If You Don’t See Taxes Withheld — Watch Out!

Volume CV, No. 10October, 2005

Over the summer, a few record companies have submitted payrolls without taking deductions from musicians — in other words paying them “net.” This means that such companies will need to issue 1099’s to each musician at the end of the year. Every musician paid this way loses 8.5 percent of their total pay.

Instead of the employer remitting its portion of Social Security and Medicare, this is now thrown onto the backs of musicians, who must now pay this when they are paying their annual taxes.

Employers who pay this way save 8.5 percent of their payroll costs and musicians lose that amount from whatever scale wages they are paid.

In addition, musicians receive no benefits for unemployment compensation, workers compensation and disability. These are normally paid by employers who have payroll over a minimum size.

If your work took place in New York State and taxes weren’t withheld, your employer is also in violation of state law, which requires that musicians be paid as employees. The employer may be subject to substantial penalities.

Since no taxes are taken out, this puts an added burden on musicians of making quarterly estimated tax payments to avoid having a huge tax amount at the end of the year.

(If these estimated payments are not made, musicians can face a penalty for the nonpayment of taxes on income that they have received!)

Local 802 is asking that contractors who prepare budgets for such sound recording companies (i.e. those that do not use a reputable paymaster) add a line in the budget equal to 16 percent of the total scale. This amount is generally viewed as the employer payroll cost in the New York City area.

We need to inform record producers and these labels up front that our collective bargaining agreements are based on the premise that there is an employer and an employee. As employees, musicians must have deductions taken out and employers must pay their fair share.

For more information contact Jay Schaffner, supervisor of 802’s Recording Department, at (212) 245-4802, ext. 161.