The gig economy: How to pay contractors and navigate benefits

The gig economy offers benefits to workers and companies alike. While those benefits do include flexibility for workers and lower costs to employers, they don’t cover things we’ve grown used to such as built-in 401K plans, health insurance options, and worker’s compensation. For many independent contractors, that’s a problem. And as the gig economy’s slice of the economic pie grows, so does the problem. Currently, there is no roadmap telling you how to pay contractors fairly while keeping costs down. The good news is that we at PayReel have been on this road long enough to learn how to pay contractors legally and ethically.

 

Start with worker classification

First things first: classify workers correctly from the outset. A worker’s classification (whether they’re an employee or an independent contractor) guides what benefits they’re entitled to by law. The rise of the gig economy has brought with it the rise of confusion over who is an employee and who is a contractor. Wherever gray areas and money meet, you will find lawsuits. True to form, legal disputes over worker classification have plagued everyone from Uber to FedEx. Following the rules and classifying correctly from the beginning saves time and potential legal troubles.

 

Stay aware of potential legal changes

From workers to legislators, people are thinking about how to manage the evolving landscape. Some envision an entirely new system with changing guidelines that suit changing times. Such a system might include “portable benefits” that travel with workers from company to company.

According to this article from the Pew Charitable Trusts, one bill proposes to:

“require people or companies that find work for and transfer payments to independent contractors — Uber, say, or a middleman who works with farm laborers — to contribute to a pool of money managed by an independent nonprofit. The broker might do that by charging consumers extra or by taking the money out of workers’ pay.

Contributions would be made at least monthly and would have to amount to either $6 per hour worked or 25 percent of the sum charged to the consumer, whichever is smaller. The money could be spent on paid time off, health insurance or other qualified benefits.”

We can only guess how things will change, but we do expect them to change. It behooves company leaders to stay in tune with these kinds of conversations and legal considerations.

 

Consider more than the bottom line

Some companies aren’t waiting for a legal mandate to make changes. Instead, they are voluntarily providing benefits beyond their legal requirements. Care.com, for example, adds a small fee to each transaction, which converts to “benefits bucks” that service providers may use for expenses such as transportation. This kind of perk goes beyond the money in a worker’s pocket. Workers who feel valued are more loyal and do better work.  

 

Protect yourself

If you can’t (or just don’t want to) keep up with the rules and developments surrounding the on-demand economy, PayReel can keep up for you. Check out this handy guide to see if you might benefit from hiring a payroll services company. Not only does our team manage worker classification, payroll, and payroll taxes; as the employer of record we even take on all risk associated with a variable workforce. Going above and beyond in the ethics department isn’t just a warm and fuzzy notion. It’s a sound business decision, too.

 

About PayReel

When it comes to payroll taxes and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

IRS mistakes cost big (even when they’re not your fault)

 

A case involving embezzlement, tax liability, and good intentions added up to a nightmare for one man. Dr. Robert McClendon’s story proves there’s no amount of caution too intense when it comes to payroll tax liability.

 

The road to hell is paved with good intentions

In a sobering case reported in Forbes, a man who loaned $100,000 to a struggling business was fined $4.3 million for said company’s payroll tax liability. When you dig into the details, it’s not as unfair as it may seem at first blush, but that doesn’t make the situation any less painful for Dr. McClendon—the defendant and a legally-deemed responsible party. As the Forbes article states, “You can be ‘willful’ under the tax law even if you didn’t have a bad motive or evil intent.”

So what was the kiss of death for Dr. McClendon?

 

Responsible & willful: A match made in IRS hell

Dr. McClendon owned the business to which he loaned the money and the cash went toward the seemingly noble goal of paying employees to prevent shuttering the doors altogether. While it was an employee who’d embezzled the funds earmarked for payroll taxes, the case against Dr. McClendon was strong enough to prove him responsible and willful. He wasn’t responsible for the embezzlement but he was responsible for choosing to pay employees instead of the payroll taxes, which by that time, he knew about. The case against Dr. McClendon withstood the legal tests and left the doc to nurse his own wounds. Ouch.

