Word from the westside of town is artists working at The Mill in Santa Monica are paying their share of taxes .. as well as the employers.
The Mill has engaged Yurcor to act as the Employer of Record for the artists they employ. Officially, artists work for Yurcor and are "loaned out" to The Mill. Yurcor is therefore responsible for the reimbursement to the artists for their work time at The Mill.
The Mill explains this has allowed them to:
"meet compliance requirements and improve administrative support to [their] valued freelancers.
By using Yurcor’s services you gain W-2 status and many of the benefits and services of a full time position while keeping all the career freedom and tax savings of a 1099 freelancer."
A full-time employee keeping the "freedom" of a freelance employee sound to good to be true? It should. Its also illegal.
To give that feeling of freedom, Yurcor not only withholds the traditional payroll taxes employees are responsible to pay (Fed Income, FICA, CA Income and SDI). They also withhold the employer portions of FICA, FUTA, California state unemployment insurance (UI), and the employer workers compensation insurance.
Documents we've received show Yurcor sells this as a benefit to the artist:
Employer of Record (EOR): “Employer of Record” is the best of both worlds; you establish your rates, you determine your work schedule, you can move from client to client, you can submit pre tax business expenses to offset your gross billings in arriving at your gross payroll, and you have access to health & retirement plans!
Similar to a 1099 scenario, you are responsible for both the employer and employee portions of the payroll taxes. Employer taxes are deducted pre tax as an administrative fee against your gross billings, employee taxes are deducted through payroll, and business expenses are reimbursed to you pre tax with your payroll direct deposit!
After contacting the Employment Development Department, the California Labor Commissioner, the IRS, and our attorney, we disagree with their assessment of the situation. Based on those conversations, we believe this is illegal and there are avenues available for the artists to recover the wages that were taken as a result of this practice.
If you have worked at or are currently working at The Mill in Santa Monica, we are interested in speaking with you. Contact Steve Kaplan at the Guild at (818) 845-7500 or email@example.com.
With your help, we can help stop this egregious infringement on labor and tax law while working to get your rightful wages returned to you.