Hello, everyone!

Today we will talk about how to properly classify workers for independent film production under New York law. One of the key legal considerations for filmmakers is whether your crew, director, and screenwriters should be classified as employees or independent contractors. While New York does not use California’s AB-5 law or its stringent ABC Test, it relies on the common law of agency to determine worker classification. This makes it essential for filmmakers to carefully structure contracts and production arrangements to avoid misclassification issues.

Common Law of Agency: Worker Classification in New York

Under New York law, worker classification is determined using a multi-factor test based on the common law of agency. Some of the most critical factors include:

1. Control: The extent to which the hiring entity controls how, when, and where the worker performs their job. Greater control typically indicates an employer-employee relationship.
2. Independent Business: Whether the worker operates their own business or provides services to multiple clients. Independent contractors are often self-employed professionals.
3. Nature of Work: Whether the work performed is part of the hiring entity’s core business operations or incidental to it.
4. Tools and Resources: Whether the worker uses their own tools and equipment or relies on those provided by the hiring entity.

These factors are weighed collectively, meaning no single factor is decisive. However, minimizing control over workers and demonstrating their independent business status are key strategies for classifying workers as independent contractors.

Project-Specific LLC: A Valuable Tool

For filmmakers, forming a project-specific LLC can help strengthen the case for hiring crew, directors, and screenwriters as independent contractors. A project-specific LLC is created solely for producing a single film and is dissolved after the project is completed. This structure can align with New York’s common law principles and bolster the argument that workers are not employees.

How a Project-Specific LLC Supports Independent Contractor Status

1. Temporary Nature of the LLC
   A project-specific LLC exists only for the duration of the film’s production. Workers are hired for a limited, one-time project rather than an ongoing business operation. This helps distinguish their roles from those of traditional employees engaged in regular, indefinite work.
2. Independent Work Patterns
   Many film professionals, such as directors and screenwriters, already work as independent contractors for multiple productions. By engaging them through a project-specific LLC, you reinforce their status as independent professionals rather than employees tied to a single employer.
3. Creative Autonomy
   A project-specific LLC allows for contracts that grant workers significant autonomy in how they perform their work. For instance, directors and writers can retain creative control over their processes, which supports their classification as independent contractors.
4. Minimized Control
   The LLC can limit its control over how and when tasks are completed, focusing instead on the results. For example, setting deadlines but not dictating the exact hours or methods of work aligns with independent contractor standards.
5. Use of Own Tools and Resources
   Independent contractors typically use their own tools, equipment, or resources. For film productions, this can mean requiring workers to provide their own cameras, editing software, or other specialized tools.

Why Worker Classification Matters

Misclassifying workers as independent contractors can result in significant legal and financial consequences, including liability for unpaid wages, overtime, and payroll taxes. However, by properly structuring your LLC and adhering to the principles of the common law test, you can reduce the risk of misclassification while maintaining flexibility in your production.

Key Considerations for Film Productions in New York

• Draft Clear Contracts: Clearly state in contracts that workers have control over how they perform their tasks and that the LLC does not dictate specific methods.
• Define the Relationship: Specify in contracts that the relationship is project-based and does not constitute an employer-employee arrangement.
• Use Professionals with Independent Businesses: Whenever possible, hire workers who have their own LLCs, sole proprietorships, or other business structures.
• Avoid Providing Extensive Resources: Let workers use their own tools and equipment, reducing reliance on company-provided resources.
• Maintain Project-Specific Focus: Keep the LLC’s operations limited to the production of a single film to avoid the appearance of an ongoing business relationship.

What About Choice of Law Provisions?

Filmmakers may consider including a choice of law provision in contracts, specifying that New York law governs the agreement. While this is valid for productions filmed entirely in New York, it’s crucial to ensure the actual work environment aligns with New York’s classification standards. If part of the work is performed in other states, such as California, their labor laws might still apply.

Conclusion

New York’s worker classification rules provide more flexibility than California’s AB-5 law, but they still require careful planning. By forming a project-specific LLC and ensuring your production adheres to the common law of agency, you can strengthen your argument that workers are independent contractors. Properly structured contracts, limited control, and hiring professionals who operate as independent businesses are all essential components of this strategy.

For filmmakers, understanding and complying with New York labor laws is critical to avoiding costly disputes and ensuring smooth production.

Ernest Goodman is a New York licensed lawyer who focuses on entertainment law and intellectual property. He can help you navigate worker classification issues and draft the necessary agreements for your film production. Contact him today to ensure your production is legally sound and set up for success.