The Employee as "Independent Sub-Contractor"

This hasn't come up in awhile, but I share the e-mail below because it's important to know the difference between "employee" and "independent contractor." And because if you know the rules, you can (hopefully) avoid getting shafted.

Dear Steve,

Maybe you can help a friend of mine with some advice, even though he's never been a union member. He recently finished a short-term job at a small CG house. He was hired as a freelancer with no benefits and no payroll deductions, even though he worked in house. He only animated, and all his work was directly supervised. My first question is, is that legit? ...

Nope. If you're in-house, using the company's equipment, and some bozo there is looking at your work and telling you what to do, then you ain't a freelancer (i.c.). What you are is an employee, and you should have filled out a W-4 and an I-9. And you should have income taxes taken out, Medicare and Social Security taxes taken out, the whole eight-and-a-half yards.

... When they hired him they promised there'd be no overtime, but of course there was lots of OT. Instead of being paid for it, they kept track of his OT as comp time. He racked up a lot of comp time. They let him go before he'd used the comp time ...

You don't say.

But here's the deal. Promising someone no overtime work indicates the employing entity viewed the individual as an ... how do I say this? ... employee.

Otherwise, why raise the issue of overtime?

Generally, overtime is due for hours worked over eight (8) hours in a day (state law) and over forty (40) in a week (federal law). Both laws apply. The employee (and we assume here he's an employee, not an independent contractor -- a.k.a. freelancer) is owed overtime for hours worked.

Then his last check bounced ...

I'm like, totally shocked.

More questions: is it true comp time isn't legal in California? Is it true that the studio owes him time and a half for all those hours? Is it true that they owe him a penalty for not paying it on time?

Whoo. So many inquiries. Here's where I get legalistic and windy (with the assistance of an actual lawyer named Mr. Libicki), so moisten up your eyeballs.

For the most part, compensatory time off in California is rigidly limited and subject to California Labor Code §204.3. An employer may provide comp time under state law if four conditions are met:

1. It must be provided pursuant to a CBA or if the former is not applicable, a written agreement with the employee must be entered into before the performance of the work.

2. The employee has not accrued in excess of 240 hours of compensating time.

3. The employee has requested in writing compensating time in lieu of overtime.

4. The employee must be regularly scheduled to work no less than 40 hours per week.

There are other rules set forth in that section of the Labor Code too numerous to mention just now. On the other hand, federal law bars the payment of compensatory time off as payment for overtime hours for private sector employees.

However, by requiring the employee to take 1 1/2 hours off for each hour worked in excess of 40 within a workweek in the same pay period in which the overtime is worked, the employer can regulate the employee's earning to produce virtually the same total earnings as if the employee has worked only 40 hours in each workweek in the pay period. (Simple, no?)

Failure to pay overtime due may result in the payment of "liquidated" damages under federal but not state law. California law, Labor Code §201.5(b) states that an employee engaged in the production of motion pictures (broadly defined in §201.5(a)(4) and would include those in the animation industry) is entitled to receive payment of the wages earned and unpaid at the time of the termination by the next regular payday. Such wages may be mailed. §201.5(c). Termination includes discharge, layoff, and completion of assignment.

If an employer "willfully" fails to pay in accordance with §201.5, the wages shall continue as a penalty from the due date at the same rate until paid but not to exceed 30 days. You can file a claim with the State Labor Commissioner for wages and penalties.

You can also sue independently, and there are firms out there which will take those kinds of cases, and there are no doubt a few who specialize in these cases.

Is there any recourse for the bounced check?

I've heard that in the entertainment industry, companies have to pay all money owed promptly at layoff, or else they're liable for damages, and that there are law firms that specialize in getting that money. True?

So glad you asked. California Civil Code §1719 covers bad checks. There is a $25 fee for the first bad check and $35 for each subsequent bad check. There is a potential for obtaining three times the amount of the check not to exceed $1,500. You would probably do that in small claims court unless there were a class of people involved.

Last thought. The area of wages is fairly technical and may involve both federal and state laws. And I'm sure not going to hit every little thing here exactly right because I don't know every little detail.

But I've thrown out enough to chew on, yes?