Recently, the California State Supreme Court issued a decision that drastically changes who can be deemed an independent contractor. Sadly, this decision makes it extremely difficult for anybody in the state to continue to be considered an independent contractor or to issue a 1099. PPA is still looking into this matter and trying to get a clear understanding of what the California State Supreme Court meant.
Looking through the Court’s decision, a 3-prong test has been established, that bars most photography businesses from categorizing their 2nd shooters or subcontractors as independent contractors.
In order to deem someone as an independent contractor, the business must answer “yes” to all three prongs. The test is as follows:
- The worker is free from control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.
- Most photographers cannot answer yes to this question since the primary shooter or the person who contracted the photographer is the one guiding them on the work, and how and what images need to be captured. You may have some wiggle room here if all you do is hire the photographer and then they have the creative direction of the images. This is something that may need to be elaborated on or fleshed out by the court systems.
- That the worker performs work that is outside the usual course of hiring entity's business.
- This is the going to be the biggest blow to photographers. Most photographers are hiring subcontractors or second shooters to aid with the things that are in the normal course of business, they just need additional manpower. Other states have adopted this line of thought and forced many small businesses to have “employees” instead of contractors. This rule still applies even if the second shooter/contractor uses their own equipment or if the hiring person provides equipment. It is not clear if this would apply when a studio hires a videographer or drone photographer.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as work performed for the hiring entity.
- This one is the easiest to answer “yes” to since subcontractors or independent contracts for photography tend to be photographers themselves.
Unless you can answer “yes” to all three prongs, according to the new state law independent contracts are now considered employees. Remember employees cannot be issued a 1099.
DISCLAIMER: This article shall not be taken as legal or tax advice. This article’s sole purpose is to inform and educate. If you have any legal or tax questions, contact a licensed attorney or certified accountant in your state.