by Lewis N. Levy, Esq.
Even the off-handed mention of filing for unemployment benefits sends most professional musicians scurrying for cover. Filing for unemployment benefits conjures up thoughts of waiting in long lines, dealing with unresponsive bureaucrats, and requires an understanding of the process. But what is most critical to any successful claim for unemployment is a finding by the California State Employment Development Department (EDD) that the musician (or other employee) seeking unemployment benefits is, as a matter of California law, a statutory “employee” of his/her employer, as opposed to a finding that the claimant is an independent contractor.
As many of you have read in the press and have experienced firsthand, employers are more than willing, ready and able to label their employees as independent contractors. Why do employers do this? The answer is simple economics: It is far less expensive for an employer to have its employees treated as independent contractors than employees. This is so because if a worker is truly an independent contractor, the employer is not responsible for such things as social security contributions, unemployment tax contributions, Medicare contributions, federal and state employer tax withholdings, California State Disability Insurance contributions, California Unemployment Insurance contributions and Workers’ Compensation coverage on behalf of its workers.
How does this affect you? Well, it matters a lot when you consider that your ability to have contributions made to the American Federation of Musicians and Employers’ Pension Fund (the “Pension Fund”) as well as the Local 47 Health & Welfare Fund (the “H&W Fund”) are literally on the line. Also at stake is the potential ability of Local 47 to organize employers of musicians and to have those employers sign union contracts. This is so because, under Federal labor laws, an independent contractor has no legal right (1) to be represented by a union and (2) to have contributions made on his/her behalf to either the Pension Fund or the H&W Fund (both of which are regulated by a Federal Law called the Employee Retirement Income and Security Act of 1974 [ERISA], which limits the participation in virtually all employer funded retirement/medical plans to employees). Thus, if your employer is successful at having its musicians classified as independent contractors, you potentially lose the legal right to be represented by the Local and to require that employer to remit contributions on your behalf to Pension Fund and the H&W Fund, not to mention Social Security contributions, unemployment contributions, tax withholdings, etc.
The issue of independent contractor status was litigated before the California Unemployment Insurance Appeals Board (the “Unemployment Board”), the California administrative board that hears appeals from determinations made by the EDD’s administrative processes. In a case involving a Southern California regional orchestra made up of mostly Local 47 musicians the South Bay Chamber Orchestra, the Unemployment Board found that the musicians engaged by the employer were independent contractors and not employees. As a result, the employer was relieved of the obligation to remit social security contributions, unemployment contributions, etc. on behalf of its musicians.
The Unemployment Board case involving the South Bay Chamber Orchestra arose from an EDD initiated audit of that employer. Because the case originated as an EDD audit, the Local was not involved and had no ability to intervene in the process to protect the rights of its members. The result was an extraordinarily bad decision by the Unemployment Board that has already had potentially awful ramifications.
And now, finally, my point: Professional musicians need to take charge of and be able to fully participate in cases before the EDD and the Unemployment Board where the issue is whether the musician filing for unemployment benefits is an “employee” or an independent contractor. This is vitally important since, unlike the EDD, musicians will have access to certain evidence of employment status that can be used to establish the employer’s “right of control” (the legal test that determines whether one is an employee or an independent contractor). This includes such items as (1) the orchestra’s performance schedule; (2) the music selected by the orchestra for performance by the musician(s); (3) whether the musicians employed by the orchestra (or other employer) are covered by a collective bargaining agreement; (4) whether the claimant/musician has attained or could have attained tenure with the orchestra/employer; (5) whether the musician’s employer has remitted contributions on behalf of the musician to either the Pension Fund, the H&W Fund, or both; (6) whether the employer deducts and remits work dues to the Local for its musicians, and; (7) whether there is an Orchestra Committee or similar structure through which the musicians deal with management (in addition to their representation through the Local), etc.