 

How to protect yourself

Either learn the rules of payroll taxes and precisely follow them or hire a qualified company to do it for you. The Forbes article suggests that one benefit to hiring a payroll service is that “the employer doesn’t have discretion to use the money to pay vendors or for anything else.” It’s sort of like a much higher stakes version of a 401K: If you can’t access the money when the temptation for an out-of-reach car comes up, you’ll still have it when you need it for less sexy reasons. Additionally, hiring a payroll service takes the burden of having to understand all of the rules and make heavy decisions off the company leadership.  The payroll service takes on the liability and frees up the small business to focus on business.

 

The bottom line:

There are too many ways to get in trouble with the IRS to choose ignorance. With fines and possible jail time on the line, legitimate small businesses must take payroll taxes seriously. The government sure does.

 

About PayReel

When it comes to payroll taxes and so much more, PayReel makes your life easier. Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

What do Trump’s first 100 days mean for the on-demand economy?

 

If anything’s certain, it’s that very little is certain when it comes to the rumors and grand plans that often surround any President’s first 100 days in office.

Worker classification was a major focus during President Obama’s administration, which resulted in a rash of highly-publicized lawsuits and debates across the U.S. just as the the on-demand economy was coming of age.

The Trump administration’s focus on that same unique issue might actually play out favorably this time around for employers who rely on independent contractors. But before you throw all your paperwork out the window—that doesn’t mean classification is going out the window, too. In fact, some states and localities might even tighten restrictions and increase punishments for misclassification in response to relaxed federal law.

In short, things are as up in the air as ever when it comes to federal government trying to keep up with rapid developments in the on-demand economy.

Here’s what to do while you wait to see what President Trump’s first 100 days mean for the on-demand economy.

 

Be vigilant when it comes to compliance

Federal, state, and local regulations already change regularly; who knows how things could fluctuate as the government tries to get a grasp on how benefits, taxes, and everything else could and should shift as workforces get more and more nontraditional.

 

Don’t slack on classification

The process of classification might eventually get easier, but it’s not likely to go away. If the current situation is any indication, it could even get a bit hairier for some states and localities as they react to uncertain or lax laws at the federal level.

 

The bottom line:

If you can’t (or just don’t want to) keep up with the rules and developments surrounding the on-demand economy—PayReel can keep up for you. Not only does our team manage worker classification, payroll, and payroll taxes; as the employer of record we even take on all risk associated with a variable workforce.

 


 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Don’t know if your locality taxes? Might be time to hire a payroll service.

Would you rather think about federal, state, and local (yes, local—such as in NYC and LA) taxes more or less?

A) More

B) Less

If you answered A, you have found your calling in life. Become a CPA and you can spend your days researching tax laws and perfecting the art of the deduction. We are forever grateful for tax professionals who view Schedule Cs as their signature move and audits as their national championship games. Note: Unless you’re one of said saintly tax professionals, (which we’re not) you’re not legally allowed to give your employees tax advice. Send them to the IRS.

If you answered B, a payroll service may be the solution that gives you a whole lot less to think about when it comes to taxes.

 

Here’s how to think about taxes less

If you can’t (or just don’t want to) keep up with the rules and developments that happen almost yearly with federal, state, and now local taxes—PayReel can keep up for you. Not only will we research the ever-changing laws, we will also handle W-4s, keep you compliant on worker classification, and make sure you’re paying freelancers fairly and accurately.

 

The bottom line:

It’s really simple when you think about it—and even more simple when you don’t. Work with PayReel and save on time, fines, and headaches by taking tax management off your plate. Contact the PayReel team  at 303-526-4900 or by emailing us here so you can get back to focusing on pulling off your next flawless production.

 


 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Is preparing for April 15 a pain in your tax? We can help.

Doing taxes is as challenging as solving a Rubik’s cube, but without any of the fun. Also like a Rubik’s cube, there are endless ways to get it wrong. For individuals, getting taxes wrong can be painful, but the stakes are even higher for businesses.

