Word from the westside of town is artists working at The Mill in Santa Monica are paying their share of taxes .. as well as the employers.
The Mill has engaged Yurcor to act as the Employer of Record for the artists they employ. Officially, artists work for Yurcor and are “loaned out” to The Mill. Yurcor is therefore responsible for the reimbursement to the artists for their work time at The Mill.
The Mill explains this has allowed them to:
“meet compliance requirements and improve administrative support to [their] valued freelancers.
By using Yurcor’s services you gain W-2 status and many of the benefits and services of a full time position while keeping all the career freedom and tax savings of a 1099 freelancer.”
A full-time employee keeping the “freedom” of a freelance employee sound to good to be true? It should. Its also illegal.
To give that feeling of freedom, Yurcor not only withholds the traditional payroll taxes employees are responsible to pay (Fed Income, FICA, CA Income and SDI). They also withhold the employer portions of FICA, FUTA, California state unemployment insurance (UI), and the employer workers compensation insurance.
Documents we’ve received show Yurcor sells this as a benefit to the artist:
Employer of Record (EOR): “Employer of Record” is the best of both worlds; you establish your rates, you determine your work schedule, you can move from client to client, you can submit pre tax business expenses to offset your gross billings in arriving at your gross payroll, and you have access to health & retirement plans!
Similar to a 1099 scenario, you are responsible for both the employer and employee portions of the payroll taxes. Employer taxes are deducted pre tax as an administrative fee against your gross billings, employee taxes are deducted through payroll, and business expenses are reimbursed to you pre tax with your payroll direct deposit!
After contacting the Employment Development Department, the California Labor Commissioner, the IRS, and our attorney, we disagree with their assessment of the situation. Based on those conversations, we believe this is illegal and there are avenues available for the artists to recover the wages that were taken as a result of this practice.
If you have worked at or are currently working at The Mill in Santa Monica, we are interested in speaking with you. Contact Steve Kaplan at the Guild at (818) 845-7500 or skaplan@animationguild.org.
With your help, we can help stop this egregious infringement on labor and tax law while working to get your rightful wages returned to you.
Oct 27, 2011 @ 19:58:52
This ALSO happened a few years ago at Digital Kitchen in NYC. It was when they brought in 50+ freelancers for one major job. There was an uproar about it amongst freelancers, but they insisted all freelancers use Yurcor for payroll and then in our first paycheck we found out, hey, we’re paying employer taxes! Odd, right? Well there was never anything done about it… Other than a lot of being told if we didnt want to work there, we didnt have to.
Yurcor explained it as a loophole in the law and we were told it was completely legal and assured that “in the end” we would be paying exactly the same amount… Basically there was nothing we could do about it.
Oct 28, 2011 @ 04:24:07
We’ve gotten a lot of reports of this being rampant in New York City. We are looking at ways to bring a class action suit against Yurcor for this egregious behavior.
In my research, I have yet to find an instance where state labor code allows for the employee to fund employer-responsible taxes. A quick perusal of the New York State Department of Labor website revealed a Wage Deduction FAQ pdf. Nowhere in that document did it say it was allowed either.
I’d bet that when I call the NY State DOL (once I get into the office), they would be equally as shocked as the CA State EDD was when I describe what Yurcor is doing. It’s nothing more than illegal and another avenue to rip off artists in the persuit of profit. Period.
Oct 29, 2011 @ 09:37:59
Forgive me for being naive, but what would I file this under with the NY Dept. of Labor?
Nov 01, 2011 @ 10:29:50
I was also on the Regally named DK job and had a problem with Yurcor. My accountant finally took them to task after the job was done and after threatening them with litigation, was able to get them to refund us some of the expenses. However, two months later I was at another company that was using Yurcor and they went back to skimming my pay. I was able to get the client to raise my rate to compensate however, which may be your best option, as they have their own issues they are trying to solve by using Yurcor.
Oct 28, 2011 @ 08:25:07
I was also at DK in NYC for that job. It was outrageous! Luckily I was only there a week, but I know some people were there for the entire duration of that job.
Oct 28, 2011 @ 08:22:05
You might also want to take a look at MBO. A lot of studios (at least in NYC) were doing the exact same thing through MBO instead of Yurcor but I think now MBO decided to bow out of the freelancer pool.
Oct 28, 2011 @ 09:09:58
Indeed they did. For this very reason, as a matter of fact. It became too much to deal with and they had their fingers in other areas of business.
We hope to do the same with Yurcor.
Nov 12, 2012 @ 22:34:34
I have recently run into this same situation with MBO working for Levi’s. They gave me a job offer at $50/hr, and only later did I realize I am only making $44/hr because I am being charged employer payroll taxes as well as employee payroll taxes.
Oct 28, 2011 @ 08:23:27
If you’re an LLC or an S-Corp (and I know that the definitions of each differ from state to state) isn’t it expected of you to be responsible for employer taxes? How can the Mill, or any studio, force you into a Yurcor arrangement if you’re already handling your own payroll or are already paying self-employment tax anyway?
Oct 28, 2011 @ 09:12:00
They can’t. If you demand to be “loaned-out” to Yurcor through your S-Corp or LLC, they will do so. However, they will then withhold your pay for 30 days after you submit your invoice to them. Legally, I believe there is precedent for this. But really, they don’t have to do so. They probably just enjoy doing it to spite you.
Oct 28, 2011 @ 09:03:58
We need to get Marvin Zindler on this…
Oct 28, 2011 @ 09:17:45
Had to look up Marvin Zindler. The popular investigative reporter out here back in the day was David Horowitz.
The other option to you, would be to sign a Representation Card and form a union at your workplace.
Oct 28, 2011 @ 11:40:15
Maaaaaaaaaaarvin Zindler.. EYE WITNESS NEWS
Oct 28, 2011 @ 11:58:19
Zindler would probably do this… but I think he’s retired.
Oct 28, 2011 @ 09:30:55
I know Psyop NY used MBO as recently as a year ago. I don’t know who they use now or if they got rid of this policy entirely.
Really glad someone is debunking this practice for the good of the freelancer community. I was never booked by a studio that used this but it always sounded extremely suspicious to me.
Oct 28, 2011 @ 09:56:48
There were a few houses around here that used MBO .. that eventually had to go legit since there was such an uproar. I’d love to hear if MBO is still at it. From what I understand though, they weren’t withholding employer taxes as part of their employment practice.
Oct 28, 2011 @ 12:26:56
MBO absolutely did the same thing witholding employer payroll taxes. I pursued it for a while until they basically just stopped responding, because they have no legit answers.
The loophole is that they take advantage of the fact that there’s no communication between all 3 parties (you, MBO, studio) about what your day rate actually is.
You tell the studio your day rate is X, studio agrees, then MBO “assumes” you negotiated a rate of X the employer payroll taxes, and they take it from you. This is the explanation I got from MBO. They take advantage of the lack of communication.
No matter how you look at it, they’re wrong. The artist is still paying their own employer payroll taxes regardless of what rate was negotiated with the studio, making it complete BS.
