What every band leader should know…
So here’s the final post on what every band leader needs to know to avoid a major hassle with the Colorado Department of Labor…
First, realize that the DOL is just doing their job. One of their objectives is to make sure that every person is covered with unemployment insurance and worker’s comp whenever feasible. In a perfect world this would be so, and sometimes it even makes sense for certain types of musicians (orchestra, symphony, full-time live performers, etc.).
But for the average part-time professional musician, a musician that gets paid for their work somewhat sporadically and possibly even seasonally, the notion of filing unemployment doesn’t make sense. A musician may also work with one band leader one day and another the next. Do they collect unemployment between gigs? Not realistically.
However, if your band is making money, even just part-time income, here is a minimal checklist of items you should have in place to CYA:
- Upon forming your band, or when you start making money, speak with your band mates about an independent contractor relationship and make sure everyone is in agreement to this arrangement.
- Next, create Independent Contractor Agreements that clearly satisfy all of the articles we’ve been visiting in the past few posts. These should be notarized and ideally crafted by a lawyer (this blog is no substitute for legal advice!).
- Make sure you pay each band member as a distinct business entity. LLC’s or S Corps are ideal, but at the very least, try to avoid paying people personally – they can easily get a dba (doing business as) with distinct business name.
- Make sure that every procedure you carry out in preparation for live performance and every live performance matches the spirit of the IC agreements.
All of the above will help, but it still will not guarantee that you are free and clear of trouble. If you want to make extra-sure that you are “Independent Contractor compliant,” consider these additional measures:
- Have each band member sign a document stating that they waive their right to unemployment benefits.
- Have each band member sign a document stating that they waive their right to worker’s comp AND that they agree to carry worker’s comp of their own and are not reliant on the band leader (you) for this coverage.
- Have each band member sign a secondary document (apart from the IC agreement) that states they are willing and ably accepting this relationship, and have it notarized. It may seem redundant, but it may help you avoid substantial fines and back penalties to show the DOL that everyone FULLY understood the working arrangement.
And one last piece of insurance – consider making your sidemen employees if you are making enough money to afford to do this. In most situations this won’t be feasible, but if you’re making real dough (above poverty level) this would be a way to gain musician loyalty and extend some benfits for everyone. What if your sidemen could actually claim unemployment in the lulls between gigs? It might not be long before the DOL would want to make them IC’s…
Can’t afford it? Ask yourself if you can afford the fines and retroactive penalties that the state can hit you with if IC’s are reclassified as employees anyways. How much does it really cost to farm out the payroll chores? It’s not feasible for part-time professionals, but if you’re really going for a full-blown, live music career, creating employees might just be the impetus to playing more and pushing yourself towards that brass ring.
And if not, make sure you at least consider all of the CYA suggestions above. If you get in a real bind, please send me an email and we’ll connect you with legal assistance, other musicians that have gone through the DOL gauntlet, and also offer help petitioning the DOL for future leniency for musicians. Good luck out there!