Common misconception about how event professionals are classified by the IRS
We're often asked the difference between employee and freelance stagehands. It's interesting how many stagehand and show crew operators don't understand the basic differences between classifications before taking on a job(s) that impact how they may be classified. Frankly, there can be a number of subtle benefits and challenges associated with every classification. We've listed and detailed some of the basics below, and we welcome your thoughts and opinions.
We've narrowed down the broad range of classification to 3 basic categories:
1. Union Member, Temporary Employees
2. Non-Union, Regular Employees
3. Freelance Independent Contractors
There are a number of subgroups under these three categories, such as Permalancers, Contract Employees, Seasonal Employees, Part-Time, Full-Time, etc. Of course there are variations and exceptions, but for the most part, they all fall into these three basic categories and the pros & cons are the most common for that group.
Union Member, Temporary Employees
Union Stagehands are often grouped into Card Holders and Permit Workers or Over-Hires. They are not necessarily considered employees of the union, but more accurately, they are temporary employees of a production house, theater, payroll agency or other such company authorized to hire them under the union's Collective Bargaining Agreement.
IRS Form to Report Income: W2
Income Taxes Withheld: Yes
Work Expense Deductions: No (some exceptions)
Home & Auto Deductions: No
IRS Schedule C: No
Payroll Liability: Strict
Payroll Tax: Paid Employer
Health Benefits: Paid by Employer
Retirement Benefits: Paid by Employer
Legal Liability: Worker is Indemnified
Liability Insurance: Paid by Employee
Workers Comp Insurance: Paid by Employee, Mandatory
Calendar/Time Management: Employer (Union)
Process/Job Assignment: Employer
Right of Refusal: Employer
Non-Union, Regular Employees
These are full-time or part-time, regular or season employees hired by production companies, gear houses, scenic shops, theaters, stadiums and other live event venues where you'd find stagehands on regular staff.
IRS Form to Report Income: W2
Income Taxes Withheld: Yes
Work Expense Deductions: Few (see IRS regulations)
Home & Auto Deductions: No
IRS Schedule C: No
Payroll Liability: Strict
Payroll Tax: Paid Employer
Health Benefits: Paid by Employer
Retirement Benefits: Paid by Employer
Legal Liability: Worker is Indemnified
Liability Insurance: Paid by Employee
Workers Comp Insurance: Paid by Employee, Mandatory
Calendar/Time Management: Employer
Process/Job Assignment: Employer
Right of Refusal: Employer
Freelance Independent Contractors
Freelancers can most accurately be described as small business owners/operators. They are small, one-person shops that solicit, perform, and close out each job. Being a small business comes with a number of responsibilities, but also has its benefits. Among the most important benefits, besides tax and income flexibility, is the right to refuse or accept jobs and to control your own calendar.
IRS Form to Report Income: 1099
Income Taxes Withheld: No
Work Expense Deductions: Yes (see IRS regulations)
Home & Auto Deductions: No
IRS Schedule C: Yes
Payroll Liability: Strict
Payroll Tax: Paid by Worker
Health Benefits: Paid by Worker
Retirement Benefits: Paid by Worker
Legal Liability: Worker
Liability Insurance: Paid by Worker
Workers Comp Insurance: Paid by Worker, Not Mandatory for Sole-Proprietors
Calendar/Time Management: Worker
Process/Job Assignment: Worker
Right of Refusal: Worker