Oct 28, 2011 @ 12:44:14
Sorry, that was meant to read:
You tell the studio your day rate is X, studio agrees, then MBO “assumes” you negotiated a rate of X, PLUS the employer payroll taxes, and they take it from you.
Oct 28, 2011 @ 10:03:00
DK in Culver City uses it also
Oct 28, 2011 @ 10:11:59
I’d be glad to hear from folks at Digital Kitchen in CC.
Oct 28, 2011 @ 10:17:41
Has anyone worked through Entertainment Services? I think this is the same situation, and I’ve been paid this way for a long time. What can I do?
I was also on the DK job, and until recently, I didn’t know there was anything wrong with this. Most of my long term jobs have been handled like this, with me paying employer taxes. Wh
Oct 28, 2011 @ 10:25:32
Anon … contact me through email and let’s talk. skaplan@animationguild.org
Oct 28, 2011 @ 10:21:52
I was at digital kitchen NY when they first started using YURCOR… I remember calling to complain but I was given the same answer as everyone else… take it or leave it… how can we get the money that’s owed to us?
Oct 28, 2011 @ 10:27:29
Any and all of you can contact the NY State Labor Commissioner or Department of Labor and file complaints against DK, Mill and Yurcor. Be ready to provide documentation as to how long you were working for them and how much in employer-responsible taxes were withheld from your paychecks.
If you do, let me know as we’re interested in pursuing this matter ourselves through a class-action suit.
Oct 28, 2011 @ 11:09:39
This same scenario happened to me with MBO Partners (http://www.mbopartners.com/ .)
It feels very abusive and unfair to freelance artists who are on their own to begin with.
Oct 28, 2011 @ 11:23:05
Couldn’t agree with you more. When did you work “for” MBO? Its my understanding they’re out of the visual effects representation business.
Oct 29, 2011 @ 14:00:15
MBO still represents me at Psyop NY, but I think new freelance hires are being put on payroll. I’m going to have a talk with them about it the next time I’m booked there.
Oct 30, 2011 @ 21:03:41
You’ve got my email. Let me know how that conversation goes. Also, I’d like to see how MBO withholds taxes from your pay. Could you send me a copy of your last payroll report?
Oct 28, 2011 @ 14:06:57
Framestore NY also uses Yurcor.
I was really confused when I got my paycheck to see pretty much 40-50 odd% taken off from the pay. When I contacted them, they said that it’s under their FAQ.
Oct 28, 2011 @ 14:11:33
Yurcor’s FAQ? I’d love to see it. Can you post the link here?
Oct 28, 2011 @ 14:17:51
I’ve worked at places that use employer of record services for years… [Psyop, the Mill, DK] …and I’ve had a corporation the same amount of time. Psyop let me avoid MBO altogether and just get paid directly through my corporation, DK let me avoid Yurcor…
BUT the Mill made me invoice through Yurcor which meant I had to give them a 3% chunk of my pay just for the privilege of getting a paycheck.
Worst of all, Yurcor demands that you get worker’s comp insurance even though no one else requires it… [you're not about to sue yourself!]
…which ends up running an extra $800 a year, give or take.
When I tried to explain that I carry liability insurance but not workers comp, a nasty woman at Yurcor yelled at me and then called the Mill and almost got me kicked off my job.
Why a third party bottom feeder at a leech of a company has the power to do that is beyond me…
Oct 28, 2011 @ 14:21:26
DK and Motion Theory / Mirada does this too. Lame!
Oct 29, 2011 @ 09:27:43
Are you sure MTh does this? I know they go through a 3rd party but I wasn’t aware they take out employer taxes.
Oct 29, 2011 @ 21:54:34
I thought MT/Mirada moved away from MBO last year?
Oct 28, 2011 @ 14:32:11
I just completed a MAJOR battle with the Mill in NYC demanding that they NOT take those wages from my invoice. As an S-Corp, I already pay workman’s comp, disability and unemployment insurance. This is totally their problem, not mine. While I won the war regarding future jobs, I lost the battle to recoup lost wages for previous jobs (before I noticed this). I figure they owe my company at least 1K, but I’d like to continue working with them, so I did not press too hard. I realize that the government was cracking down on Post companies and questioning the term “Freelancer” when it came to hiring artists who work on site. This is all a result of them covering their butts and figuring out a way to off load some of the cost of doing business to the artists to boot. It’s absolutely OUTRAGEOUS.
Oct 28, 2011 @ 14:49:27
hey skaplan839, I did the same research as you did, and ran up against a wall when the California EDD found out Yurcor was based in Florida. There was some sort of jurisdictional problem there, and I would bet 13% of my paycheck that the only state they don’t pull this scam in is Florida. Is there a way to get around that? Everyone I talked to, both in the IRS and the EDD were incredulous and could not believe these companies were doing this. Yet, it is the State Labor Boards that handle these violations, and they can’t seem to bring charges across state lines…
Oct 28, 2011 @ 15:27:39
Mouse,
Our lawyer was concerned about this as well. I believe he’s found a way to get them in each state since they’d have to be licensed in the state to practice business in order to pull of the scam. If not, there are ways of filing a law suit that can reach the great state of Florida.
When I spoke to EDD, the person was aghast with what I described and was more than helpful in describing how the Labor Commissioner and EDD should be informed of the situation.
I encountered the same problem with the IRS as you did. However, when faced with a court litigation, the IRS won’t have to be present since the tax laws are on the books and say what Yurcor is doing is illegal.
Oct 28, 2011 @ 14:52:57
I hear Superfad uses Yurcor too
Oct 28, 2011 @ 15:29:17
Feel free to contact me with details. If you’re interested in getting your money back, we’re interested in helping you.
Oct 28, 2011 @ 15:53:30
yeah, they absolutely do. they were my biggest client for a while, after they made the switch i ended up incorporating instead of dealing with yurcor. kind of pisses me off that studios would buy into this scam.
Oct 28, 2011 @ 17:54:59
I am yet another person who was on the DK job 2 years ago. I had my own LLC but wasn’t allowed to use it; had to use Yurcor.
Oct 28, 2011 @ 19:35:35
Psyop NY has dropped MBO, I was there recently and although their vendor rules are incredibly strict (general liability ins., w2 payroll) they will put freelancers on regular W2 status. I was at Superfad for a month last year, I actually purchased workers comp ins. so I could bill through my corporation because I calculated that it was better to pay a YEAR of workers comp insurance than get ripped off by MBO….at least I can write that off.
EOR’s like yurcor are bullsh1t, and fortunately it seems like a lot of studios are moving on from them since artists hate them so much.
Oct 28, 2011 @ 20:31:58
i hear
Oct 28, 2011 @ 20:46:24
I was freelancing at Shilo – NY last year and they also were using Yurcor at that time. It was very strange that I had to pay this employer tax and I really had no other option but to pay it. The fee was automatically deducted from my cheque and the people working at Yucor couldn’t give me a good explanation on why I had to pay this fee. This is a crime and shameful fraud that needs to be investigated by the IRS. I’ve been freelancing over a decade and this incident was a real an eye opener to start looking into Incorporating a business to avoid this Crap.
