Call for Written Testimony for Senate Bill S00957 and House Bill H01412 -An Act Relative to Independent Contractors
Please send in written testimony in support of these bills to the Joint Committee on Labor and Workforce Development- email address: Kate.Flanagan@Mahouse.gov by November 8th (she is the staffer who will make sure all the committee members will get a copy of your testimony).
Massachusetts Independent Contractor 2004 Law Change and how it may impact you & talking points (updated on 11/7/11)
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 (DOR), the Attorney General's Office, and/or the Division of Unemployement Assistance (DUA), 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 the three governmental agencies to the best of our knowledge have 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.
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. However, please be aware that if what you are "performing" for the company is interpeted as part of the usual course of business (ie you being hired is considered "outsourcing the job") you will more than likely need to be w-2ed.
This state law change is in direct conflict with Federal Copyright law.
For more information: Read the Advisory from the Attorney General's Office, Kathleen Bitetti's paper written about the law change and its impact: http://www.artistsunderthedome.org/IC_2010_paper.pdf, an article written by Robert M. Shea on the Massachusetts Independent Contractor Law . Read a Boston Globe editorial, view a WGBH segment and hear/read a WBUR's piece on the issue.
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Please send in written testimony in support of these bills, Senate Bill S00957 and House Bill H01412 to the Joint Committee on Labor and Workforce Development- email address: Kate.Flanagan@Mahouse.gov by November 8th. (she is the staffer who will make sure all the committee members will get a copy of your testimony)
By mail (and how to address emails and letters):
Joint Committee on Labor and Workforce Development
RE: Senate Bill S00975 & House Bill H01412 An Act to Relative to Independent Contractors
Room 39
State House
Boston, MA 02133WHAT TO INCLUDE IN YOUR WRITTEN and VERBAL COMMUNICATIONS:
(PLEASE ONLY USE THIS TEXT AN EXAMPLE- PUT YOUR WRITTEN TESTIMONY IN YOUR OWN WORDS AND MAKE IT DISCIPLINE SPECIFIC)
SAMPLE LETTER
Chairwoman Representative Coakely-Rivera & Chairman Senator Wolf and members of the Joint Committe on Labor and Workforce Development
Room 39
State House
Boston, MA 02133
Dear Chairwoman Coakely-Rivera & Chairman Senator Wolf and members of the Joint Committe on Labor and Workforce Development,
Please support Senate Bill S00957 and House Bill H01412 -An Act Relative to Independent Contractors. The 2004 Independent Contractor Law change is having negative unintended consequences for Massachusetts artists of all disciplines and other freelancers/self employed people. 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 or even if they don't have one 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 or from their studio/office outside of their home (that they pay for), and use their own supplies and equipment. The same holds true for photographers, illustrators, and other artists of all disciplines. Another example: If you are paid via w-2 to sing at a church for weekly sunday service- the church has the right to record your performance and rebroadcast it/sell it in any format they so choose. If you are paid as an independent contractor you can decline to be recorded or you can negotiate the terms under which they can record your performance and what they may do with it (same holds true for dancers and other performers). 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 (and others who create Intellectual Property) can be independent contractors to be able to control the intellectual property of what they create- our livelihoods depend on it. Please support Senate Bill S00957 and House Bill H01412 -An Act Relative to Independent Contractors!
Sincerely,
your name, artistic discipline and contact information
To be informed of Massachusetts Legislation that impacts artists of all disciplines, small arts based businesses and nonprofits- join the ArtistsUndertheDome.org's free listserv and also see their section on pending Massachusetts legislation.