In 2004, Massachusetts altered the law governing Independent Contractors, unbeknownst to many in this State. Essentially, it is now next to impossible for someone to be paid as an independent contractor – or “1099ed” — in the Commonwealth.
Here’s our understanding, at the Artists Foundation, of how this all came about: From what we currently know, it was the MA Carpenters’ Union who backed the legal change because it wanted to control the abuses in the construction industry. (That’s clearly an important issue that does need to be addressed but the way they altered the law governing independent contractors was not the way to do so).
Meanwhile, most people in the arts community are unaware of the development and are learning about it via the Massachusetts Health Care Reform Law. Why is that, you ask? Embedded in Chapter 58 of that legislation is a new three-part definition of who is an independent contractor, so employers can accurately count and classify their employees.
Our freelance artists, writers, independent film makers, and photographers are particularly vulnerable to this change in the law. Artists of all disciplines earn a significant proportion of their income as independent contractors, historically using the 1099 classification. Now, the potential problem with getting a W-2 and being an employee versus a 1099 and being a contractor is that
if you’re an employee, the company could claim all rights to work produced (i.e.; the artist does not retain the right to sell their work in other markets). While contractors have negotiated those rights in the past, sometimes work for hire makes sense, sometimes not.
Copyright is always with the creator, but usage is not. In many industries when you are a W-2 employee, even a part-time one, you cannot work for a competing firm. (Think design, news, etc.) Now, the change in legislation will likely stem the much-needed flow of such income for Massachusetts artists. It will also make it almost impossible for them to write off their costs incurred in
making their art.
If artists do not have 1099/self employment income that will, in effect, make them ineligible as a self-employed person for the program the state has established to help self-employed people pay for health insurance. The Insurance Partnership is an important option in the MA Health Care Reform law for self employed people, insured or not. Every penny an artist can put in their pocket matters a great deal. A 2007 recent report out of Minnesota, “Artists Count”, is a sobering snap shot of artists’ economic status.
The change in Massachusetts’ independent contractor law is already having a negative impact on arts organizations and businesses that employ artists. Instead of using this law to monitor construction companies, the Department of
Revenue (DOR) is testing it by investigating two opera organizations (as random audits, we are told). If the opera companies are forced to reclassify their independent contractors as W-2 employees, they will have to pay the back taxes they
owe and will have to close their doors. This real scenario does not take into account what happens to the opera companies under Health Care Reform Law requirements for businesses if people who used to be considered independent contractors are now defined as employees.
It is important to stress that there will not be any new opera companies to replace these ones. If the companies close, many artists will lose their essential 1099 income, performers and composers will lose venues, and the public will lose places in which to see existing operas and new operatic works. This
case highlights an issue that will not only affect the opera companies, but also all of our arts organizations who depend on contractors/1099 workers.
In addition, with the DOR in charge of both enforcing the individual and business mandates for the new health care reform law and enforcing the 2004 independent contractor law change, there will be a negative impact on our community. DOR will now be able to identify those who are violating the 2004
legislation. Our fear is that many artists will have to leave Massachusetts for professional opportunities elsewhere and we may also lose, or financially devastate, many of our arts organizations.
For more information on this law click here:
Kathleen Bitetti
Artist & Executive Director, Artists Foundation
www.artistsfoundation.org
www.healthcareforartists.org
Thank you for raising this important issue Kathleen. There are a number of industries and professional sectors that are very concerned with the unintended consequences of a flawed independent contractor reform, and how it will inter-relate with the new health care law. Revision of the independent contractor law in non-construction industries must be a top priority as the health care law rolls out.
Jon Hurst
Retailers Association of Massachusetts
How tragic that a supposed leader of the “Artists Community” is spending so much time and energy tinkering around the edges of this harmful law.
Instead she could be joining, even being a leader in, the growing movement to stop the law and to replace it with what the state really needs — a universal healthcare program, NOT a forced private insurance mandate) that forces people to buy a shoddy expensive insurance product.
To learn more and get involved visit
http://www.DefendHealth.org
and
http://www.MassCare.org/legislation
Thank you.
Ann Malone’s comment has me puzzled. A universal health care program may indeed be the best solution (I happen to think so myself), but it would dangerous to ignore the law that is actually now before us, which will have real and immediate consequences, intended or not. If “tinkering around the edges” can help us avert some of the harm this law might otherwise inflict, even while we work for a better overall solution, I’m all for it. Let’s be pragmatic.
The new law has serious consequences for too many people whether it is tinkered with or not. This bill should have ended up on the cutting room floor before it was signed into law but that’s politics for you. The amount of taxpayer money that has been spent on this dangerous mandate and the bureaucracy installed to implement it could have gone into providing real, quality healthCARE, not this sham that will hurt so many.
This law must not be referred to as healthcare REFORM because the word reform implies a change for the better – something good. This is mandated health insurance that offers inadequate coverage and is unaffordable for 100s of thousands across the state who are struggling just to pay their basic living expenses. It has nothing to do with quality healthCARE for all but is merely another monthly bill to add to the list that may or may not be paid when heating season begins and the cost of utilities and food continue to rise while incomes remain stagnant.