One of the biggest challenges we’re seeing for businesses right now is the rise in popularity of local taxes. Since most state W-4s don’t list such taxes directly, employees and employers are left to find out about changes through trial and error (yikes!). New Yorkers: Take heart. Yours is the one state that has localities listed on the W-4s and allows employees to claim different deductions on the local, state, and federal levels.

No matter where you are, it’s a lot to think about.

 

Would you like to think less about taxes? Here’s how hiring PayReel can help: 

As the employer of record, we’re responsible for taxation. That means you can save yourself some time and headache. We handle it all. We keep addresses up to date, send out W-4s, and make sure your workers are classified correctly so you give them the correct forms. We also make sure you’re using the right W-4 for your state and keep track of the federal, state, and local taxes.

Hand over the Rubik’s cube. We’re like this guy.

 

One more thing: There are certain career paths (like tax lawyering) that really require a special type of person. Unless you’re one of those, (which we’re not) you’re not legally allowed to give your employees tax advice. Send them to the IRS.

 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave all payroll services and details (even taxes) up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Contractor payroll, overtime exemptions, and what Volkswagen’s scandal teaches us

 

Heads up: The way the production industry has traditionally approached contractor payroll just isn’t going to cut it anymore. Though currently stalled, new overtime regulations are questioning outdated payment practices—including day rates in the production industry.

Wherever you find new guidelines radically changing previously-accepted practices, you will also find someone trying to get around them. But it behooves companies to be ahead of the guidelines instead of trying to work around them. Just ask Volkswagen.

For its shady dealings (which the BBC broke down here), Volkswagen is paying the price to the tune of $20 billion—one of the most expensive corporate payouts in United States’ history. But it’s not all about the money. While the circumstances differ, the production industry can learn a few lessons from Volkswagen’s scandal about how to walk above board and avoid ending up in court.

 

Culture is everything, and it’s about to shift for the production industry

Martin Winterkorn, Volkswagen’s then CEO, implicated “the terrible mistakes of a few” in his apology. But a scandal so deep doesn’t happen without a company culture (hello, Supervisor B!), and a broader auto industry culture, that tolerates or encourages finding a way around the rules.

A New York Times article points to the cultural element in industries that traditionally require long hours—like video production—that has always made room for fudging paperwork. Companies negotiate a flat rate and contractors work as long as it takes, even up to 12 or more hours, to get the job done. Since it’s standard practice, submitting time sheets that read “9-5” when everyone knows it was actually 9-9 hasn’t necessarily seemed unethical or unfair to either party. That’s just the way it is. Or at least the way it has been.

The new proposed regulations make it clear that even when workers claim to be okay with not getting paid accurately, it’s not actually okay. Employers must be prepared for the culture to shift and for workers to start questioning their overtime eligibility.

 

When the press talks, the people talk…

There’s nothing that shifts culture more than attention. As laws change at the state level and contractors and workers start thinking “this relates to me,” there will be pushback against industry norms. And it’s not just the workers. The media love to find and expose wrongdoings. Nobody wants to be the center of the biggest scandal of the year. Once again, just ask Volkswagen.

A mutual expectation of a flat rate for an undetermined number of work hours doesn’t count as compliance. Duties and level of pay dictate whether or not someone is eligible for overtime, not tradition. The more the press highlights these points, the more the people talk. And the more the people talk, the more the wink and nod approach in the video production industry will come under scrutiny.

 

…and money always talks

The air is dirtier, the ozone is thinner, and consumer trust is shattered. Unfortunately, Volkswagen isn’t the only company bending the rules or blatantly cheating in order to make a buck. Theirs is a tale as old as time. They just got caught.

And it’s coming to our industry too—the same New York Times article states that Fox is in litigation with a former worker who alleges he was paid unfairly. Once a studio gets shut down with a class action lawsuit, everyone will suddenly tighten up their practices and fall in line. But why risk finding yourself at the defense table in a courtroom? It’s not the amount of money that makes it relevant to our industry, it’s the fact that people are paying attention to it.

