The Manager’s Corner- October 2013

by Chris Daniels

I’ve managed my own band since the 1980s and despite the amazing changes in technology, success in the music business is built around some tried and true elements: great music & performance, really hard work and timing (often mistaken for luck). The book I wrote for my UCD class on artist management is called “DIY: You’re Not in it Alone” and that is exactly what you need to understand … you have partners out there willing to help…and you should count on them.

I wrote about this a lot last year and I hoped that the work we all did with the Colorado Department of Labor and Employment (CDLE) would have made a difference. I’m sad to report it did not. CDLE is STILL auditing musicians and agents and small sound companies and ruling that those bands and sound companies are EMPLOYERS and not INDEPENDENT CONTRACTORS and it is bordering on harassment!!

This sounds like really dry crap to have to read about but for the men and women out there that are actually scraping by making some or all of their living in the music business this is really important. These rulings are being driven by a group of uninformed and badly trained auditors that have the ability to put me, you and a lot of our compatriots out of business because of their bad training and the vagueness of the law. In short, this can really fuck with your show!

The most recent case is a local sound company that is run by one very beloved member of the music community. He is a patriot. He has been to Afghanistan and Iraq several times doing sound for USO shows entertaining our troops. He works with all the major names here in the business, Hazel Miller, Girls On Top, The City of Longmont – you name it he does it and he is highly respected for the quality of his equipment and the professionalism and art that he brings to the craft of mixing live sound. OK, let me just say it, this guy is a prince and we all love him.

CDLE sent him a request for audit. He provided all the documentation. He mostly works by himself. His son helps him a lot, when he is not working in his own studio or with his band. Every now and again he hires local sound people to help him with a big show or when he has two shows on the same day and has two rigs out covering the two shows – obviously he can’t be in two places at once. All the people who work for him from time to time have signed the “Independent Contractor Agreement” he provided and they all have agreed that they are NOT his employees – that our local hero does not provide training, benefits, a specific place to work (like a McDonalds) and that they are not under his control in any way shape or form. They do not wear uniforms, they are expected to know their way around digital boards and sound systems and their time on the job is dictated by the client our hero is working for NOT by our hero himself. Our hero does not pay them a wage but pays them a flat fee and at the end of the year he sends them a 1099. In other words our hero does everything that is required to run a good small sound company “by the book” with all the proper paperwork and following all the NINE STIPULATIONS set forth in the law (Colorado Revised Statute 8-70-115) that “allow” companies (bands, event companies, venues that hire bands, and yes sound companies) to function as independent contractors.

One year ago I worked with a bunch of people including Mike Marsh, Hazel Miller and COMBO to (a) meet with the Governor (b) meet with the Executive Director of CDLE (c) meet with the music community and representatives from CDLE at an event at the Walnut Room to try and prevent folks like myself (yes I went through this bull-crap too – while I was in the hospital getting chemo!!) and Hazel and Susen and so many others from having to go through this. At the meeting CDLE assured us that they were going to be doing trainings with their auditors to help them understand the differences our various music companies have from McDonalds or Starbucks or Wal-Mart. I’m sad to say that those promises were NOT kept. My friend with the sound company, our hero, will be forced out of business if the ruling against him stands – classifying him as an employer/employee relationship with his son and various engineers he hires from time to time. The same would have been true for me had the ruling against me stood. I appealed and I won, but it cost me $5,000 in legal bills. Our hero is facing the same thing: a long appeal and expensive lawyer – and all to try and keep from being classified in a way that he should NOT be classified by CDLE’s auditors in the first place!

I am really pissed. Our community is doing this right. We pay our taxes. We file 1099s and 1096 forms with the IRS. We have “Independent Contractor Agreements” with the various people who work with us. We do it by the book and these poorly trained and obviously pre-prejudiced auditors at CDLE are threatening to put good people like us out of business. It has got to stop!!

So here is what has to happen. (1) We have to fight for our hero’s case and we are doing that. (2) Further, we need to get a change in the law that stipulates that the independent contractor status is not some kind of “exception” to the automatic assumption that a company (band, events company, sound company) is an employee/employer relationship…it is not some “exception” that should be considered …it needs to be a clear classification that idiot auditors cannot overrule at a whim or when they are too pre-prejudiced to read the documentation properly. (3) That new law needs to state clearly that companies can apply for and be granted a classification as a company organized as a group of independent contractors working together… a band… a sound company owned by one man who hires his son and the occasional sound tech to help out … an events company that “brokers” deals between clients that want entertainment and established bands … a venue that hires different bands every night … that those bands are not employees.

I will keep you informed as to how this case is going. We may, like the old Frankenstein movies from the past, need to get the mob together to storm CDLE with torches and pitchforks. For now we are working with CDLE to resolve this (AGAIN!!).

For those of you who are baffled reading this and wondering what the fuss is…let me give you one clear example. So you start a band or a sound company. You and your buddies (male and female) decide to start performing. And you set up the band as an LLC – calling it – The “What The Hell” band. And you all agree that you are working together in this band because you want to … and that if somebody wants to leave, that’s fine, you will replace him or her with another player. You do lots of gigs and you split the money evenly – or pretty close to it. If one of the members of your band loses his/her job at Safeway and files for unemployment – CDLE must (by Federal law) audit all the places that person worked. So they will audit the “What The Hell Band.” If you lose the audit (which right now it looks like about 99.9% chance you will) it means that you will have to go back and pay thousands of dollars into the workmen’s compensation fund, you will probably lose your tax status as an independent contractor and have to go back and pay withholding to the IRS for all the members of the band and there could be really big penalties and interest for not doing both of those things AND in the future you will have to do monthly filings with the IRS for all the “wages” the band paid to the players. You will also have to pay into the workman’s compensation insurance fund every quarter. The bookkeeping for this is estimated to cost around $200 per player per month or more. THAT IS WHAT WE ARE TALKING ABOUT HERE. So this matters to all of us who make some or all of our living as independent contractors. I play with my band, I sing commercials, I teach, I write articles, and give lectures, I play on other people’s records, I write songs and all of it is part of how I make my living. Like the majority of musicians in the States, we don’t just survive on one band or gig – we are independent contractors – in Colorado CDLE is threatening our financial existence – and truly threatening to put a lot of us out of business. And that is a really dumb ass thing for a government department to do that is supposed to be there FOR the worker. As they said in the movies, “Houston we have a problem!”

Tags: Chris Daniels, cdle, the manager's corner

Category: Shop Talk