Musician Wins Appeal of Denied Benefits

Ruling Affirms Right to Unemployment Payments

Volume CV, No. 7/8July, 2005

In an important decision for New York musicians, the state’s unemployment insurance review board has upheld musicians’ status as employees, thus maintaining their eligibility for unemployment insurance benefits.

The lengthy ruling by the board reversed an earlier decision denying unemployment benefits to Local 802 member Tom Dempsey alleging, among other things, that he was operating a business because he maintained a personal web site.

But in its written decision the board stated that the web site, which was not used to sell books or CD’s, was not evidence of operating a business as was previously ruled, but instead was “a form of resume or press release to promote himself to outside employers.”

Local 802 President David Lennon hailed the decision and told Allegro, “This ruling once again supports our hard fought position that musicians must be treated as employees and must have access to all of the statutory benefits and protections afforded other workers. We applaud the review board’s decision.”

The original unemployment claim was filed in June 2003 after the musician had completed a yearlong Broadway tour. A little over $8,600 in unemployment benefits was paid through December 2003. (In accordance with the law, the Department of Labor was informed when there were earnings — and benefits were not paid during those periods.)

In early 2004, an unemployment claims officer questioned the musician about a web site Dempsey maintained called Despite an explanation that the web site was a means to make potential employers aware of his skills and accomplishments and to help him obtain employment, it was ruled that the web site was evidence that he was operating a business and thereby ineligible for unemployment benefits.

Based on this, the Commissioner of Labor, in addition to cutting future benefits, sought to recover the $8,600 benefits already paid.

At that point Local 802 got involved. The union recognized that if the decision was not reversed it could have a damaging impact on musicians across New York State.

Recording Vice President Bill Dennison arranged for the musician to be represented at the first appeal level by a representative from the Workers Defense League, a union-supported organization that has specialized in defending unemployment insurance cases.

A hearing before an administrative law judge took place on June 7, 2004. Despite clear testimony that the musician was not operating a business and that was not in any way a corporate entity, the judge ruled that he was operating a business and was therefore not unemployed.

The decision was even more damaging because it went beyond the issue of the web site. The judge also said that Schedule C expense deductions on tax returns, royalty checks and reuse payments were also evidence of an ongoing business.

Following the decision, Dempsey appealed to the New York State Unemployment Insurance Appeal Board. In the appeal process Dempsey personally filed his own brief. He researched labor law cases and discovered previous decisions in other cases that supported his position.

On Oct. 21, 2004 the board found credibility with Dempsey’s position and ordered the case to be remanded for a new hearing.

Dennison contacted the law firm of Meyer, Suozzi, English and Klein, which Local 802 maintains on retainer for specialized labor and employment related cases such as this. At the hearing before the appeal board, Dempsey’s case was presented by attorney Anthony Lumia who, following the oral arguments, presented a lengthy brief in support of the musician and Local 802’s position.

Lumia argued that there was no DBA registered with the state, no income received through Dempsey’s Web site, and no business bank account. He pointed to prior appeal board decisions that had recognized that Schedule C expense deductions were not sufficient evidence of operating a business, nor was receipt of royalty checks.

The ruling by the appeal board was a reversal of the previous decision on all counts. As such, it was an important ruling for musicians across New York.

The one cautionary note, especially for those who maintain web sites, is that the written decision specifically noted that nothing was sold on the web site. It’s unclear how this decision would have come down had the web site been utilized to sell CD’s, books or other products.

The ruling does, however, clearly maintain and reinforce the employee status of musicians, something that Local 802 won in legislation passed by the state in 1987. This legislation specifically lists musicians as employees in the state’s unemployment insurance, workers’ compensation, and labor relations statutes.

For more information about this ruling, or unemployment compensation for musicians, contact Recording Vice President Bill Dennison at (212) 245-4802, ext 111.