Post by StylingHaus on May 5, 2005 0:08:30 GMT -5
Do we really need agencies?
I have found that to be a key question among many a modeler. Some have an idea of what I am writing about and others simply won’t believe this. Hell, there will always be those who curse the darkness rather than seeing the light. This is for those who were not confined to a spider hole along with Saddam.
As most know, there was a time before the Internet. Back in the day, agencies helped the studios find the personnel they required. They also provided other human resources services. They also created a client friendly atmosphere when it came to billing requirements.
In today’s world things are very different. Clients can just keep in touch with modelers and other studio support via email. They can always turn to web sites (such as this) to post job openings.
So why don’t they? Is there some big conspiracy afoot? Is there some good ol’ boys network going on. Hardly! While some of the agencies prime reason for being fell by the way side some time ago, other needs came into the picture.
First is the absolute need to have proper payment of all taxes and insurance, etc. paid correctly. Sadly, it takes only one bad apple to spoil the whole bunch. A few modelers, and for that matter other contractors in general, have not taken care of business as they should have. As a result, the courts have held the clients responsible and have forced them to pay all back taxes, fines, etc. as if they were the employer of the so-called contractor. They also have found the client was an employer rather than a contractor of labor even when the labor had signed papers stating that they were contractors and would take care of their legal duties. Just ask Microsoft who had to pay millions once the labor had been reclassified by the courts as employees, not contractors.
The term “contractor” is really a misnomer in this day in time, at least in California. If a modeler is working for an agency, the modeler is most likely an employee of that agency. The agency by law should be paying all applicable taxes and workers compensation insurance and unemployment insurance, and withholding the proper amounts from the employees to pay into social security (social insecurity) paid family leave and assorted other withholdings, and for larger agencies – health insurance. If they are not, they indeed need to be called into question. Only in rare circumstances is this not the case. If an agency (or studio, etc.) is improperly classifying its labor as contractors (as opposed to employees), and those very same modelers (or others) are not providing for themselves the same coverage with respect to insurance and tax payment, there might be a real serious problem.
Some agencies (and clients) would rather not abide by this state’s point of view. One good reason is money. By adding into the bill rate all the required payments can be huge. Depending on the workers comp rates (some rates can be astronomical depending on circumstance such as class code for occupation and the accident record at the work facility), the percentage over and above the employees pay rate can be sizeable. This can be even greater for short-term duration employment. Longer terms can help to absorb the initial brunt of the unemployment insurance costs. As business and workers comp insurance is based on a business’ revenue, annual audits are part of the fun too. Furthermore, another major reason to avoid actually having “employees” as opposed to “contractors” is the payment of overtime. This also is a mega no-no that can bite the client in the butt if these laws are dodged.
Some clients have been known to from time-to-time be rather relaxed in payment of invoices. If the agency is doing what they should and paying the modelers in a timely fashion then the agency is really taking it in the…<br>
So what does the agency do, they either have very deep pockets, or they go and borrow from those that do. It really doesn’t matter who it is, banks, accounts receivable companies, factoring or funding, or loan sharks, they all want the same thing. The cost of money is money. Interest, or a percentage, or whatever you want to term it as, it is still the bottom line. And guess who pays for that? That again is part of the bill rate.
The clients want to use the agency to cushion the lag from invoice time to payment time. They want to know that the modeler will still be paid even if the payment from the studio takes longer than anticipated. Thereby, the modeler won’t freak, pack, and skip town.
An agency also helps to keep the studios’ own unemployment insurance rates down. If they had outside help hired for short term, the constant layoffs would drive their rates to the limits. They don’t want to be paying the higher rates all year around on all of their actual full time employees. They would prefer to do so only for the temp labor when they need to have it.
An agency should help to insulate the clients in some aspects of liability. The way the law is in California, I really don’t know if this works or not. It seems the courts like to go for whoever has the deepest pockets. An agency can on occasion keep clients' toes out of the fire with some good advice.
Studio managers also have a limited amount of time to deal with the whereabouts and numerous situations of the modelers. They in turn leave the bulk of that interface with the agencies.
Would it be possible to have an association that provides all of the same benefits to the studios without having to go through an agency at all? It would be nice. On the other hand, who is going to run this? It is sort of like a credit union as a means of providing many similar aspects of banking to its members that a traditional bank or savings and loan does. At the end of the day, even though its members make up a credit union, someone still needs to be paid to operate it just like the bank does. Cost saving are negligible, however it might offer its members some other benefits as well as some pitfalls.
In addition to the costs associated with the labor being hired, an agency also has the same overhead as any other business. So how much should an agency add on to the bottom-line? Well that is a question for you to discuss. I am always interested what others think, right or wrong.
As far as really being an advocate for a particular employee, again, most studios already have a fair idea who they want although they do sometimes request new names and faces. Of course, an agency will always push an employee who has been tried and true.
This is not legal advice nor should it be construed as such, but rather a broad overview, and like anything else there are exceptions to the rules. If you do find some exceptions to this, I am always eager to hear what you find. Please don’t take this as “The Gospel”, look to regulatory bodies such as the EDD or IRS to find what you need to know. As a principle at Allegro, I am certified as a California Accredited Consultant (CAC), and I am active in California Staffing Professionals, which helps to promote a better understanding of the laws in this complex state.
So there it is! The dark, seedy, underbelly of the agency world as told by an insider, and a modeler as well. Hopefully this clears up more uncertainty than it creates.
All the best!
