A friend of mine has posted a blog recounting the way he was treated by a studio as an artist. He documents the entire process he used to protect himself with legal correspondence over a disagreement in compensation.
I have several studios who still owe me money from 2007-2008 because I did not employ the documentation he used. I am not incorporated and if I had pressed with legal action against these studios, they would have owed me tens of thousands of dollars in penalties, on top of wages owed. I didn't press out of fear of being blacklisted by the studio. Ironically, I would never work for these studios again because of how I was treated. I create a statement or work now and require the DP to agree to all points before starting any gig, so we are all on the same page.
In addition, there has been a lot of talk lately about EOR (Employee of Record) organizations and the rights of freelancers. Employees are often misclassified as Freelancers. The EOR's protect the studios by offloading the expense and liability of dealing with freelancers.
To get a really good idea about EORs and
The Freelancers Dilemma, check out these links:
The most prominent EOR company in LA is MBO Partners.
This is how MBO handles your check:
If you are paid via MBO, they take 2-5% fee for processing your payroll depending on what the studio negotiated with them.
Then, the normal employer's tax is taken off your wages first... e.g. Social Security, FUTA - federal unemployment and training, and in California: SUTA - State Unemployment .
Then they will run payroll, and the employee's tax is taken off: Federal Withholding, State Withholding, Social Security and Medicare. Note: Social Security is taken out twice - you are, in effect, paying double the Social Security tax because the employer pays zero.
The only benefit of MBO, is that you can collect unemployment because you are an employee of MBO and not operating under a 1099/contractor classification. Which is only right because you are paying the employer portion of unemployment taxes in addition to your own. So, unless you collect it, you'll never get that money back. MBO gets the studios off the hook with the IRS, but it doesn't make the comply with state law regarding classification of workers, pay periods or overtime laws.
MBO also doesn't pay on-time - at least in the State of California. They may invoice the company weekly for your work, but it takes them a few days to issue the invoice. The company has ten days to pay MBO. If MBO receives the money by Tuesday, you may get paid Friday, otherwise you'll get paid the following Friday. You'll be waiting 3 or 4 weeks for that first check.
Then, the normal employer's tax is taken off your wages first... e.g. Social Security, FUTA - federal unemployment and training, and in California: SUTA - State Unemployment .
Then they will run payroll, and the employee's tax is taken off: Federal Withholding, State Withholding, Social Security and Medicare. Note: Social Security is taken out twice - you are, in effect, paying double the Social Security tax because the employer pays zero.
The only benefit of MBO, is that you can collect unemployment because you are an employee of MBO and not operating under a 1099/contractor classification. Which is only right because you are paying the employer portion of unemployment taxes in addition to your own. So, unless you collect it, you'll never get that money back. MBO gets the studios off the hook with the IRS, but it doesn't make the comply with state law regarding classification of workers, pay periods or overtime laws.
MBO also doesn't pay on-time - at least in the State of California. They may invoice the company weekly for your work, but it takes them a few days to issue the invoice. The company has ten days to pay MBO. If MBO receives the money by Tuesday, you may get paid Friday, otherwise you'll get paid the following Friday. You'll be waiting 3 or 4 weeks for that first check.
In California, its illegal:
MBO helps companies evade payroll taxes by forcing each of their employee's to pay said payroll taxes on top of paying the employer's normal payroll costs in the form of the MBO fee.
Win win for the employer, and lose lose for the artist.
In California, wages, must be paid at least twice during each calendar month on the days designated in advance as regular paydays. The employer must establish a regular payday and is required to post a notice that shows the day, time and location of payment. Labor Code Section 207 Wages earned between the 1st and 15th days, inclusive, of any calendar month must be paid no later than the 26th day of the month during which the labor was performed, and wages earned between the 16th and last day of the month must be paid by the 10th day of the following month. Other payroll periods such as weekly, biweekly (every two weeks) or semimonthly (twice per month) when the earning period is something other than between the 1st and 15th, and 16th and last day of the month, must be paid within seven calendar days of the end of the payroll period within which the wages were earned.
MBO helps companies evade payroll taxes by forcing each of their employee's to pay said payroll taxes on top of paying the employer's normal payroll costs in the form of the MBO fee.
Win win for the employer, and lose lose for the artist.