FAQs & Resources

Who needs to be payrolled?

Payroll on set can be complicated, but OOTB Solutions works with our clients to make recommendations that will keep their workforce compliant while also staying within their budget.

Employment and labor laws are constantly changing. Many states are evolving their laws to better protect workers and provide them with the rights and benefits of employees, such as meal breaks, workers’ compensation and disability insurance, unemployment, FICA contributions, and overtime pay. Although the production industry has often paid crew and talent as independent contractors to avoid the additional costs of paying workers as employees, misclassifying workers exposes an employer to serious legal and financial penalties.

What is AB5?

California redefined the criteria for classifying workers with the passage of AB5 in 2018, mandating that certain workers be classified as employees rather than independent contractors. Failing to correctly classify workers makes an employer vulnerable to severe financial liability. Other states are moving in similar directions and Joe Biden has indicated that he will pursue a federal standard modeled on AB5’s “ABC Test.”

Despite the recent passage of Proposition 22 in California, production crew and talent are not included in AB5’s current limited exemptions.

Under AB5, the "ABC test" must now be used to determine whether a worker providing services in California is an “employee” for purposes of the California Wage Orders, Labor Code, and Unemployment Insurance Code.

If the answer is “No” to ANY of the following questions, a worker should be classified as an employee and must be paid W-2 wages.

• A: Is the worker free from the control and direction of the hirer?

• B: Will the worker perform work outside the usual course of the hirer?

• C: Is the worker regularly engaged in an independently established trade of the same nature as the work to be performed?

By payrolling your talent and crew with OOTB Solutions, you ensure that they are properly classified and covered by workers’ compensation and other necessary insurances. You will have peace of mind knowing that your workforce is compliant with the applicable labor laws and that you have appropriate protection from workplace liability.

Visit the California Labor & Workforce Development Agency FAQ on AB5

What about hiring independent contractors?

It is important to note that both federal and state employment laws classify a worker as an employee unless proven otherwise. The U.S. Department of Labor and many states, including California, use the ABC Test (for more information about the ABC Test, refer to “What is AB5?”) to determine worker classification. The IRS and other states, including New York, use common law rules to make these determinations.

The IRS states that “A worker is an employee when the business has the right to direct and control the worker.” Even if a business gives a worker freedom of action, having the right to direct and control them is what determines classification. Examples of direction and control include:

• Determining when and where to do the work.
• Specifying what tools and equipment to use.
• Determining what order or sequence to follow when performing the work.

Producers should be aware that having a written contract that designates a worker as an independent contractor is not sufficient to determine the worker’s status. The duration of work also has no bearing on classification. If a worker should be an employee, it does not matter if they only work a one-day shoot once a year. They are still an employee. The IRS only considers how the parties work together to determine classification.

If a business misclassifies workers as independent contractors, they can be liable for employment taxes, fines, and penalties.

Visit the IRS guide to determining worker classification

What are the risks of misclassification?

Misclassifying workers exposes a business to serious legal and financial consequences. In California, there are civil penalties of between $5,000 and $25,000 per violation for the willful misclassification of workers. State agencies and the IRS may require businesses to pay unpaid state and federal payroll taxes, Social Security and Medicare taxes, and unemployment and disability insurance. Additional penalties, fines, and criminal charges may also apply.

If a misclassified employee files an unemployment, disability, or worker’s compensation claim, it can trigger an audit of the employer’s payroll and other financial records. Misclassified employees may also file a complaint with the state or federal Department of Labor or take legal action against employers to recover unpaid wages and benefits. Legal action can result in further fines and penalties.

What is an employer of record?

An employer of record is the entity or organization responsible for complying with all state and federal requirements pertaining to the relationship between an employee and employer. These responsibilities begin with paying the employee, but also include the management of payroll taxes, employee benefits, insurance, state and federal labor law compliance, and HR responsibilities. The entity that manages and benefits from the labor of the employee is not required to be the employer of record, so long as another entity assumes the employer of record responsibilities. In this case, a “co-employment relationship” exists between the employer of record and the entity that manages and benefits from the labor of the employee.

What is a co-employment relationship?