For more information from the EDD please contact www.edd.ca.gov
For more information from the Department of Labor please contact www.dol.gov
For more information from the Department of Industrial Relations contact www.dir.ca.gov
For more information from the IRS please contact www.irs.gov
Find out more about CSP at www.cspnet.org
I have found that to be a key question among many a modeler. Some have an idea of what I am writing about and others simply won’t believe this. Hell, there will always be those who curse the darkness rather than seeing the light. This is for those who were not confined to a spider hole along with Saddam.
As most know, there was a time before the Internet. Back in the day, agencies helped the studios find the personnel they required. They also provided other human resources services. They also created a client friendly atmosphere when it came to billing requirements.
In today’s world things are very different. Clients can just keep in touch with modelers and other studio support via email. They can always turn to web sites (such as this) to post job openings.
So why don’t they? Is there some big conspiracy afoot? Is there some good ol’ boys network going on. Hardly! While some of the agencies prime reason for being fell by the way side some time ago, other needs came into the picture.
First is the absolute need to have proper payment of all taxes and insurance, etc. paid correctly. Sadly, it takes only one bad apple to spoil the whole bunch. A few modelers, and for that matter other contractors in general, have not taken care of business as they should have. As a result, the courts have held the clients responsible and have forced them to pay all back taxes, fines, etc. as if they were the employer of the so-called contractor. They also have found the client was an employer rather than a contractor of labor even when the labor had signed papers stating that they were contractors and would take care of their legal duties. Just ask Microsoft who had to pay millions once the labor had been reclassified by the courts as employees, not contractors.
The term “contractor” is really a misnomer in this day in time, at least in California. If a modeler is working for an agency, the modeler is most likely an employee of that agency. The agency by law should be paying all applicable taxes and workers compensation insurance and unemployment insurance, and withholding the proper amounts from the employees to pay into social security (social insecurity) paid family leave and assorted other withholdings, and for larger agencies – health insurance. If they are not, they indeed need to be called into question. Only in rare circumstances is this not the case. If an agency (or studio, etc.) is improperly classifying its labor as contractors (as opposed to employees), and those very same modelers (or others) are not providing for themselves the same coverage with respect to insurance and tax payment, there might be a real serious problem.
Some agencies (and clients) would rather not abide by this state’s point of view. One good reason is money. By adding into the bill rate all the required payments can be huge. Depending on the workers comp rates (some rates can be astronomical depending on circumstance such as class code for occupation and the accident record at the work facility), the percentage over and above the employees pay rate can be sizeable. This can be even greater for short-term duration employment. Longer terms can help to absorb the initial brunt of the unemployment insurance costs. As business and workers comp insurance is based on a business’ revenue, annual audits are part of the fun too. Furthermore, another major reason to avoid actually having “employees” as opposed to “contractors” is the payment of overtime. This also is a mega no-no that can bite the client in the butt if these laws are dodged.
Some clients have been known to from time-to-time be rather relaxed in payment of invoices. If the agency is doing what they should and paying the modelers in a timely fashion then the agency is really taking it in the…<br>
So what does the agency do, they either have very deep pockets, or they go and borrow from those that do. It really doesn’t matter who it is, banks, accounts receivable companies, factoring or funding, or loan sharks, they all want the same thing. The cost of money is money. Interest, or a percentage, or whatever you want to term it as, it is still the bottom line. And guess who pays for that? That again is part of the bill rate.
The clients want to use the agency to cushion the lag from invoice time to payment time. They want to know that the modeler will still be paid even if the payment from the studio takes longer than anticipated. Thereby, the modeler won’t freak, pack, and skip town.
An agency also helps to keep the studios’ own unemployment insurance rates down. If they had outside help hired for short term, the constant layoffs would drive their rates to the limits. They don’t want to be paying the higher rates all year around on all of their actual full time employees. They would prefer to do so only for the temp labor when they need to have it.
An agency should help to insulate the clients in some aspects of liability. The way the law is in California, I really don’t know if this works or not. It seems the courts like to go for whoever has the deepest pockets. An agency can on occasion keep clients' toes out of the fire with some good advice.
Studio managers also have a limited amount of time to deal with the whereabouts and numerous situations of the modelers. They in turn leave the bulk of that interface with the agencies.
Would it be possible to have an association that provides all of the same benefits to the studios without having to go through an agency at all? It would be nice. On the other hand, who is going to run this? It is sort of like a credit union as a means of providing many similar aspects of banking to its members that a traditional bank or savings and loan does. At the end of the day, even though its members make up a credit union, someone still needs to be paid to operate it just like the bank does. Cost saving are negligible, however it might offer its members some other benefits as well as some pitfalls.
In addition to the costs associated with the labor being hired, an agency also has the same overhead as any other business. So how much should an agency add on to the bottom-line? Well that is a question for you to discuss. I am always interested what others think, right or wrong.
As far as really being an advocate for a particular employee, again, most studios already have a fair idea who they want although they do sometimes request new names and faces. Of course, an agency will always push an employee who has been tried and true.
This is not legal advice nor should it be construed as such, but rather a broad overview, and like anything else there are exceptions to the rules. If you do find some exceptions to this, I am always eager to hear what you find. Please don’t take this as “The Gospel”, look to regulatory bodies such as the EDD or IRS to find what you need to know. As a principle at Allegro, I am certified as a California Accredited Consultant (CAC), and I am active in California Staffing Professionals, which helps to promote a better understanding of the laws in this complex state.
So there it is! The dark, seedy, underbelly of the agency world as told by an insider, and a modeler as well. Hopefully this clears up more uncertainty than it creates.
All the best!
For more information from the EDD please contact www.edd.ca.gov
For more information from the Department of Labor please contact www.dol.gov
For more information from the Department of Industrial Relations contact www.dir.ca.gov
For more information from the IRS please contact www.irs.gov
Find out more about CSP at www.cspnet.org