by STEVEN LEIGH MORRIS
[dropcap]Nine[/dropcap] months ago, the California Unemployment Insurance Appeals Board in Northern California supported an administrative law judge and struck down a sweeping decision by the State’s Employment Development Department (EDD), which had ruled that Sacramento Theatre Company’s administrators, actors, and designers (and even two scholarship students) were all misclassified as “independent contractors” and should have been classified as “employees.” The appeal ruling stated that, with the exception of the theater’s producing director, the 46-year-old community theater had correctly classified all of its other workers, including its actors, as “independent contractors.”
Sacramento Theatre Company is the third California theater we’ve heard of that underwent an audit by the EDD. Coupled with the rulings against Shotgun Players in Berkeley, and CASA 0101 in Boyle Heights (both now being appealed). EDD has made a series of sweeping decisions that are attempting to eliminate the independent contractor classification for all workers in non-profit theaters. (For non-profit arts organizations, the “employee” classification carries a significantly higher tax burden. Shotgun Players was stung with a $50,000 bill for back taxes, based on what the EDD claimed were erroneous worker classifications.)
The Appeals Board decision should offer some comfort for both Shotgun Players and for CASA 0101, but for different reasons.
As reported in @ This Stage last week, Shotgun Players conceded that its actors were employees, and was fighting for the right to classify its designers and directors as independent contractors. And though the Berkeley company will have to prove its case by its own agreements, the Sacramento appeals ruling supports Shotgun Players’ general contention. The appeals ruling stated:
“Designers worked under the auspices of a union contract which set forth that their services would be rendered on an independent contract basis. Their designs, whether they be for graphics, sound, props, lighting, choreography, music, lighting, or the like were unique creations of the designers themselves, and were not performed on a ‘work for hire’ basis. Designers performed services via independent contract agreements, and billed the petitioner via invoices.”
The appeal ruling cited the case that, under the theater’s agreement with its music director, if the theater wished to re-show a production, that music director would have to be paid royalties — a standard of proof that the music director was not a company employee.
That original EDD ruling had also demanded the company bookkeeper be reclassified as an employee. Because she had her own, independent office, the Appeals Board reversed that ruling, too, along with the case of a prop master who had been an employee but demanded to work as an independent contractor. Even under that circumstance, the EDD determined she was nonetheless an employee. Not so, said the Appeals Board.
The EDD has ruled against CASA 0101 with similar resolve. It stands to benefit from the appeals ruling precedent for its case argument that its directors and designers are independent contractors rather than employees. But the case for actors as independent contractors is far more nuanced than the case for designers and directors.
Regarding actors, the appeal ruling argued that the Sacramento actors essentially ran their own businesses — an EDD standard for independent contractor: “Actors typically starting out would advertise through their own “Linked In” website or through Facebook, or with their own website which in many respects took the place of traditional business cards or portfolios, so prevalent in the 20th century. Those websites typically contain headshots, portions of live performances, and the curriculum vitae of the actors.
“Musicians and actors were not given specific instructions as to how they were to apply their art. However, they were sometimes given general instructions in terms of the finished product. As an example, [one actor] was given the suggestion to portray a ‘sad and solemn character.’ In that instance, he would try to accomplish that result, but was not given any specific instruction as to how to act to create that character portrayal. The Musicians and Actors came to the theater with their own talents, training and experience.”
This would seem like a slam dunk for CASA 0101. However, the appeal ruling then argues that were the actors working under an AEA contract, in which the producer has more control over workers’ schedules and performances, they would be employees.
The question, currently being investigated by CASA 0101’s attorney, is how the 99-Seat Plan, under which it operated during the time of its audit, differs from a union contract. The Plan is (was) not a contract between the union and the theater, but an agreement between the AEA and its own actors, allowing them to work for stipends and not be constrained by scheduling and artistic demands (i.e. control) normally imposed on the actors by an AEA contract. In fact, actors under the Plan are at liberty to leave at any time, during rehearsals or performances, and can also tell the theaters the schedule they can meet. By EDD’s own guidelines, this should qualify them for “independent contractor” status.
Furthermore, the 99-Seat Plan has been in force for almost 30 years, having been cemented by L.A. Superior Court’s acceptance of a 1989 out-of-court settlement between the union and its actors. Therefore, CASA 0101 is hoping that the appeals’ ruling assumptions that actors working under a union contract may not apply to them.
However, the implication for mid-size theater companies (and even colleges and universities) using AEA guest contracts — in which union actors perform alongside non-union actors — could change the way artists are classified for tax purposes. It may well be a violation of California labor law for non-union actors, classified as independent contractors, to work alongside union actors (working under an AEA contract) who are therefore classified as employees, and are paid by a different pay-scale from their non-union peers for performing similar tasks.
In the Southland, A Noise Within and Cornerstone Theatre Company both classify all of their actors as employees. (A Noise Within classifies its designers as independent contractors.)
What bodes well for the two theaters appealing EDD rulings is that those rulings are clearly not the last word.
SAVE THE DATE: On Wednesday, June 22, 7:30–9:30PM, LA STAGE Alliance and California Lawyers for the Arts are co-presenting a workshop that will address issues pertaining to these EDD rulings, and how they might affect the future of theater in Greater LA. Held at CASA0101. RSVP HERE.