Relates to the definition of employee

Summary of provisions

Amends WCL § 2(4) to clarify that performing artists who are employed as corporate executives of their own corporations, and whose corporations enter into contracts with theaters or other venues to provide their services, and who would not be found to be employees of the theater or other venue under traditional common law principles that are utilized to determine employment status in workers compensation proceedings, are subject to the same exemption from the requirement to be covered by workers compensation insurance as any other corporate executive who is the sole owner of the corporation, or one of only two such owners.

Existing law

In 1986, section 2(4) of the WCL was amended to define "employee" as including, for purposes of the WCL: "a professional musician or a person otherwise engaged in the performing arts who performs services as such for a television or radio station or network, a film production, a theatre, hotel, restaurant, night club or similar establishment unless, by written contract, such musician or person is stipulated to be an employee of another employer covered by this chapter."

Justification

Before enactment of the 1986 amendment, the determination whether a performing artist who was engaged, for all other purposes, as an independent contractor, was nevertheless an employee for purposes of workers compensation coverage, was made on a case-by-case basis, with analysis of the common law factors that determine whether a worker is an employee or an independent contractor, including payment of wages, the right to control the details of the work, the right to hire and fire, and others. It was observed, at that time, that venues, in order to escape liability for payroll taxes, unemployment insurance contributions, and workers compensation premiums, were essentially coercing performers to accept employment as independent contractors. When these performers were injured, they were then required to prove their status before the workers compensation board, an arduous and time consuming process that then almost invariably found for the injured performer. The intent of the 1986 amendment, as expressed by the Assembly sponsor, the late Assemblyman Roger J. Robach, was to "add clarity to the law," to "provide an accurate reflection in statute of the practical realities of the marketplace." Assemblyman Robach's supporting memorandum also noted: "Under common law these groups are eligible as employees since they meet the test of being under an employer's direction, supervision, and control. Currently these employees must now litigate

to be awarded their due benefits. Case law has consistently found in the employees favor."

Legislative debate also indicated that the purpose of the amendment was to protect performers who are not in the "star" category, and who are not in a position to protect themselves through negotiation or otherwise.

As the foregoing reflects, the 1986 amendment, as it applied to performing artists (the amendment also changed the statute as it applied to licensed real estate brokers and taxicab operators), was intended to eliminate the necessity for hearings in the case of performers who were, under traditional principles, actually employees, not to change the law as it applied to "star" performers, whose contracts were carefully negotiated, who exercise independence in their artistic performance and interpretation, and who would not, under traditional principles, be considered employees. However, the language of the amendment is read by many as a sweeping pronouncement that performers who are engaged, by written contract, as corporate executive level persons, do not have the same option as other individual corporate owners who engage in service contracts through their corporations to elect to forego workers compensation benefits.

The measure places executive officers of a corporation, who would otherwise be deemed excluded from coverage under section 54(6)(c) or section 54(6)(e) of the WCL, but who happen to be performing artists, on the same footing as any other corporate executive who owns his or her own corporation or limited liability company to work as an employee of his or her own entity, and retain the same right as any other such corporate executive/owner to elect to forego workers compensation benefits, and have the relationship with the venue be determined under traditional common law principles in the event of injury.

The proposal would have no significant impact on the beneficial purpose of the 1986 amendment. The question of employment status would arise only where there was a written contract by which the performer is stipulated to be employee of a corporation owned solely by the performer, or owned by the performer and one other person, in which the performer is an executive officer. The musician hired by a night club or restaurant to entertain during weekend brunch hours, or the semi-professional comedian performing at a comedy club, who has not established a corporation in this or another State, would still be automatically covered by the statute as amended in 1986. A written form contract by which the performer agreed to independent contractor status would not invoke this proposed change, because the change would not be applicable to written contracts directly between the performer and the venue.

Legislative history

New bill.

Fiscal implications

None

Effective date

This act shall take effect immediately and shall apply to all cases, matters or proceedings pending on such date, or which have not been finally adjudicated on such date or commenced on or after such date.