Don’t be the Volkswagen of the media production industry. It’s going to happen to someone. Why gamble your business instead of just starting to recognize eventual changes to overtime regulations now?

 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave the details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Payrolling freelancers? Here are 4 ways to be ready for new overtime rules.

 

The Department of Labor’s Fair Labor Standards Act (FSLA) will make about 4 million more workers eligible for overtime on December 1st, 2016. With 21 states suing to end the act altogether, some businesses may be hoping it all just goes away before they have to make changes. But waiting is risky. Getting ready for upcoming changes now ensures companies stay in good standing with employees and the government, too.

 

Four ways to prepare for payrolling contract employees in light of new rules

 

1. Provide a daily guarantee for a pre-negotiated flat rate for contractors. Budget for overtime if applicable.

2. Start tracking time accurately. Businesses and contractors using obligatory, inaccurate timecards need time to adjust to new processes.

3. Classify workers correctly up front. This is a big one because it sets you up for success. In fact, you can read a whole slew of advice on the topic by clicking here.

4. Read our previous posts on what the Volkswagon scandal teaches us about the FSLA and payrolling and four ways to prepare for changes to contractor payroll.

 

The production industry must adapt to remain competitive. And it may wreak havoc on some budgets in the short term. But this whole thing goes beyond the numbers. Companies that treat people fairly attract high quality workers. And when people feel valued, they go above and beyond. Proactive compliance is good business.

 

About PayReel

Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave the details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.

Relax. We got it.

 

Ten questions to help you decide if you really need to pay for payroll services

Time is money. And when you have a tendency to get buried under onboarding, vendor payment, classifying temporary employees, and other hiring details, time is priceless. Here’s a brief quiz to determine if hiring someone to handle your payroll services might be worth the investment.

 

Do you regularly hire independent contractors and/or temporary employees?

 

Is said hiring and onboarding one of the most time-consuming parts of your role?

 

Do old school payment processes or corporate legal concerns cause frustrating bottlenecks?

 

Is your desk/desktop cluttered with binders, folders, and paperwork?

 

Have you ever made a contacting mis-hire because of a time crunch?

 

Do you get pulled into fighting payrolling fires at least once a month?

 

Would a high level of service free you up to focus on other aspects of business?

 

Do concerns about compliance, worker classification, IRS audits, and workforce headcount keep you up at night?

 

Have you ever lost favor with one of your best contractors by paying late?

 

Do you have a reputation among contractors for paying late?

 

Not everyone needs a service like PayReel (especially startups and small businesses), but if your blood pressure went up as you read the list above, you might need PayReel. For those who need quick/frequent access to qualified contractors or who want to take all the risk out of dealing with the independent workforce, PayReel is a headache free solution. PayReel’s independent workforce engagement solutions makes classifying, onboarding, and paying your freelancers painless, paperless, and personalized. It’s about time.

 

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it. Relax. We got it.

Contractor payroll is changing. Here are four ways to be prepared.

Like it or not, upcoming overtime exemption rules will change the way the production industry engages with contractors and freelancers. In the past, we talked about where things have been. Here, we’ll talk about where they’re going and what you can do to stay ahead of the curve.

Be aware.

If you hire contractors, you need to be aware of the following in order to maintain trust and stay out of trouble:

  1. Industry standards such as hiring contract employees on a day rate aren’t always in compliance with the laws. Educate yourself so you can learn to bridge the gap between the two.
  2. Be up to date on the specific requirements where your project is located (California has different rules than Colorado, for example).
  3. Find an expert who can classify workers correctly and identify who is legally exempt from overtime.

Be proactive.

Productions are hectic enough. Do your homework ahead of time to squelch possible legal problems and avoid the pressure of trying to implement last-minute changes.

To start, determine who needs to be paid a flat rate and who is exempt. If you aren’t sure, engage someone with production-specific expertise in this area.