Oct 29, 2011 @ 03:07:20
Guys, listen, now is the time to stand up and have some courage like our forefathers did 230 years ago. Tell them to take a fucking hike! When they are forced to hire illegal immigrants because they are the only ones willing to work maybe they will reconsider what value you do present and finally decide to operate in a manner that satisfies everyone. Thank you and god bless the United States of America.
Oct 29, 2011 @ 08:42:14
VFX Soldier wrote in his post on the subject something everyone should remember:
That’s exactly what we’re looking to bring to Yurcor, and any other EOR that has illegally withheld wages from visual effects artists. Big Legal Trouble
Oct 29, 2011 @ 08:47:34
So, I’m certainly feeling like an idiot here, but would the issue be resolved on an individual basis by switching to an LLC? What are the disadvantages to that, beyond paying one’s own workers’ comp and being reimbursed Net-30?
Is forming an LLC or being hired as one a real headache? Any suggestions on how to get more info on this? (I’ve Googled it many times, but the services to help set them up never know anything about freelance artists).
Oct 29, 2011 @ 10:22:00
Unfortunately many studios have onerous requirements for llc’s/ s-corps etc. such as requiring workers comp or gen. liability insurance & or w2 payroll, or all 3, none of which is required by law.
Oct 29, 2011 @ 18:33:55
Setting up an LLC or S Corp is not difficult and totally worth it.
Oct 30, 2011 @ 07:05:25
There is little expense or effort in setting up an S-Corp or LLC. A few forms to file with a small fee and … VIOLA! You run a company.
There are certainly things you’ll want to be aware of before practicing business this way. The proper procedure for Loan Out as well as filing business taxes come to mind.
Also, this does not trump the misclassification of artists as freelance contractors. But, that’s a whole other ball of wax to tackle.
Nov 01, 2011 @ 11:01:20
Make a S-corp
Is the best decision I made and totally worth it.
What’s Happening With LucasFilm/Pixar Collusion Case? « VFX Soldier
Oct 29, 2011 @ 10:13:22
Oct 29, 2011 @ 11:47:01
Logan next to Mirada requires Yurcor or your own LLC and what not. After lame talks I managed to get one week as w2 before being let go. So I read on Yurcor website that you basically become their employee is that it? What the fuck is this shit really?!
Oct 29, 2011 @ 15:08:19
DK Seattle uses Yurcor.
Oct 30, 2011 @ 15:36:46
also part of this fiasco – My first paycheck last week through Yurcor for NYC based shop.
Was taxed 43% of earnings. rang Yurcor to query. Politely told to suck it.
Very timely this article. Want to get to the bottom of this..
Oct 31, 2011 @ 09:46:59
What seems a little disappointing about this whole topic is how narrowly the whole situation is being viewed, where each side freelancers and studios have decided to adopt an adversarial stance with one another rather than coming coming together and working to find a common solution instead of playing the “blame game”. What is needed is for everyone to understand why the change happened and how we can all move forward through it as we’re all affected by it.
To start with, nobody has really raised the question of how this situation came about. Why did Uncle Sam decide to change the landscape making studios crack down on hiring 1099 employees? In short, because they are broke. This results in the IRS taking drastic measures to make sure they would get the money they were owed, which is why they cast an eye on the creative/freelance arena as one area they viewed as being an issue. Believe it or not taxes are mandatory and not elective in nature and we are all expected to pay them. However there are some members of the 1099 community who would basically “take the money and run” and not pay the appropriate taxes due. Studios would receive letters basically saying that if the delinquent tax payer was hired again then the studios would have to garnish their wages.
We, of the freelance community in short have to take responsibility for some of us having a hand in creating the current situation we now all find ourselves being affected by. Instead of opening a discussion and trying to decipher how this change affects us all in the way we do business and how we can all move forward in an informed way, the discussion has taken a turn of studios demonizing freelancers and in turn freelancers demonizing studios. Studios and freelancers are two sides of the same coin, it’s a symbiotic relationship between the two which ought to be understood as that: studios rely upon freelancers to do the work and freelancers rely upon the studios for work. It’s important that the lines of communication remain open and honest between the two. There’s no archetypal “good” or “bad” that is exclusive to one side or the other, in truth there are many studios that can be accused of poor practices just as there are many freelancers that can be accused of poor practices. Which is why each side has to discontinue engaging purely in an adversarial manner armed with misinformation as their guide and try to get acquainted with the facts of how to move forward. Some questions to be asked: Is it appropriate for freelancers to expect studios to absorb the cost of them to do business? An analogy if I hire a man to paint my house and he is a sole proprietor should I pay for his cheque cashing fees, and disability insurance, workers comp? Or should that be his responsibility – just one question of many raised by this situation.
While some may say yes, there are others that may disagree and unfortunately both camps are drawing their opinion based on what each of them perceive as fair – however conjecture shouldn’t be the guide instead of cold hard factual information. As freelancers we ought to seek to become more informed about the business operations of the industry we work in, and how that comes into play with what we do (pushing pixels, shooting, writing or whatever our position in the industry is) that’s our responsibility not the studios. There are many of us freelancers that have simply chosen to remain uniformed on this issue and to incorrectly “pick and choose” what we want to believe is fact simply because we want to be right. For example the myth that freelancers are “entitled” or that it is the “law” that they receive time and a half and/or double time. Upon researching this and looking at the IRS website, while it is true that workers are entitled to time and a half and/or double time it also states that there are industries which are exempt from this and the “creative” field (which our industry falls under) is one of these industries. I’ve come across many freelancers who are outraged at studios who don’t want to uphold this, and who unfairly view the studio as being unfair and a “slave driver” of sorts. Don’t get me wrong, I do believe that freelancers ought to be compensated for long hours however I feel the correct way to broach this subject is to negotiate this with each studio to come up with a solution palatable to both parties. If you end up working long hours due to inefficiency and not enough workers being assigned to a project then I think it is a fair solution to be compensated. At the very least it ought to give those studios who engage in this practice a wake up call on how to run a tighter more efficient operation that is more cost effective and serve to raise the bar on how efficiently freelancers work which could be beneficial to both in the long run.
Bottom line without digressing too much from the topic at hand, the more informed and buttoned up freelancers are, then it will make it that much harder for us to be taken advantage of.
We’ve chosen to be freelancers, that is our choice but we must be aware that there are responsibilities that go along with that choice. We can’t just want the results without any of the responsibilities and then become upset when we’ve fallen victim to shady employment practices. Forewarned is forearmed.
We (freelancers) have to get better at rooting out the misinformation and replacing it with solid facts. We have to get better at approaching employers while knowing the facts and should be ready to ask the right questions and be prepared to negotiate to get the terms we expect. (Note I used the term negotiate. Not demand. Or expect after making assumptions). Once we approach studios with this level of professionalism it will open the door to better communication and a better overall experience for both parties. If all we come to the table with is misinformation and not knowing the first thing about the business side of our industry and how it pertains to what we each do, then we’re lowering the bar and encouraging poor practices to run rampant and effect us all.
