Massachusetts Independent Contractor 2004 Law Change and how it may impact you & talking points (updated on 1/19/10)
Many artists earn their income or a key part of their income from being an independent contractor. Many cultural organizations and arts related businesses hire independent contractors (i.e. their earnings are reported via a 1099 IRS form if they are paid over $600 for the entire year. No taxes are taken out of the payment).
In 2004 there was a change to the Massachusetts State law governing Independent Contractors. The change to the law was enacted as part of the Public Construction Reform Act. The Committee that produced the bill was the Committee on State Administration. Our understanding is that the carpenter's union pushed for this legislation.
This law now makes it next to impossible to be an independent contractor or a freelancer in this state. However, it is our understanding that it will be the "employer" who will be fined for the violation by the Massachusetts Department of Revenue, not the person who is 1099ed. So just be aware of this law change. The burden is falling on the "employers" at the moment and DOR has not implemented a state-wide campaign to check individuals for violation of this law. DOR, however, in 2007 investigated two nonprofit arts organizations for violation of this law as part of "random" audits of those organizations.
It is key to understand if you are "employee" you do not control the use of the intellectual property you create as an employee- your employer does. The employer owns the right to sell and use the intellectual property as they see fit (not the employee). So it is critical that artists of all disciplines can be independent contractors to be able to control the intellectual property of what they create.
We are hearing that in the publishing industry, companies that are not based in Massachusetts are no longer hiring Massachusetts-based freelance writers, copy editors, editors, etc. due to this 2004 Massachusetts law change. Massachusetts freelancers are losing needed clients and income due to this law change.
What the Massachusetts Independent Contractor 2004 Law Change does:
Under this state law change, which adds to the established IRS 20 part test classifying what constitutes an independent worker, an individual is considered an employee of the company unless the company can establish ALL of the THREE below requirements as stated in the law:
a) such an individual has been and will continue to be from control and direction in connection with the performance of such services, both under his contract for the performance of service and in fact; and
b) such service is performed either outside the usual course of business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and
c) Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
Translation: The individual must have a contract, decides when to start and when to stop work, uses their skill and knowledge to complete their work without any instruction or direction from the company. The service the individual provides does not duplicate any other employee's job at the company. For example, if an outside a graphic designer is hired to temporarily work at a company "on site or not on site" and there is already a graphic designer on the staff of that company, the company must W-2 the temporary graphic designer. But if you are hired and perform your work off site (i.e. you are not physically at the company's place of business(es)), no one at the company does what you are being paid to do and you regularly provide this work for others outside of the hiring company- you are not an employee.
WHAT IS BEING DONE AND WHAT YOU CAN DO
Sign the online petition: online petition
Testify in favor of HB 1844 and/or send in written testimony:
An Act Relative to Independent Contractors House Bill 1844
The bill was also filed in 2008 and was refiled in 2009. It would amend the 2004 Independent Contractor law change. The 2004 law change is negatively impacting the artist community and the arts community because it made it next to impossible for people to be classified as independent contractors in this State. This amendment, however, would still keep key changes in place that keep employers from misusing the independent contractor worker category. (Note: There is a Senate Bill 670 -An Act Relative to Independent Contractors that is very similar to HB 1844).
--The House Bill was filled by Representative Rodrigues.-The public hearing for HB 1844 is Wednesday, January 27th, 2010 10:30am in room A-2 at the Massachusetts State House in Boston, MA. It is being heard by the Joint Committee on Labor and Workforce Development.
PLEASE SEND IN WRITTEN TESTIMONY IN SUPPORT OF HB 1844!! Send it to: Ryan.Whalen(at)state.ma.us - it should be sent in no later than Friday, January 29th (for tips on how to address your testimony and talking points to include see the bottom of this page).
HOW TO ADDRESS AND WHAT TO INCLUDE IN YOUR WRITTEN TESTIMONY:
HOW TO ADDRESS YOUR TESTIMONY:
Chairman Senator Thomas McGee and Chairwoman Representative Cheryl Coakley-Rivera
Joint Committee on Labor and Workforce Development
Room 39 and Room 112
Massachusetts State House
Boston MA 02133
Dear Chairman McGee, Chairwoman Coakley-Rivera and members of the Joint Committee on Labor and Workforce Development,
EXAMPLE TEXT:
(PLEASE ONLY USE THIS TEXT AN EXAMPLE- PUT YOUR WRITTEN TESTIMONY IN YOUR OWN WORDS AND MAKE IT DISCIPLINE SPECIFIC)
I am writing in support of House Bill 1844-An Act Relative to Independent Contractors. The 2004 Independent Contractor Law change is having negative unintended consequences for Massachusetts artists of all disciplines and freelancers. Those of us who are paid to create intellectual property of any kind need to have the option of being treated and paid as an independent contractor.
It is key to understand if you are "employee" you do not control the use of the intellectual property you create as an employee- your employer does. The employer owns the right to sell and use the intellectual property as they see fit (not the employee).
For example, if you are hired to create a design for a company's holiday greeting cards as a freelance graphic artist, you negotiate the rate of your pay AND the use of what you create. The company can only use your design for the printing of the greeting card. If they want to use your design again or for another use, they have to contact you and negotiate the pay/compensation of the new use of your design. This only holds true when you are an independent contractor.
Under the 2004 law change, if a company hires a freelance graphic designer and they already have a graphic designer on staff, the "freelance" graphic designer has to be w-2/treated as an employee (have withholdings taken out). The freelance graphic designer is not really an employee of the company. They do not get any benefits, they work from home, and uses their own supplies and equipment. When they are "w-2ed" for their work due to the 2004 MA law change, they lose their rights to their intellectual property, and the use of it. They lose their moral and use rights to their work and they also lose needed revenue.
It is critical that artists of all disciplines can be independent contractors to be able to control the intellectual property of what they create- our livelihoods depend on it. Please support HB 1844.
Sincerely,
your name, artistic discipline and contact information
To be informed of Massachusetts Legislation that impacts artists of all disciplines and arts small businesses and nonprofits- join the ArtistsUndertheDome.org's free listserv and also see their section on pending Massachusetts legislation.