Landmark court case says musicians are employees.
This spring, the U.S. Court of Appeals ruled that the musicians of the Lancaster Symphony were not independent contractors as the orchestra’s management asserted, but employees with the right to unionize. The musicians’ legal struggle took over eight years, but they eventually prevailed.
It is odd that you can work for one orchestra, have three rehearsals and a performance of Beethoven Five, and be considered an employee, and yet you could do the exact same thing for another orchestra and be considered an independent contractor. It doesn’t matter if an orchestra is full-time or per service, the work is the same.
Unfortunately, the IRS does not give a precise definition of what makes someone an independent contractor, but rather a list of characteristics to apply to each particular case. An employer, here orchestra management, will always prefer to have independent contractors for reasons I’ll explain below. The main argument that orchestras have for independent contractor status is that musicians provide their own instruments. But, the IRS says the key determinant is this:
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
I cannot imagine any conductor in the world who does not believe that their job is to control “what will be done and how it will be done.” Musicians are told what to do, when, what to wear, and how to act. You are not an independent contractor. If an employer really had any doubt as to a musicians’ status, they could file Form SS-8: Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The IRS will review the facts in the case and make a determination. Since employers are not required to submit this form, most simply make a determination on their own.
There are a couple of important differences between being an independent contractor versus an employee.
- Independent contractors receive a 1099, employees receive a W-2 at the end of the year. If you receive a 1099, you report your income and expenses on Schedule C; W-2 employees deduct unreimbursed expenses as an itemized deduction on Schedule A.
- Independent contractors pay Self-Employment Tax, which basically means that they pay both halves of the Social Security and Medicare payroll taxes. If you are an employee, your employer pays one-half of the tax (7.65%), and you pay the other half. Even a per service orchestra likely has several hundred thousand dollars in payroll each year, so 7.65% is a significant expense.
- Employees have a right to unionize.
- Musicians who are employees might have a right to unemployment and worker’s comp benefits, depending on their state. Employers pay unemployment taxes if they have employees, but not for independent contractors.
As a musician, you are better off being an employee, a fact which caused the Lancaster Symphony management to spend eight years trying to overturn the decision of the National Labor Relations Board that determined that the musicians were in fact employees.
I play in a per service orchestra where musicians are considered independent contractors. I wanted to find out what this ruling meant to musicians who are independent contractors, so I contacted Harvey Mars, Esq., who is the counsel for AFM Local 802 in New York, and an expert in employment law for professional musicians. Mr. Mars recently wrote about the Lancaster ruling here.
FFM: Is the Lancaster Symphony ruling grounds to compel other per service orchestras to classify musicians as employees rather than independent contractors?
Mars: Yes, the ruling does establish a precedent and will be considered persuasive authority.
FFM: Do you foresee orchestras making this change voluntarily, or would the players or union need to pursue this on a case by case basis?
Mars: I believe this ruling may change some, but not all employer practices.
FFM: What are the benefits for musicians to be employees rather than independent contractors? (Ability to unionize, unemployment benefits, employment taxes?)
Mars: In addition to what you have, take advantage of statutes that only benefit employees, such as civil rights statutes. In New York we have City Laws that only apply to employees covering paid leave time.
The reality is that most orchestra musicians have always been closer to the definition of employee than independent contractor, but no one had ever challenged that status in court. Now we have a legal precedent to be considered employees, thanks to the Lancaster Symphony ruling. Similar per service orchestras should take note!