I believe freelancers and studios should engage one another in discussions about what the facts are and try to work out a way to establish some kind of standard for how to move forward that doesn’t involve people getting ripped off or taken advantage of by third parties who potentially take advantage of the lack of communication. The “no 1099′s” issue is not going to go away so isn’t it time we all tried to educate ourselves and stop pointing fingers in an effort to make the industry a better place for us all to do business in.
Oct 31, 2011 @ 09:53:13
Sorry, but you cannot lay the blame equally here. Tax compliance is an individual matter, but if the studios are feeling heat, there is a simple solution….pay freelancers as employees (as they are) or allow incorporated freelancers to bill as vendors. Don’t allow 3rd party vultures like Yurcor and MBO to steal your artists’ money. It’s that simple.
Oct 31, 2011 @ 10:32:28
I agree wholeheartedly with not using third parties, however my post wasn’t about laying blame but trying to cast a light on the issue for people to become more informed so as to better understand the issues at hand. The third party companies involvement was a terribly misguided attempt of studios to deal with this issue which failed horribly and gave more people headaches.
Oct 31, 2011 @ 10:53:33
“We’ve chosen to be freelancers, that is our choice but we must be aware that there are responsibilities that go along with that choice. We can’t just want the results without any of the responsibilities and then become upset when we’ve fallen victim to shady employment practices. Forewarned is forearmed. ”
Yeah right…because for sure if you offer the choice of either payroll or freelance 90% will stick to freelance?! Of course not! the vast majority would rush at any staff position. This whole freelance EOR debacle is being imposed onto the job seekers who cannot turn their back anymore, and on top of being artists and training for technical excellence we should be our own CEO’s, CFO’s, CPA’s and what not?! And If that were the case freelancers would have to double their rate, i.e. a roto contractor should be asking $40/hour if he was properly running his company. Have you ever hired a painter/contractor for $20/hour?! No don’t think so. The dude you pay $20/h to paint your living room is the one you pay in cash behind closed doors.
“in truth there are many studios that can be accused of poor practices just as there are many freelancers that can be accused of poor practices.”
And for freelancers what would that truth be?!
Oct 31, 2011 @ 12:15:08
Paul, your rant at my post clearly shows that (a) you do not understand what it said and (b) it sounds as though you do have legitimate frustrations however taking them out on me is not the proper avenue. Do you believe that EVERY single freelancer out there would rather be staff (or is that just your personal opinion of how you feel which you are representing as fact for the majority?). I’m a freelancer through choice and there are many others out there like me so your statement that we would rather be staff is false – what are you basing your statement on? If you are doing freelance work but you would rather be a staff employee you must understand that my post was not addressing this at all.
I firmly stand behind that there are responsibilities that go along with being a freelancer – do you believe there are not? And to put things in perspective, there are happy mediums – no one stated you had to be a CPA, CEO, I believe knowledge is always the key to most things. It doesn’t hurt to know a little bit more than what you need to know in your general day to day goings on. And certainly I would hope that wanting to know something of the landscape for the industry you work in is beneficial to you in particular. Do you think you ought to be paid more for your own enlightenment? That sounds a little strange and I’m not sure you’d get many people to get on board with that idea – let alone employees…
Nov 03, 2011 @ 07:37:56
Well said, Shirley. Perhaps the most level-headed, educational, and mature remark on the situation I’ve seen yet.
Oct 31, 2011 @ 10:26:22
I agree wholeheartedly with not using third parties, however my post wasn’t about laying blame but trying to cast a light on the issue for people to become more informed so as to better understand the issues at hand. The third party companies involvement was a terribly misguided attempt of studios to deal with this issue which failed horribly and gave more people headaches.
Oct 31, 2011 @ 10:49:27
Shirley,
While I believe your longer post was meant as a call to action for freelancers to become more aware and proactive, it came across as laying blame for the “adversarial relationship” on the artists. While you may not have meant that, others will read that way as the above author did as well.
Secondly, the capitalistic nature of business would therefore be equally to blame. Any employer can use legitimate means of paying and employing artists. Its the pursuit of profit that has engendered these battles and acrimonious relationships. By your own admission, there has to be a better understanding of rules and laws on the part of the freelancer in order to “protect” one’s self from these practices. Even with full knowledge of the laws and the desire to not be “screwed over” the discussions you suggest having with employers would be terse at best.
Its a bit idealistic to think employers won’t continue the pursuit for increased profit in the work. While I believe the conversations will be difficult ones, I support the notion of having them and checking to make sure nothing stands in the way of your gainful and rightful reimbursement.
Oct 31, 2011 @ 11:49:14
While I can’t help how others perceive this hot button issue, (or what they choose to take away from it), I can assure you that laying the blame on freelancers was not the point of my longer post. I am a freelancer not a business owner. However as well as being a freelancer I have also had the opportunity to work on the business side of things as well as on the creative side which gives me a somewhat clearer view than what I had before. While there are companies who engage in unfair practices and try to be as cheap as possible while fleecing it’s workers I think it’s important to make the distinction this is not true for all companies in the industry. Just as there are some who engage in poor management and waste money while making bad business decisions so are there other studios that try to run their business with integrity and honesty, some which I’ve had the pleasure of doing business with. I pointed out that there are faults on both sides – which is true. However I have worked alongside many freelancers who simply will not inform themselves in order to better protect themselves, simply because they see it as a hassle.
My sentiment is that if we freelancers are better informed then it will be easier to galvanize in an attempt to make real changes. But how can we know what these changes should be if we’re simply don’t have proper knowledge about our own industries practices?
And I disagree it’s not just the greed of studios that has fueled these battles, again I think that’s a very blinkered and easy view of a situation that is multifaceted. While working on the business side of things I gained insights that changed my own point of view where I came to understand that some of my own views (which I’d upheld as the right view of things were challenged and I was able to honestly understand why some policies of companies were in existence – which previously I had blindly attributed to “the Man’s greed”) were simply incorrect. I’m not pro studio, however I am pro eradicating misinformation parading as fact.
I think the Yurcor/MBO companies involvement in our industry is something that should NEVER have happened and I disagree with it wholeheartedly.
There will ALWAYS be companies that will attempt to exploit workers, but there will also be those that will not engage in that practice. Such is the nature of the beast. However even though it may seem idealistic to enforce change through positive means, I do believe it can be done. And the first step is to make ourselves as freelancers informed and much more watertight in order to be taken seriously. Right now even though I am taking a diplomatic approach other freelancers will rail against what I’m saying by taking away not the real message of what was said but will attack what I’m saying simply because they don’t want to hear it. They want me to take sides, which I’m not doing – rather I’m looking at the situation (or trying to) as a whole. We can’t expect those companies to fix their poor practices if we cannot operate as informed professionals – which at the end of the day is our responsibility.
I support the notion that every person who was swindled out of their money should get it back and should absolutely try to join forces with those in the same boat to get it back. I don’t think they should give up on it.
As I said before I believe there ought to be dialogue between both studios and workers to begin to address these issues as we work side by side and depend upon each other. Because it hasn’t been done doesn’t mean it’s impossible to do, hey what’s so scary about trying to affect change? Just because it’s not a popular notion doesn’t mean it’s one that should not be looked at.