Be transparent.

In a previous post, we talked about Volkswagen’s trouble with shady, dishonest practices. In his post-scandal apology, Martin Winterkorn (Volkswagen’s since-resigned CEO) gave his word that they’d “proceed with the highest possible openness and transparency.” This shows he understands that people care about transparency, but can a company that size turn on a dime to become fully transparent? It’s a lot easier to trust a company that is proactively committed to transparency and has it’s employees’ and freelancers’ best interests at heart.

To demonstrate your commitment to transparency and earn trust:

  1. Make announcements about all your changes to both internal employees and all relevant external parties with as much advance notice as possible.
  2. Make your intentions and changes as clear as possible.
  3. If you make mistakes (which you likely will), share about that, too.

Be above board.

Just like so much in life, there are ways around the rules. But if you operate in the gray area, you’re gonna get caught—or at least earn a negative reputation.

To stay above board:

  1. Do the right thing up front. In this industry, most contractors probably make above the $47,476 yearly threshold if you annualize their day rate pay, but that’s not the point. At the heart of the law is President Obama’s goal of providing “a fair day’s pay for a fair day’s work.” Paying for overtime is the right thing to do and will make you a preferred client (which, by the way, means you’ll get better workers who do better work).
  2. Avoid backing-in to artificial hourly rates or employing the split-day plan to find ways around the rules.

Laws are ever-evolving at the state and local level and keeping up with them is a full time job. It takes a lot of time and expertise to stay on top of this many details, but it’s a worthwhile investment. If you don’t have the time, resources, or desire to pay attention to all the details, hire a team like PayReel. Our PayReel OnLine software is fully equipped to help you sort out the rules and execute processes while also balancing contractor expectations, legalities, and company budgets.

If you have any questions about how your company’s keeping up, call us at 303-526-4900, shoot us an email, or contact us here—any time, day or night.

About PayReel:

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail—down to insurance for temporary employees—perfectly while making sure their clients think nothing of it, so they can get back to doing what they do best.

Successful Businesses are Built on Trust

After nearly three decades, my business and I have matured. In a nutshell, this means I get to shut up more. This luxury is a direct result of being surrounded by advisors and team members with varied experience and whose strengths function well together.

Trust powers a sustainable business. Here’s how it helped me build and grow three different companies—Crew Connection, PayReel and CrewCloud

You Can’t Do It All

It’s tempting for leaders to be involved at every level, but you can’t do—or be good at—everything. That’s what the team is for. A growing business allows you to hire more people and hiring more people allows the business to grow. This cycle is a sure sign of a healthy organization. Once I built a team that I could trust implicitly, the best thing I did for the company, the team, and myself was to get out of the way when it comes to day-to-day tasks.

Surround Yourself with Good People

Without implicit trust, I get too involved. Usually, we just need to make adjustments or offer personal development because individuals are busy or stretched too far. When team members are good for the company, but bad for the position, we can rewrite their roles and move forward. We know we got it right once things start humming again and I can step away. When it doesn’t work out and someone has to move on, we see it as a learning opportunity.

Attitude Trumps Skill

When it comes to team dynamics, attitude trumps everything. I’d rather have someone inexperienced with a positive outlook than one with all the training but a sour demeanor. You can develop skills. In a growing company, a bad attitude is like poison—deadly and difficult to remove. Once it’s in the system, things go downhill fast.

You know you’ve built the right team when you’re happy to delegate. Things work better when everyone has a good time, works hard, and respects each other.

Happy Teambuilding,

Heidi McLean

President and Founder of Crew Connection, PayReel and CrewCloud

Feeling the trust? Then trust us and check out our other entrepreneurship articles about change and persistence.

About PayReel:

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it, so they can get back to doing what they do best.

About Crew Connection:

Crew Connection connects you with video production crews across the country and around the globe. With more than 25 years of experience and thousands of shoots to our credit with film crew pros, you can trust our expert coordinators to match you with the right freelance video crew and equipment every time.