[Dixielandjazz] Subcontractors Contract

Thu Aug 16 17:44:31 PDT 2007

Several of you asked for a copy but while this is pretty self explanatory there might be some questions.

Paragraph 1 - these requirements are spelled out in the government pamphlet

Paragraph 2 - one of the requirements for any business is that you have more than one client.  The minute you work for only one band you qualify as an employee.  This is really important to the IRS in determining employee/contractor status.  The fact might be that they are working only for you but they must be free to accept other contracts.  People when presented with a 1099 and suddenly have to pay the 15% SS tax sometimes write letters to the IRS complaining.  This can amount to a lot of money.  I used to do taxes and people really get upset about that.  You don't want someone complaining or worse, the IRS asking a lot of questions.

Spelling out that you are not guaranteeing a job or any job past the one he is hired for is important to you.   Contracting on a job to job basis is one of the requirements, if not, you start looking like an employer.   A singer that I had used three times accosted me on another leaders gig because I wasn't hiring her.  It got pretty loud.  If you are going to be a professional group and not a hobby band or "club", players need to understand that you are free to hire anyone you wish and that you are only hiring them one job at a time.  There is a musician lawyer in town who also drinks very heavily among other things and was terminated from one of the bands.  He threatened to sue that band because they had deprived him of a whole list of things and damaged his reputation.  Nothing came of it but those things can happen if you don't spell out the relationship.

I would have people sign something like this even if you are a hobby band and there is very little money involved.  People get really attached to bands. 

Paragraph 3 - Payment per job and not hourly wage.   This is an IRS requirement.   This is good for you too. If you have to play over a bit or less than was first thought you don't have to get out your calculator and stop watch.  It might also qualify as a loss under the guidelines.

It's not a good idea to fudge time very often on musicians but it does happen and they need to know  that you may but are not obligated to pay extra if the time slides a bit.

This might be a sticking point with the AFofM.  They like everyone to be an employee with strict hours and pay scales.  I discussed this with my local and basically told them that I would not consider anyone who worked for me as an employee and I would not handle or be responsible for paying the taxes.  They gave me a pass on it.  There is no way I would stay in the local if they insisted on me being a standard employer.   I was an employer for many years and it's a nightmare.  There is paperwork for every job: State, Federal and City.  Tax accounts have to be set up and deposits made very regularly along with the attendant record keeping.   If you don't do it or miss deadlines there are hefty fines.   You also have to pay workmen's comp if you have more than 3 employees.  The record keeping is a real pain.  The City here has a 1% employment tax also.  They actually issued a warrant for my arrest because I wasn't filing the proper paperwork.  I was able to convince them that I was no longer an employer but if I had gotten stopped for a ticket while that thing was in effect I could have ended up in the slammer.

The IRS says if you are reimbursed for all expenses you may be an employee and if you provide any benefit package you might become classed as an employer.

Paragraph 4 A business must be capable of incurring losses although that isn't the idea behind any business.    There is a box on the Copy C that you must check that says your investment is at risk.  Employees are not expected to incur losses.

There are some musicians that won't sign these agreements and if they won't you shouldn't use them.  I think it's because very few leaders use these and it's not the custom.  There are guys that don't pay the taxes and you are having them sign something that says they are responsible.  Some think because they are signing it you will screw them over.  Then there are guys that aren't the sharpest pencil in the box and they can get spooked by these.

You should have them sign one every year.
Larry
StL