Oct 31, 2011 @ 12:14:23
Shirley,
Having been exposed to the business-side of a studio, I’m confident you found reasons for what you previously perscribed as “The MAN’S greed” in daily business decisions. I will also concede that more education and knowledge on the part of freelancers to not just laws and better practices, but companies who choose to be lawful and artist-centric would be beneficial.
Thank you for being in support of returning artist wages in this EOR scam and for being outwardly pro-artist yourself. However, this problem is a complete result of employer greed. On that point, I will not budge. Do The Mill, Digital Kitchen and the rest of the companies who utilize these companies know they’re screwing their freelancers? Not important. They are. Will sitting down with them and discussing the issue bring and end to the problem? I would have to doubt that. I believe its more likely that any artist or group of artists will be told to get back to work after having shown such spinal cord.
To your point:
I couldn’t agree more. I know a great way artists can organize and approach studios in meaningful dialogue to hammer out a lasting relationship that both fosters growth on the part of the company and provides protections and sets standards in the workplace to benefit the artists. Its called Union and the first step to forming one is signing a Representation Card.
Oct 31, 2011 @ 11:00:59
when asked my rate, I now quote 20% extra if I need to go through MBO/Yurcor. At least, in theory….I have been able to bill as a vendor in most cases, or at least get paid on W2 status. But that kind of thing gets their attention, and I believe this is the reason that some studios have dropped Yurcor. And if only a few studios are still using them, they will quickly become undesirable places to work, and have trouble attracting talent as a result.
Working conditions are bad enough….bookings without advance notice, long hours/weekends with no overtime….but at least it does look like this scourge will be going away.
Oct 31, 2011 @ 11:19:32
This is a good workaround. I’m going to start doing this until I have an LLC set up. Thanks!
Oct 31, 2011 @ 11:54:15
If you’re incorporated then you should never have any company force you to use these third party companies – that’s why you’re incorporated. And that is the studios error in expecting you to use them.
I do have to say though that last minute bookings isn’t really on the studios it’s really on the clients who wait until the last minute with a job that needs doing in a ridiculously short time frame, but that’s another story and another example of why it’s important that we try to understand how things really work….
Oct 31, 2011 @ 12:21:08
Agreed on both points. We understand that Yurcor will eventually work with artists who insist on being paid through their S-Corp or LLC companies. We believe this puts a crimp on their business and therefore they fight hard to keep it from happening and utilize rules that allow them to hold-back artist pay for 30 days after invoice submission.
Your second point is also valid in that some studios will call for last minute bookings to put more bodies on a project that has fallen behind due to unforeseen circumstances. Knowledge of the vendor-client relationship and the pitfalls that are faced running a studio are important for artists to understand. With that knowledge, artists could make better decisions on who to work for.
Oct 31, 2011 @ 12:59:28
Studios don’t “force” incorporated freelancers to work through Yurcor, but some of them set unnecessary barriers to billing as a corporation or LLC, such as requiring the freelancer to have Worker’s Comp, General Liability insurance, and/or W2 payroll set up….none of which is required by law.
As for last minute bookings….agreed, it’s the nature of the biz….if you are high enough up the food chain you can decline them.
Oct 31, 2011 @ 13:37:41
I still don’t feel a third party is really necessary if someone is an S-Corp or LLC though….seems superfluous in nature.
Oct 31, 2011 @ 15:50:11
i think that the main issue here without resorting to the blame game is that there is no trust. as a freelancer i really feel that freelancers should have dialogues / assemblies / forums that discuss freelancer’s issues. especially legal and ethical ones. the 60 day waiting period after completed work and at time months to get paid is a clear indication that we as freelancers are doing a disservice to each other. i’m well aware that waiting periods mostly have to do with clients but the clients problem gets handed down to us(freelancer).
Nov 01, 2011 @ 05:46:18
for some creepy [TERRIBLY ILLUSTRATED] yurcor BS:
http://www.yurcor.com/clients/mill/consultant/overview.aspx
Nov 01, 2011 @ 09:19:07
I was one of the first freelancers to use the Yurcor set up at DK in NYC (pretty much a guinea pig). I was an s-corp, but DK refused to recognize that and told me that their new policy was that Freelancers (Except a special 3) needed to use their ssn and yurcor. My CPA spoke to DK and Yurcor to no avail, his only suggestion was for me to find work else where.
DK moved to Yurcor for all of their offices due to laziness. Their payroll was/is out of the Seattle office and at the time, their system was not able to keep up with who was and was not working in all offices at all times. As a result, they were giving unemployment to any freelancer who claimed it (Not the right thing to do at all, but some freelancers are uneducated on working for themselves). Unemployment was approved through DK first and then DK was fined for signing off on unemployment to freelancers who were not full time employment. To make sure they were never fined again (and payroll could keep slacking) the sought out yurcor to be their freelance payment mediator. I am not exactly sure if DK was the first to use yurcor, but other shops quickly follwed. This solution was a way for DK and others to still use freelancers, but not have to worry about the headaches of dealing with freelancers from a financial stand point.
All in all, Yurcor is a rip off. To work at these large companies, you are/ were no longer a freelance artist. You need/ needed to become an employee of Yurcor.
I wish these companies, who depend on freelancers to get work on motionographer, feed, more clients, etc., would care about taking care of their freelancers as much as they care about their futures.
Nov 01, 2011 @ 13:57:38
Perfect example of how this devolves into something so wicked and egregious. Company doesn’t do their due diligence to set up proper accounting of temp-hire employees. Company wants to operate under the law, but shoots itself in the foot and starts to cut corners. Artists see this and begin to take advantage by filing fraudulent unemployment claims. Company gets hammered and loses money to these claims. Yurcor steps in and says “We can fix that”. Company loves Yurcor for saving them money .. and allowing them to be lazy.
I’ve said it many times, there are costs to doing business. While I’d gladly reprimand artists who found a loophole and worked DK over, DK has doubly screwed themselves now by exposing themselves to being partially or completely liable to repay the artists for all the wages illegally withheld by Yurcor. This all could have been solved by properly hiring, classifying and tracking temp-hire artists. With the right amount of time and personnel to that effect, none of this would have happened.
May 02, 2012 @ 14:35:39
Hey Scott
Regarding UI, can you explain when, if ever, you think an artist could ethically file/collect on a claim?
If that’s too broad a question, maybe you can address a specific case?
Consider a post house that hires freelancers through an outside payroll company, on a permalance basis (nearly full time for 2+ years, for example). So the payroll company pays the employer taxes, and the freelancer gets W-2s, until the work slows down, and they stop booking. To me this seems like a traditional job situation, so it seems like fair game for collecting UI, but I hear a lot of grumbling about it, and I’d like to consider the impact UI has on other artists. I also don’t know how it would work if someone on UI found short term work at another company, then resumed the claim again. Maybe it still draws from the UI they’d paid into at the long term job, but I’m not sure. It seems possible the claim would instead draw from the place where they did the short term gig.