Furthermore, this law is a roadblock to single-payer affordable, attainable, quality healthcare because it continues to feed the insatiable beast – the medical insurance/medical indsutrial complex which includes big pharma. Otherwise, why would that cartel have spent $7.5 million plus lobbying to protect their special interests, i.e. profits?
Jon Kingsdale was quoted in the June 11 NYT article by Reed Ableson as follows: “We’ll try to be the test laboratory for the rest of the country.” Our response to Jon Kingsdale and his crowd is, “We are not your test animals, nor are we, as was stated in one of the meetings: social beggars that will become empowered advocates. We ARE empowered advocates and know exactly what is going on.
This law has very little, if any, grassroots support and will fail, hopefully, sooner than later so too many will not be seriously bruised along the way.
Paul, there’s no need to be surprised by Ann’s comments because she is a sheep in wolf’s clothing. While she staunchly supports single-payer, that is only half the battle to get rid of waste and inefficiency. What Ann almost never says is she suuports the status quo of private delivery of health care, which is just if not more rife with waste and inefficiency. Did Ann mention almost 40% of health facilities are investor-owned? Oh and by the way, that doctors often have a financial stake and relationship with those that profit by increased “demand” for services and technologies that are clinically unproven? Single payer will only lower the administrative costs that insurers add, but it will do nothing to drive down costs. Have you seen the level of Medicare fraud in a year? Let’s get real. Single payer + single deliverer = lower cost healthcare. That’s right, no more cushy for-profit or “non-profit” physician groups and hospitals. Anything less keeps this sham going.
The health mandate isn’t going to last more than a year or two before it is either thrown out by the legislature or the courts. But it is clear that it is going to hurt a lot of people in the meantime.
To Scott G: By calling me names here for the reasons stated, you reveal yourself to be ignorant of the PUBLIC ACCOUNTABILITY, OVERSIGHT, AND STANDARDS that would be implemented in a fundamentally reformed hc system that uses a streamlined single payer financing mechanism and a private delivery system.
Please inform yourself of the details before going off on an unproductive tangent. I am a nurse trying to share useful information with others about how to get us all out of the hc mess we’re in — that means you, too.
Useful and straight forward info on this topic can be found at http://www.MassCare.org/legislation
and
http://www.Healthcare-now.org
p.s. I agree with Pat and Dianne’s comments which is why I say to Paul: the people who will be hurt by this law can’t wait for us to be “pragmatic” and politely ask for something better. We must demand it now. This really is the right thing to do.
Thank you, Ann.
We who are going to be adversely affected by this law have tried to speak to our reps, Deval Patrick and others who have posted letters on this blog but to no avail. For the most part we have been ignored and in one or two cases told, “Wait, it’s not perfect.”
Unfortunately, the banks who hold our mortgages or the landlords to whom we pay rent, the heating oil and utility companies, the tax collectors at the local town halls to whom we pay property taxes, etc. won’t wait.
Therefore, we have only one choice: to remind our elected officials that they work for us and demand that they put an end to this nonsense before more taxpayers’ money is wasted on needless bureaucracy, advertising, grants to study who goes into debt and the list goes on. So much good could have been done with nearly $1 billion already spent on this sham of a scam.
Hard-working MA residents deserve respect, not a mandate.
The legislature has screwed the people by allowing the medical-industrial-complex (clearly, the combined lobbyist clout of these large forces alone held sway: what else is new?) to concoct this farce of a law and bring it into being.
It requires hard-working people, whose incomes barely keep up with basics of everyday life, (does anyone think the current mortgage default crisis is some unrelated phenomenon in some separate economy?) to come up with thousands of dollars just to have “access” to a corrupt healthcare delivery system.
Right smack in the middle of the issue of exploding costs for healthcare is “we” really do not want the good times to end. “We” want a ready and continuous supply of sick people. The whole medical-industrial-complex feeds off of it. If we had a government (I wish we could forget the business sector, of course, we can’t) that truly cared about our health, note: I did not say healthcare — which as it’s delivered is all about disease and not health, we would have far fewer fat people that become sick, fewer diabetics and heart attack risks, and there would be far fewer chronic diseases of aging that the medical community/pharma connection is perfectly content to call “normal” while getting rich treating exclusively with (another corruption of the highest order) drugs.
Healthy people, like myself, want nothing to do with this pharmaceutical-driven system of medical care. It’s an abomination. It derives its power because of the systematic dumming down of us all when it comes to caring for our basic health. I keep myself healthy. I make it my business to know about my body. That’s my responsibility as a human being and a citizen. Would I purchase health insurance to cover myself for a potential catastrophic event (the only type of insurance I would want, everything else is paid out of pocket)if it were reasonably priced in the marketplace? Yes.
So health insurance industry, let’s reasonably price it. Health insurance is not the same thing as car insurance. But if it’s going to be mandated and imposed, it’s got to be made as affordable. Otherwise, it’s another tick on the clock for the middle class. Pretty soon, we’ll all be moving to China.
To the legislature: When business as usual as we have it in government amounts to “anything of, for, and by the corporation”, how to we expect to have anything but systemic corruption and enslavement? What kind of a government forces its citizens into even deeper poverty, and thus, failing them again by doubling down on them? Passing off a corrupt system’s failure onto its citizens does not do anything to fix the system. It just reinforces people’s cynicism and loss of faith in their government.