Can screen actors legally be considered private contractors? I thought the IRS rule says private contractors set their own hours and are self-directed. Actors don't set their own hours, and they are directed by a director.
You are largely correct in your understanding of the IRS guidelines: because production companies typically exercise a high degree of control over actors' work (setting hours, location, and providing direction), most screen actors should legally be classified as employees, not private (independent) contractors.
The Deciding Factor: Control
The IRS and state labor departments use the degree of control and independence as the primary factor in determining worker status.
Employees: A worker is generally an employee if the business for whom they perform services can control what will be done and how it will be done. This describes the typical actor-production company relationship: the director dictates schedules, lines, actions, and overall performance, meaning the actor has little control over the details of how the service is performed.
Independent Contractors: An independent contractor typically has more control over their own work, sets their own schedule, provides their own tools/equipment, and has the opportunity for profit or loss in their business. This is not the standard situation for most working actors on a set.
Real-World Practice vs. Legal Standard
Despite the legal standard, it is common practice in some parts of the entertainment industry, particularly in low-budget or non-union projects, to misclassify actors as independent contractors (paid via Form 1099-NEC instead of a W-2). This is often done to save the production company money on payroll taxes and benefits like unemployment insurance and workers' compensation.
However, this misclassification carries significant legal risks for the production company, including fines and penalties for back taxes and liabilities.
Exceptions
There are a few situations where an actor might be legitimately considered a contractor:
Loan-Out Corporations: Highly successful actors often form their own personal service corporations (also called "loan-out" companies). The production company then contracts with the actor's corporation, not the individual actor. In this case, the actor is an employee of their own company.
Unique Circumstances: If an actor brings their own unique equipment, supplies, and intellectual property rights to a short-term, non-integral part of a production, they might be classifiable as a contractor.
Specific Roles: Certain high-level roles, such as writers and directors (who are involved in overall planning and implementation), may sometimes be classified as independent contractors depending on the specific circumstances.
In summary, based on the IRS's control test, most screen actors working for a production are legally employees, even if they are sometimes incorrectly paid as independent contractors in practice.
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