Relates to the definition of employee

Existing law

In 1986, section 2(4) of the Workers' Compensation Law was amended to define "employee" as including, for purposes of the Workers' Compensation Law: "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 employee's favor."

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. 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. Some performers set up private corporations through which they purchase health, including major medical, insurance, and these policies, which may provide a choice of physicians and other medical care providers superior to the choices afforded under workers compensation insurance, but will decline coverage for medical treatment of any injury that is covered by workers compensation, thus relegating these individuals, who planned for their own choice of medical coverage, to the providers who accept workers compensation insurance, and then compel the worker to establish the need for each treatment to the satisfaction of the Workers Compensation Board, thus complicating the performer's ability to access medical care which could be obtained simply by visiting a provider who accepts their private insurance. If the performer has also chosen to purchase private long-term disability insurance, the performer may receive no added benefit from the lost wage aspect of workers compensation either. In such instances, the amendment has the unintended effect of relegating an individual who planned and paid for their own medical and disability insurance needs to a system which they did not choose, and which may provide benefits which are not only redundant to the benefits he/she purchased privately, but also present administrative and often legal challenges to access medical treatment and a continuous flow of disability benefits. The amendment would also have the beneficial effect of permitting the performer to pursue legal rights which would be precluded by the automatic imposition of workers compensation coverage.

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 restores the same right as any other such corporate executive/owner to elect to forego workers compensation insurance, and, in the event of injury, to maintain their right of action under traditional tort principles, while accessing their own privately purchased medical and long-term disability coverage.

What the proposal would not change: The proposal would have no impact on the beneficial purpose of the 1986 amendment. Every musician or other performing artist would still be automatically covered by the statute as amended in 1986, unless the performer (1) is an executive corporate officer of his/her own corporation, and (2) establishes that he/she is not an employee under traditional common law principles. Thus, no musician or performing artist would lose any of the benefits provided by the 1986 amendment.

Prior legislative history

This is a new bill

Fiscal implications for state and local governments

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; provided, however, that this act shall expire and be deemed repealed 3 years after such effective date.