Getting Paid

[Guest]

But this problem of producers running out of cash to pay for work or stiffing people who file invoices is not unique to the film industry.

 

I think you'll find this issue in every industry that hires a lot of freelancers.

 

R,

[David Mullen ASC]

There are an awful lot of union productions so clearly either it's not so easy to circumvent them or simply some producers don't mind doing union productions. Also I would think when a multi-million dollar Hollywood production goes to Eastern Europe or South Africa, the key union members that they take with them might still be working under some of union contract, otherwise they and their families could lose their healthcare plan if spending six months out of the country on a big non-union shoot.

[Guest]

Issue for US and Canadian unions is that the quality of crew outside of North America has gone up dramatically in the last 10 years. Now overseas crew are just as good if not better than the North Americans. My South African crew was superior to the Canadian crews in every way, and none of them were in any union. My next two projects are both slated to shoot in South Africa, I would not even consider shooting in Canada again. Not only are the South African crews vastly superior to their Canadian counter parts, but with the currency exchange, fantastic weather, and film rebate.....Canada simply can't compete on any level with a place like South Africa.

 

R,

[Phil Rhodes]

 

 

with most shows that use a payroll company

 

I have never once in my life worked on a production which used a payroll company. In each case, I just invoiced the production company (and yes I have occasionally worked on both big and small stuff)

 

That's a US thing.

 

P

[Guest]

 

I have never once in my life worked on a production which used a payroll company. In each case, I just invoiced the production company (and yes I have occasionally worked on both big and small stuff)

 

That's a US thing.

 

P

 

Interesting, I have always used a payroll company, even shooting in South Africa. Laws say the producer must deduct the payroll taxes, otherwise the producer is on the hook for them.

 

R,

[Phil Rhodes]

That situation is complex in the UK. Certain people sometimes find themselves in a position to convince the tax authorities that they can be treated as self-employed for tax purposes. This is extremely advantageous to the worker and doesn't cost the producer anything, but it does cause the producer to worry that he'll be clobbered by the tax people, so it can be an uphill struggle to get it past both the tax authorities and the producer.

 

Because I was often in a position to be doing unusual things that the tax office had never heard of ("What are an didjital imarging tecknishan?") I always got it, but I suspect modern DITs are very much on the back foot in this regard.

 

P

[David Peterson]

A trick I learned from a wily old gaffer was to state on your invoice that the agreed rate for the job was heavily discounted (even if it wasn't), and that the discount would be removed if the invoice wasn't paid on time. Doesn't help with deadbeat producers, but it has made a few corporate accounts departments pay on time.

 

 

Interesting idea! Especially as I normally am discounting things anyway in a number of cases.

[Jonathan Tinsley]

Thanks for all the input everyone. It is much appreciated. I've taken some notes.

[Paul Maibaum ASC]

Many years ago while still in film school I was hired as the Director of Photography to shoot scenes in L.A. for a feature based out of a foreign country. It was a 2 or 3 day shoot and my assistant camera person warned me not to hand over the exposed film until the L.A. crew was paid in full. Being a trusting person I did not heed his advice assuming the producers were honest and turned in the exposed stock. We were not paid. We went en masse to the local office of the National Labor Relations Board to research what recourse we had in order to force the producers (who lived in L.A. even though the majority of the project had been filmed overseas) to pay the crew. The rep from the NLRB asked us who had notified the crew as to when and where to show up for work as that person was ultimately the responsible party for the payment of the negotiated wage. In this case the person was a crew member hired as the UPM and who also was not paid. The moral of this story is be very careful in giving out crew calls to one's fellow workers.

[Gregory Irwin]

This has been an education for me. In my experience, there has always been a payroll company and we always get paid every week on Thursday for the previous week. It's crazy to have to wait for what you've earned. I couldn't deal with that.

 

G

[Phil Rhodes]

I think in many cases a lot of British crew would be suspicious of the idea of anything called a "payroll company." It may be a thing on the very largest shows, but in my experience, getting paid by anyone other than the actual company that's doing the job is an excuse for chicanery, and I've been at union meetings where this has been an experience common to many people. Often the term used is "invoice handling company" or "scanning bureau," but in general it's indicative of a large company whose middle management has been persuaded to farm out something as simple as sending out payments, and it tends to lead to problems.

 

Clearly this is not the "payroll company" familiar to US film workers.

[David Mullen ASC]

I think it's a great system -- not only does the production have to put in a large deposit to cover payroll in advance, but all your employment payment records exist at the few payroll companies, so getting documentation of past work is a lot easier than tracking down defunct production companies.

 

When I had to prove my 100 days of work in 2003 to get into the union, a single non-union payroll company had handled so many of my indie features that they just had to write a letter to Contract Services telling them my work history. If I didn't have that single letter, I would have had to get dozens of letters from various producers and perhaps Contract Services would have questioned half of them as being legit. But it's hard to argue with a payroll company that can tell the union exactly how many hours I worked under what job classification over what period of time.

 

The only downside is for producers, not crews - there was a scandal ten years ago when it turned out that a big payroll company was taking the large downpayments delivered at the start of some major Hollywood productions and playing the stock market with someone else's cash to make extra money. They went out of business I believe. But otherwise, it's been a pretty stable system over the decades, probably started after the studio era ended and in-house payroll went away because movies started being made as independent productions to avoid liability by the studio.

[David Mullen ASC]

Phil's comment does point out the difference between doing work for a long-standing production entity like a commercial house or a major corporation hiring people to make a commercial compared to working on an independent feature being produced by a temporarily-created production company that will disappear once the movie is completed.

[Guest]

This has been an education for me. In my experience, there has always been a payroll company and we always get paid every week on Thursday for the previous week. It's crazy to have to wait for what you've earned. I couldn't deal with that.