A co-employment relationship is a predetermined and contractual relationship between two or more parties that have mutual but varying legal responsibilities for an employee. OOTB Solutions clients benefit from the labor and talents of individuals who they select to perform work as designated W-2 personnel, while the employer of record responsibilities are managed by the OOTB team. The client still maintains legal and practical liability for their actions related to the employment relationship. Among other things, this includes providing a safe working environment and complying with state and federal workplace laws.

How does payroll affect booking rates?

Production payroll includes many unique intricacies that standard payroll companies are not equipped to handle. These include 10-hour & 12-hour work days, industry standard overtime rates, travel time, prep days, and 6th & 7th day overtime. Your OOTB Solutions team works closely with you to navigate and understand these details before your production starts to ensure that you are in compliance with labor laws and that employees are paid correctly. With the detailed information provided by our team, you will have the knowledge you need to optimize your production schedule to best avoid additional costs to your budget.

How does OOTB Solutions pay models and other agency-represented talent and crew?

OOTB Solutions communicates directly with each agency to collect booking terms and process agency and commission fees. Talent and crew are paid their contracted rate, less any fees due to the agency, through W-2 wages. The remaining agency and commission fees are invoiced and paid directly to the agency.

We ensure the timely payment of talent and crew wages in accordance with the Photoshoot Pay Easement Act. This law allows employers to pay models, producers, photographers, and other employees on a print shoot in California on the next regular payday of the payroll period that follows the end of their work on a production.

Our procedures for agency-represented talent and crew ensure that everyone involved—hiring entity, agency, and talent—remains compliant with all applicable labor laws.

How does OOTB Solutions handle paying minors?

Working with minors requires additional documentation and time management.

• A licensed Studio Teacher should be on set at all times when minors are present.
• A current work permit in the minor’s name needs to be provided when the minor arrives to set.
• A Coogan Trust Account must be provided for payment with at least 15% of the minor's net pay to be deposited into that account.
• Employment verification documents must be provided for the minor's I-9 verification.
• Depending on the minor's age and school schedule, there are restrictions on how many hours they can be on set and perform work.

Your OOTB Account Manager can provide resources to assist the minor's parent or guardian get all the proper documentation prior to the start of production. Depending on the turnaround time you have for onboarding your production, we highly recommend that you check that minor talent have the required documentation in place prior to confirming them for work to ensure proper compliance.

Vist the OOTB Solutions "Working with Minors" page for more information.

What are employment and payroll taxes?

Employment taxes include all taxes employers must pay if they have employees. Payroll taxes are the Social Security and Medicare taxes that are withheld from employee pay and matched by employers.

Taxes paid by the employer are an additional cost on top of employee wages. They are not deducted from employee pay. Taxes paid by the employee must be withheld from their gross pay by the employer and transmitted to the appropriate tax agencies.

Taxes paid by both employers and employees:

• Social Security and Medicare taxes (Federal Insurance Contribution Act, or FICA taxes). Split equally by employer and employee.

Taxes paid by employer:

• Federal unemployment taxes (Federal Unemployment Tax Act, or FUTA)
• State unemployment taxes (state unemployment insurance, or SUI)
• Applicable local taxes

Taxes paid by employee:

• Federal income tax
• State income tax
• Applicable local taxes
• Additional Medicare Tax (if individual’s income exceeds the threshold amount)

What about workers' compensation?

California employers, regardless of the number of their employees, must provide workers’ compensation benefits to employees by paying for workers’ compensation insurance. Employees are entitled to prompt, effective medical treatment for on-the-job injuries or illnesses, no matter who is at fault, and in return are prevented from suing employers over those injuries or illnesses. If an employee gets hurt or sick because of work, the employer is required to pay for workers’ compensation benefits. The insurance coverage provided by workers’ compensation ensures that the employee is provided with basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.

Do I need a separate workers' compensation policy in addition to the policy that OOTB Solutions provides?

An additional policy is not needed when personnel are established as W-2 employees of OOTB Solutions. The workers’ compensation policy maintained by OOTB Solutions provides coverage for personnel employed by OOTB as W-2 employees. Any individual who is not engaged as a payrolled employee is not covered by, nor provided the benefits of, the OOTB Solutions workers’ compensation policy. W-2 employment status must be established prior to any work being conducted. Our formal W-2 onboarding process is a primary step in documenting the W-2 relationship.