I know I’m a little off topic, but since you brought up the example of inappropriate UI as a cause of companies moving to EORs, I hope you can shed some light on this?
Nov 01, 2011 @ 11:22:28
This post has been very informative. In a couple weeks I’ll be at one of the companies mentioned here… so, my temporary solution is to raise my day rate by $50.
Nov 01, 2011 @ 12:03:55
I’m working for one of these companies soon. I will just raise my day rate by $50 to cover the Yurcor BS. Its one solution.
Nov 01, 2011 @ 13:59:27
I’m getting so sick of hearing this as a solution to the problem. Raise the rate to cover the BS costs. Yurcor gets paid even more since they’re taking a percentage cut from the negotiated wage.
What’s even more ironic, is how this flies in the face of the argument that unions would drive the business out of the country. Seems to me that Yurcor is doing a fine job of that themselves.
Nov 01, 2011 @ 14:15:05
true but it sends a strong message to the studios….they are the ones who will fire the EORs when they see that it’s costing them money (and talent).
Nov 01, 2011 @ 14:38:29
You would think….. but DK NYC stuck to it’s guns. How is DK NYC doing now?
Nov 03, 2011 @ 14:54:38
I never said it was the answer, and how does this relate to unions? My point is fighting fire with fire. Studios are not interested in supporting the community, they are interested in competing in the market.
By raising my rate, I am using a simple market tactic to respond to a position they have staked.
I also take the responsible action of informing the studio that I raised my rate because they use Yurcor. I do this after they have already hired me, because fuck it, thats my right.
Also, if the studios want to hire someone $50 cheaper, fine. I probably didn’t want work there anyway.
Nov 03, 2011 @ 15:02:59
Exactly. This is all about money, in the end, and if the studios find that using Yurcor costs them in the form of higher effective freelancer day rates, or difficulty in attracting talent, they will stop.
Nov 01, 2011 @ 16:06:04
Yes and by doing that you risk losing the job to someone $50 cheaper. Way to go Yurcor!
Nov 01, 2011 @ 14:06:52
so, how can we be on the look out for this? is it something we can try and tell from our checks or do we need to look into the company our checks come from? i ask as a recent transplant to nyc and a freelancer. this is crazy!
Nov 01, 2011 @ 15:37:37
I was on that DK job too. My accountant filed the money I lost to Yurcor as a tax deduction which helped a little. But still. The system is completely dysfunctional and freelancers have little to no control if they want to get work.
Nov 01, 2011 @ 16:05:09
I too was sadly on that dk job and a few before. Ive since been to shilo, the mill and recently suspect under the yurcor enslavement. The trick is to work as mu h at studios with yurcor which eventually diminishes the employer-side taxes to 0. I managed to do so this year however who can choose to get those gigs consistantly. The other way to get back some dough is to claim unemployement whenever between jobs. Yurcor said they would approve it if you contact the state dept. You are paying the unemployment tax so you are entitled. i have to look into if its retroactive if ive started a new job. See what my accountant says. And yes i have an scorp and ive run into the wall of 3 insurances everytime with yurcor. No one budges on that. Its hard to assess how many yurcor gigs ill have to justify paying the yearly insurances though. Hows it going rosie? Keeping busy?
Nov 01, 2011 @ 16:11:14
You’re going to have to explain that one to me. How is it that if you work *MORE* under Yurcor’s EOR, that you have less employer-responsible taxes taken out?
Nov 01, 2011 @ 17:39:08
Well the SUI (state unemployement insurance) goes away after you pay into it enough. It’s a lot in the beginning of the year and if you work enough you can get it down to 0. That was a huge part of the employer-side taxes that were coming out. I spoke with the yurcor rep and she explained this to me finally. that’s what allows you to claim unemployment.
Nov 01, 2011 @ 18:38:58
Sorry if this sounds harsh peteanonymous, but that sounds like you’re not just drinking the Kool-Aid, you’re swimming in it.
The fact they *take* the SUI, as well as the FICA, FUTA and federal Unemployment Tax is illegal. They take you in as an employee, then loan you out to a vfx studio, and get you to pay the employer taxes they are responsible for. They get the studios to buy into this game by selling them on the fact that they’re effectively skating the employee classification rules.
There is NOTHING good about this. You have been sold a bill of goods. Wake up and smell the reality.
Nov 01, 2011 @ 20:14:29
Thanks for the wake up call skaplan, i didn’t realize I could bypass all these taxes so easily. Come on! If we could all avoid this shit so easily no one would be on here bitching. Everyone’s accountants are perplexed as well, did you see anyone on here with a solution? I have bills to pay and if staying on at a studio that uses yurcor longer to incrementally get more back in my paychecks instead of turning down yurcor jobs, then I’m going to do just that buddy! What’s your answer, huh?
Nov 01, 2011 @ 20:15:51
Oh yeah, and by paying the employer side taxes you end up having a lower gross income, hence you are required to pay less taxes. So doesn’t that make sense?
Nov 02, 2011 @ 02:58:51
doesn’t that also mean the Yurcor is stiffing both the artist AND the state/federal govt.?
bottom line…what they are doing is Illegal, and unethical. You may feel that you have a reason not to turn town those gigs, and that’s fine. But it doesn’t change the fact that they are skimming 10-15% of your hard earned money, and lining their pockets with it.
Nov 02, 2011 @ 05:20:36
No. Our friend is trying to make the best of a bad situation. I take it he’s upset that I’m bringing to light how illegal it is because he’s moved past that fact and is living comfortably with the knife in his back. Being reminded of the pain isn’t pleasant after all the work it took to block it from his mind.
To you question, Yurcor is paying the employer side taxes as they are mandated by law to do. The illegal part is, they’re doing it with YOUR money. That is how they sell themselves to vfx shops. Since legally, you’re an employee of Yurcor, the shops don’t have the burden of paying your payroll taxes. Yurcor is loaning you out to the companies. To make it more profitable for them, they hit your earnings to pay the payroll taxes they should be paying on your behalf.
Nov 02, 2011 @ 05:30:00
yes I understand that but by making your employer side payroll tax disappear from your day rate, they are also (slightly) reducing your taxable income. Which stiffs the govt. Not nearly as much as it stiffs the the artist though.
Bottom line….Yurcor and MBO are evil, and studios who use them need to be pressured/shamed/influenced to drop them by any means necessary.
Nov 02, 2011 @ 07:51:37
No .. they aren’t just slightly reducing your taxable income, they are significantly reducing it. And in doing so, they are illegally withholding money from you which they are then using to pay their costs of doing business. The IRS and the State are not being stiffed at all. They are getting the money they should have gotten through your employment. The only stiff .. is you, and the rest of the artists working under Yurcor.
Nov 02, 2011 @ 03:15:10
Pete – I completely agree with you that we all have bills to pay. Sometimes it’s better to work in a less-than-ideal situation than to not work at all.