 

G

 

It's the norm for most freelance people Gregory. Plus for crews that do only commercials, it's always the case, if the shoot only lasts 1-2 days then there can't really be a "pay roll company" and payday on Friday. The crew has to submit an invoice and hope it gets paid quickly.

 

R,

[Guest]

not only does the production have to put in a large deposit to cover payroll in advance,

 

Does the payroll company require that or the union? We use EP in Canada and I don't put up a payroll advance, we fund them weekly. The union takes a bond equal to one or two weeks pay, and they hold this until after the last cheques clear for their members then return the bond to the producer.

 

But of course like all things in film.....the producer can get around anything, if, he wants to.

 

R,

[David Mullen ASC]

You may be right about how often payroll is funded in advance.,, but non-Union shows use payroll companies too in the U.S.

[Guest]

A payroll company is most useful from the producers POV because it forces the crew to have all the tax deductions done. In the US and Canada the government requires all payroll taxes from film crews now. If the producer is discovered to have not done the deductions, the government will demand all the taxes to be paid by the producer!

 

Film crew workers who bill on a freelance basis are notorious for hiding and under reporting income. This comes largely as a result of not knowing when the next pay cheque will arrive and the discipline one needs to parse out tax money from each pay cheque and hold it in a separate account and not touch it for living expenses. I know so many US film crew people that have been caught owing thousands in Social Security tax. If you are self employed in the USA the Social Security tax is so high it's off the charts!

 

In Canada actors are not required to have payroll taxes deducted, they are considered "freelance" whereas the crew is not, they are "employees." How the government arrived at this very strange decision is beyond me, but there it is.

 

As a result CDN actors are routinely caught owing huge amounts in back taxes to the government, they spend their entire pay cheque, and have nothing left to pay the taxes with.

 

R,

[Stuart Brereton]

Film crew workers who bill on a freelance basis are notorious for hiding and under reporting income.

 

They are not the only ones avoiding taxes. In the US, film crew are often employed on a '1099' which makes them Independent Contractors. This is, strictly speaking, illegal, but it happens all the time because it allows producers to circumvent minimum wage legislation, and to avoid employer contributions to income tax, and workman's compensation.

[David Mullen ASC]

Most anything made for a mainstream studio or network demands production crew members NOT sign up as independent contractors but as employees, so W2, not 1099.

[Guest]

Yes, but the reason people have taxes deducted at the source in "regular" jobs is because the government primarily does not trust the employee to remit the taxes. The government wants to make sure they get paid before the employee blows the money on something frivolous like food.

 

R,

[Guest]

I do find it amusing when I see all the BS fees being deducted from crew pay cheques to feed their union masters. Oh well, I hope they are getting some value for it. Total amount of my money I have paid to film unions in my career equals $00.00.

 

And when I hear what they charge you guys to join, OMG! What a racket!!

 

R,

[Stuart Brereton]

Most anything made for a mainstream studio or network demands production crew members NOT sign up as independent contractors but as employees, so W2, not 1099.

This is true, because there are substantial fines for employers found breaking the law. The studios and networks don't want that kind of trouble, but in the indie world, there are many producers who are more than willing to take the risk in order to save money.

[Phil Rhodes]

 

 

A payroll company is most useful from the producers POV because it forces the crew to have all the tax deductions done.

 

This is too often the excuse given.

 

I don't know if this is something that happens in the US, but in the UK it's often very clear that "fulfilment"and "invoicing" companies exist more or less as (another) delaying tactic to avoid paying immediately and, yes, to avoid involvement with the worker's tax status.

 

The problem with doing this is that it is extremely disadvantageous to the workers from a tax perspective, and that's the case when said workers are following all the rules to the letter.

 

I would be reasonably comfortable with the assumption that most people who are referred to as producers on feature films are not very familiar with the concept of tax, at least as it applies to them, and this is therefore fairly difficult to stomach especially in a country where most film producers are publicly funded to some extent.

 

P

[Landon D. Parks]

No legit production should be hiring crew members as 1099. This is the arena of tiny indie producers, in which case you're better off just volunteering your time and avoiding the paperwork. I made a video about this earlier. In general, you don't want to 1099 anyone who is not a true contractor. Not only can the 'employee' turn you in at his own choosing at any time, but YOU (the producer) are the one who will suffer from this by being fined and forced to repay the government all due taxes. NEVER give someone something to hold over your head as leverage, which is exactly what any producer employing people as 1099 are doing.

 

Yes, yes, I know.... No one cares and will do it anyway. Well, that won't stop me from spreading the word. Any producing doing 1099's should be prepared to be blackmailed by their employee at any time, and know that that employee can turn you in any time they want - and the government takes such violations very seriously, no matter how much money you (the producer) has.

 

Either hire your crew as a W2 employee and suffer the needed paperwork, or bring them on as 'members' in an LLC - where you can legally avoid paying them upfront since they are part-owners and not employees or contractors.

 

As for Unions, I have no opinion one way or the other. Some are good, some are bad. Some are mandatory, especially here in the US. Want to get any distribution for your film? Chances are you'll need a SAG actor, which means jumping through hoops so large it'd intimidate an Olympic hoop jumper. It's just the nature of the business.

 

As for Payroll companies, I have used them twice on theatre (non-film) related jobs. As a producer, I'd much rather just cut the checks myself and avoid paying the fee of the payroll company. It's really not that hard to establish workers comp policies and such.

Edited September 12, 2016 by Landon D. Parks

[David Mullen ASC]

Phil, I'm not sure why you think payroll companies are a delaying tactic when you usually get your paycheck within four business days.