Also, the musician who files a claim for unemployment benefits has the ability to testify at any hearing on the issue of whether they are an employee (something the EDD does not do in its employer audit proceedings) or an independent contractor. This provides an opportunity for the musician/claimant to testify firsthand about the degree and significance of control that his/her orchestra, band, etc., imposes over all musicians in its employment. It also provides the musician the ability to call other musicians, employed by the employer covered by the unemployment claim, to testify about how the employer exercises its “right of control.” Taken together, such testimony is a powerful evidentiary tool we can use to establish the requisite “right of control” and to have the EDD and the Unemployment Board find, as they should, that musicians are employees.
Indeed, at a recent meeting with EDD Director Patrick Henning, representatives of the American Federation of Musicians, Professional Musicians, Local 47 and AFM Local 6 (San Francisco) were told that, because of the Unemployment Board’s decision in South Bay Chamber Orchestra case, the EDD prefers to have musicians file individual unemployment claims. The reasons given to us at the meeting with EDD Director Henning mirror what I have discussed above: the EDD believes that individual musicians will, with assistance from their local unions, have a better ability to convince the Unemployment Board that their employers exercise the required “right of control” and, in turn, that they are “employees” for purposes of their entitlement to California unemployment insurance benefits.
Therefore, when and if you become unemployed because your job with a regional orchestra, community orchestra, etc., has concluded, please contact your Local. The Local can then, in coordination with legal counsel, assist you in evaluating the matter and advise you on how to proceed. This will allow you to control the evidence that is placed before the EDD and, if the employer files an appeal, the Administrative Law Judge (who initially hears any appeal an employer may file from an EDD determination that an ex-employee is entitled to unemployment benefits and whose decision is eventually reviewed by the Unemployment Board).
Establishing through the EDD and Unemployment Board processes that musicians are employees, and not independent contractors, is vitally important to all professional musicians. Nothing less than your ability, and that of future generations of musicians, to be represented by a union and to have a decent pension and medical coverage is at stake.
Most recently, we have received some excellent decisions from the National Labor Relations Board (“NLRB”). One of these decisions – the Lancaster Symphony – dealt directly with the issue of whether, for purposes of federal labor law, symphony musicians were protected employees or unprotected independent contractors. In the Lancaster Symphony decision, the NLRB made clear that in its view musicians are the employees of symphonic organizations and are entitled to the protections of federal labor law.
Although the EDD is not required to follow the NLRB’s decisions, nonetheless the opinions of the NLRB do carry great weight in influencing how the EDD would rule as well. Thus, there is every reason that given the chance, the EDD would follow the NLRB’s Lancaster Symphony decision and find that symphony musicians are also employees for purposes of California unemployment insurance.
So, if you are entitled to unemployment benefits, please file for your benefits: You earned them and there is no shame in claiming what you are entitled to! However, if you are denied benefits because the EDD or your employer claims that you were independent contractor, please contact the Local immediately. The Local needs this information to help in the fight to preserve your rights.
In closing, and on a different “note,” musicians at or near retirement age should be aware of how their pension benefits may affect their unemployment benefits. The general rule is that an employee’s unemployment benefits are reduced by the amount of her/his pension benefits. However, there are two important exceptions to this rule that may enable you to avoid having your unemployment benefits offset by your pension benefits.
First, unemployment benefits will not be if your pension benefits are based, at least in part, on your own contributions. It does not matter how large or small your contributions were. If you contributed anything at all to your pension, your unemployment benefits will not be reduced by your pension benefits.
Second, your unemployment benefits will not be reduced if the work that is the basis for your unemployment claim did not affect your eligibility for a pension or increase the amount of your pension benefits. For example, if you are already receiving pension benefits and those benefits are not increased by the new work, your unemployment benefits will not be reduced.
Be vigilant! By helping us protect your rights to unemployment benefits, you allow the Local to protect the rights of all musicians to be properly classified and treated as employees and not independent contractors.