By: Denise Gilmartin, VP, Business Affairs, AICP
While reviewing back issues of AICP’s newsletter, Spotted, I noticed that some topics are truly evergreen.
In the September 2011 edition of Spotted, AICP published the article “Is Your Director Flying Without a Net?” As rosters change and insurance policies are renewed, it is always a good time to have conversations about workers’ compensation coverage with artists you hire through loan-out companies.
Below is an updated version of the original article:
Is your director covered for a work-related injury they may sustain while working on a project produced by your company? If the director is providing services through a loan-out company and does not maintain a workers’ compensation policy for that company, the answer may be no.
All businesses in the United States that have employees are required to provide workers’ compensation coverage for their employees. However, in some states, such as California, there is an exception for the sole owner of a corporation or LLC when that owner is also the only employee (for example, a loan-out company). In this instance, the director is not required to purchase a workers’ compensation policy and may decide it is an unnecessary expense. However, while the director may have medical coverage through the DGA health plan, that plan may exclude costs for injuries sustained while working, which could leave the director without any coverage at all.
Since most production companies utilize an industry payroll service that provides workers’ compensation benefits for a fee, this may be a solution for a director who is providing services through a loan-out company. The production company would submit a loan-out company timecard to the payroll company for the director’s services, and the payroll company would then charge the production company a percentage of the director’s fee. However, since most directors’ fees for commercial projects are based on shoot days, the director may not be covered through the payroll service’s workers’ compensation policy for the entire period they are working on your job, such as days attending pre-pro meetings and tech scouts, unless the work is being performed under a written contract in which remuneration is based on the entire scope of work.
The most comprehensive way to provide coverage is for the loan-out company to maintain a workers’ compensation policy for the director. In this instance, the director would be covered while working for your production company and would also be protected when working for other companies in other media and/or on the director’s own projects.
In all cases, the production company should protect itself from claims by either requiring the director to provide evidence of the loan-out company’s workers’ compensation policy or by submitting a loan-out timecard to the payroll company for the entire project for which the director’s services were retained.
If you have any questions regarding this article or any other business affairs issue, please contact me at deniseg@aicp.com.
This information is designed as a service to AICP Members and is intended only to provide general information on the subject covered and not as a comprehensive or exhaustive treatment of that subject, legal advice, or a legal opinion. Members are advised to consult with legal counsel and other professionals with respect to the application of the subject covered to any specific production or other factual situation. Use by a company of any of the options and provisions discussed herein are matters of individual company decision in accordance with its own business needs and nothing contained herein is intended to suggest agreement among AICP members or the adoption by the AICP of a uniform position concerning the content of this article.