However, I think your comments about taxes and gross pay are either badly worded or you’re confused about how taxes work. Taxes come out of your gross income, they don’t reduce it. They only reduce your net income, the part that makes it into your bank account at the end of the day. By working with Yurcor you end up paying more taxes, not less. At a certain level you stop paying some taxes because they are capped. This isn’t necessarily a good thing, as you seem to believe. If you’ve been overpaying in the first place that’s money you should never have had to give away. So no, your comment about paying less taxes doesn’t make sense. Could you please clarify what you mean?
Nov 02, 2011 @ 05:14:57
Perfect sense!! Why don’t you pick up the cost of cleaning the floors and advertising the company too! Hey, that would mean you’d get more work right? And with more work, according to your logic, you’re paying less taxes!!
Your argument reminds me of this picture: http://vfxsoldier.files.wordpress.com/2011/10/olivertwist.jpg
You don’t need to tell me how difficult it is to work in this field when there are so many shady business out there. I have my share of stories too. What I will take umbrage with is you coming to this blog and telling us how sweet the sugar tastes that you pour all over your medicine. Things are broken and I’m taking a stand and doing my part to fix it. A little bit at a time, and only whats in my power to fix.
What’s my answer?? Have you not been reading this blog? I want the companies to act within the law. I want them to hire artists legitimately. Even if its for a week or two. I want the artists then to legitimately file unemployment. Even if its paltry, its what was paid in for them. The system works when no one tries to bilk it.
Let me turn your question back to you Oliver, what are YOU doing to fix it? What’s your answer to all this other than taking it with as much of a smile as you can muster?
Nov 01, 2011 @ 20:29:36
I’m working through a similar service. How can I determine if this is happening to me? Is there something to look for on my pay stub?
Nov 02, 2011 @ 05:33:15
Hi Steve –
A while ago, I proposed to someone (it may even have been you) that the various locals interested in representing VFX and Motion Design workers might want to try organizing Yurcor and MBO “employees.” Isn’t there a law requiring all employers to allow organization efforts and distribution of voting cards?
I imagine that doing this might be the fastest way to get these jokers to pack up and leave our industry. The rumor in New York is that MBO is not taking on new clients because VFX people are too high-maintenance. Alternatively, if they choose to stay and negotiate in good faith, then they might actually present an opportunity to build critical mass for a CBA that would cover the many small companies that make up much of our business.
Nov 02, 2011 @ 06:25:25
ETMthree,
Incredibly good to hear from you again. I hope all is well with you.
Organizing companies like Yurcor and/or MBO poses a problem of scale. In order to get a majority representation from the artists they represent, we’d need to be running a campaign across the country. As my research into this problem discovered, Yurcor is representing artists in various companies across various states. If we were to petition the NLRB for a representation election to represent the artists working at The Mill in Los Angeles, Yurcor would be able to successfully argue that the size of the unit we are trying to represent is too small since they represent artists for The Mill in NYC as well .. AS WELL AS artists at all the other vfx locations across the country. Rightfully, the NLRB would have to include those artists in the unit and we would have to get cards from all of them.
The scope of the organizing campaign your describing would be similar to what AFGE undertook to organize the Transportation Safety Officers working at our nations airports. The IATSE would certainly be able to facilitate an organizing drive of this nature, once the national VFX Local is established and thriving.
Nov 02, 2011 @ 07:34:43
Skaplan, I appreciate your polite and civil responses to my opinions. The internet unleashes the best in people I guess. I stand by my stance that I have to pay my bills and I guess you have enough cash laying around that you can afford to turn down jobs left and right. I don’t have that luxury. I admit I may not be completely savvy of how the tax code works I’m just reiterating what yurcor reps have explained to me, why they make you pay employer-side taxes. Believe me, over the past three years working wtih yurcor controlled studios I have had many battles and I haven’t gotten anywhere with them. It’s been going on for three years and I’m one of the few who spoke up here in new york. Most people just let it be. I am extremely pissed that my money is getting stolen by these assholes, but without any organized mob to help me fight them I have to do what’s best for my situation at the time. If that means letting yurcor screw the govt by making my income lower let them and get in trouble. Maybe it’ll expedite their departure from our industry. I’ve had two accountants look at yurcor’s practices and they didn’t see anything illegal, unethical, backhanded, yes. If people here are willing to stand up together and we all state our case maybe we can get somewhere with this. And Skaplan, do you think just organizing for the Mill LA artists will end up stopping the new york based studios from using yurcor? A friend worked in LA and said they had already organized and pushed out yurcor and a few places. Now that VES has a chapter in new york maybe we can organize here as well.
Nov 02, 2011 @ 08:16:31
Oh dear, have I hurt your feelings? I apologize. I’m sure its not easy being complicit by being complacent.
As I stated, I have my share of stories working for vfx shops in LA that held my pay for months “until the client paid them” or insisted on Net-30 and misclassifying me. I also told myself, “well, at least the money will eventually come”. And, luckily for both of us I hope, it eventually did.
I’m glad to hear you at one point stood up and questioned these tactics. I’m sorry to hear that they overwhelmed you and you’ve been forced to make your life through their illegal practices. I look forward to the day where they’ve been held accountable for their actions, and you have a little more comfort going to work knowing you’ll be able to take home all the earnings that are rightfully yours.
Nov 02, 2011 @ 08:35:38
Pretty much every studio in new york works on net 30, some are even net 60 and *shutter* net 90. I’ve been paid every time for every studio I’ve worked at here so I can’t complain, but some people have had issues with never getting paid, usually at smaller studios who can’t budget themselves.
And I’ll reiterate I don’t approve of yurcor’s tactics but like i stated, I’m not going to turn down work with a yurcor run studio when it’s still a tough environment for freelancers. If I have another hold that I’d prefer to work with I’ll do what I can to book with that studio. But holds and booking are a tricky game, drop a hold and you may be jobless for a while.
Nov 02, 2011 @ 08:47:40
I could never blame you for doing what you can to pay the bills. Everybody has to eat and pay rent. I’m glad that I’m in a position to make a positive change in the industry I love. That’s why I left to join the Guild as its organizer.
This is what Labor Organizations are for. I’m glad to be able to extend the Guild’s ability to represent and protect its members to artists here in LA and hopefully across the country. I’m still stung by the irony that a unionized vfx industry would be without these problems, and still cost less than what Yurcor is charging.
Nov 02, 2011 @ 08:37:41
There seems to be a lot about organizing you’re not aware of. I’d be glad to expound more on it with you. Why don’t you email me and I’ll go over the specifics. skaplan@animationguild.org
Nov 10, 2011 @ 01:43:09
Correct me if I am wrong, but isn’t the VFX company (in this case the Mill and others) that hires Yurcor that is the issue? I mean, Yurcor is doing their business in a particular way and they seem to be good at it, but I have the feeling that the VFX firms that hire Yurcor are obviously not fair towards their employees. So rather than making it a technical law issue, I think it’s seems more of a moral issue. As we all know the employees are the core resources of these companies, so it doesn’t feel like the most intelligent move to save a few bucks…?
Nov 10, 2011 @ 10:19:03
And that way is what we have a problem with. Yurcor’s withholding of employer taxes is a blatant infringement of the law. Yurcor needs to answer for this behavior.
Yurcor approaches vfx studios and sells their services as a way for studios to leave behind their wicked ways of misclassifying employees as freelance contractors. *PLUS* now they can actually save money by having Yurcor pay the employer taxes as well.
Are the studios complicit? That’s for the court to decide. We want to end the practice all together and feel Yurcor is responsible.
Have you been forced to deal with Yurcor? Let us know .. « Organizer's Notes
Dec 27, 2011 @ 14:04:34
May 01, 2012 @ 22:10:01
Can a Black List be created here so that we can help each other avoid blacklisted shops? It will need to be updated regularly because once shops feel the heat that they’re blacklisted by the freelancer pool, hopefully they’ll wisen up and stop biting the hand that feeds them…
We have the power in this situation. Let’s exercise it wisely and educate our peers! These shops can’t function without artists!
V
May 01, 2012 @ 22:13:23
Feel free to update this list if this information is not current, by re-posting an up-to-date-list.
May 1, 2012
Black Listed Shops, that do business through Yurcor and MBO:
Digital Kitchen
Logan
The Mill
Mirada
Motion Theory
PSYOP
Shilo
Superfad
May 02, 2012 @ 08:02:36
Psyop no longer requires freelancers to use MBO. They put them on regular W2 payroll.
May 02, 2012 @ 10:22:47
I can second that for Psyop NY at least. They stopped over a year ago.
Aug 09, 2012 @ 19:45:39
I am currently at the mill and i has and S Corp and NY TheMill still insist that i need to go with yurcor…
Here’s the detail about the yurcor charges.
Yurcor normally charges a 4.5% service fee and the Mill covers 2.5% of that. The rate agreed to is The Yurcor bill rate, not your pay rate. Yurcor will bill The Mill $xxx/ day, they will then withhold the Administrative overhead cost (payroll employer taxes) to arrive at your pay rate. The Administration overhead cost (NY) is 19.54% on the first 8,500 in gross billings, and then it will go down to 8.54%. The Yurcor service fee is a separate portion, and it is paid by you (2%).
WTF…. if you going to work with The Mill make rate higher
Oct 10, 2012 @ 09:53:22
To work at Superfad and DK, I got around the Yurcor trap by changing my business to an S-Corp last year. I got sick of dealing with them for so long, but it seems this is the only way around it.
Dec 04, 2012 @ 14:55:54
Since YurCor is waging everything on the idea that we, as independent contractors are actually under the *misclassified* status, I asked my YurCor rep why they consider us as this Federally classified category of “MISCLASSIFIED AS INDEPENDENT CONTRACTOR. The YurCor rep told me it was because:
1) I work at DK’s offices
2) I use their machines
3) I take direction from their managers
So, I called the Department of Labor here in Los Angeles, CA and got this information:
Under the Federal Guidelines, you are officially an independent contractor and should be 1099′ed based on the following criteria:
1. Your title, alone, classifies you as a “highly paid, professional and/or Creative Professional” and are considered a TRUE INDEPENDENT CONTRACTOR (in this case, Editor).
2. You negotiated a day rate, NOT an hourly rate and are therefore under ”exempt” status meaning you must receive your full, negotiated salary. (Your negotiated day rate was based on doing as much work to get it done, regardless of how many hours you actually spend – again, you’re not paid hourly, you’re paid a day rate.)
3. You get paid a fixed rate (the same amount) every day. It doesn’t fluctuate based on how many hours you clock in.
4. You negotiated your rate with Digital Kitchen. They didn’t tell you that X-dollars was your set rate or that you *had to* work for that amount (as they may have with a true employee).
5. You could have said no to the job / price and walked away to take other jobs (where an employee could not have).
6. You pretty much work your own schedule and do not clock in or out.
When I brought up the YurCor Representative’s arguements and her claims that we are not true independent contractor based on:
1. The fact that we work at DK’s offices
2. We use their equipment
3. We take direction from their staff managers
The Department of Labor said those details didn’t matter and that the above 6 criteria classify you as a TRUE INDEPENDENT CONTRACTOR, NOT UNDER THE MISCLASSIFIED category.
Finally, Dept of Labor said that under these guides, and especially since the actual amounts that were going to be deducted from our rates were not laid out to you PRIOR to your starting the job, but made evident AFTER work began, we can take this matter to Small Claims or Civil Court and collect the fees that they are surreptitiously trying to force upon us, plus any hardships, lost business, court fees, etc.
I also contacted my CPA and he, too backed up the argument that if DK wants to pay us under W2, they can do that without charging us YurCor’s Overhead or Admin Fees. YurCor is not hired by us, but by DK and therefore their overhead or admin fees have nothing to do with us.
There is nothing stopping DK from paying us as W2 and taking our taxes upfront. But trying to get us to pay YurCor’s shady 15.54% overhead fees makes no sense and is a CLEAR demonstration of them pushing their payroll costs onto us.
Dec 04, 2012 @ 14:58:01
I am going to take this matter to court. If anyone in the LA area is interested in joining me, please contact me at TakeYurCor2Court at gmail dot com.
Feb 08, 2013 @ 20:33:17
I’ve been negotiating with a national company for contract work, once all set they said I had to go through MBO for billing. MBO contacts me and demands client lists, contacts, proof that my s-corp pays “Fair and reasonable wages” to myself, and of course requires workmans comp and a host of other insurance policies. So my question to this group, anyone who’s incorporated, has anyone ever had these EOR companies demand your client information and invoices for the reason of ensuring no single source 1099′s? This seems ridiculous to me that an s-corp can be a reclassification risk
Feb 23, 2013 @ 16:16:36
I have been working as an independent consultant for a large energy company who would like to keep me working for them into the distant future as there is a lot of work to be done. A couple of weeks ago I got an email from MBO Partners that stated that my client has enlisted them to assess all independent consultants to make sure they are compliant with current IRS guidelines. I thought it was a scam so I asked the person who I report to about it. Her response was that she forgot to tell me about it but it is legit.
The company is requiring this assessment for 1099 consultants but not incorporated consultants (I found out later that they would be required to go through this process at an undetermined later date). And yes, 2112, they asked for all of that information you mentioned. After much runaround from my client and MBO I was able to discern that my business would not comply and I would be forced into a W-2 employee of this company.
I have been working as an independent consultant for this client for almost 2 years under contract. So my last email to MBO stated, “if MBO finds my business to not be compliant that also means my client is not compliant and I should be reclassified as an employee according to the IRS.” I also mentioned that my client was the one who hired me so how will they avoid the risk of co-employment? I got an email back that stated something to the effect that due to the nature of the questions I was asking, their program isn’t right for me and they will refer me to the client’s staffing company. Then I told HR at my client’s (who is probably really my employer) company that I will let the IRS figure out if I am compliant.
Next step for me is filling out an SS-8. I figure if I have to be someone’s employee then it will be my client’s not MBO’s. What astounds me the most is that my client knows I need to be someone’s employee and they want to push me off to these people. I am now waiting to see if my client will allow me to work until the end of my contract and interested to see what happens after the IRS determination.