BILL NUMBER:S7823

TITLE OF BILL:  An act to amend the workers' compensation law,
relating to the definition of employee

PURPOSE: This bill would amend Section 2(4) of the Workers'
Compensation Law, to clarify that a musician or other performing
artist who is exempt from the requirement to have workers'
compensation insurance because he or she is an executive officer of a
corporation who is deemed excluded from coverage under section
54(6)(c) or section 54(6)(e) of this chapter is not an "employee" of
the television or radio station, production company, or venue of the
performance.

SUMMARY OF PROVISIONS:  Amends WCL § 2(4) to clarify that performing
artists who are employed as corporate executives of their own
corporations, and whose corporations enter into contracts with
theaters or other venues to provide their services, and who would not
be found to be employees of the theater or other venue under
traditional common law principles that are utilized to determine
employment status in workers compensation proceedings, are subject to
the same exemption from the requirement to be covered by workers
compensation insurance as any other corporate executive who is the
sole owner of the corporation, or one of only two such owners.

EXISTING LAW:  In 1986, section 2(4) of the WCL was amended to define
              

"employee" as including, for purposes of the WCL: "a professional
musician or a person otherwise engaged in the performing arts who
performs services as such for a television or radio station or
network, a film production, a theatre, hotel, restaurant, night club
or similar establishment unless, by written contract, such musician or
person is stipulated to be an employee of another employer covered by
this chapter."

JUSTIFICATION: Before enactment of the 1986 amendment, the
determination whether a performing artist who was engaged, for all
other purposes, as an independent contractor, was nevertheless an
employee for purposes of workers compensation coverage, was made on a
case-by-case basis, with analysis of the common law factors that
determine whether a worker is an employee or an independent
contractor, including payment of wages, the right to control the
details of the work, the right to hire and fire, and others. It was
observed, at that time, that venues, in order to escape liability for
payroll taxes, unemployment insurance contributions, and workers
compensation premiums, were essentially coercing performers to accept
employment as independent contractors. When these performers were
injured, they were then required to prove their status before the
workers compensation board, an arduous and time consuming process that
then almost invariably found for the injured performer. The intent of
the 1986 amendment, as expressed by the Assembly sponsor, the late
Assemblyman Roger J. Robach, was to "add clarity to the law," to
"provide an accurate reflection in statute of the practical realities
of the marketplace." Assemblyman Robach's supporting memorandum also
noted: "Under common law these groups are eligible as employees since
they meet the test of being under an employer's direction,
supervision, and control. Currently these employees must now litigate


to be awarded their due benefits. Case law has consistently found in
the employees favor."

Legislative debate also indicated that the purpose of the amendment
was to protect performers who are not in the "star" category, and who
are not in a position to protect themselves through negotiation or
otherwise.

As the foregoing reflects, the 1986 amendment, as it applied to
performing artists (the amendment also changed the statute as it
applied to licensed real estate brokers and taxicab operators), was
intended to eliminate the necessity for hearings in the case of
performers who were, under traditional principles, actually employees,
not to change the law as it applied to "star" performers, whose
contracts were carefully negotiated, who exercise independence in
their artistic performance and interpretation, and who would not,
under traditional principles, be considered employees. However, the
language of the amendment is read by many as a sweeping pronouncement
that performers who are engaged, by written contract, as corporate
executive level persons, do not have the same option as other
individual corporate owners who engage in service contracts through
their corporations to elect to forego workers compensation benefits.

The measure places executive officers of a corporation, who would
otherwise be deemed excluded from coverage under section 54(6)(c) or
section 54(6)(e) of the WCL, but who happen to be performing artists,
on the same footing as any other corporate executive who owns his or
her own corporation or limited liability company to work as an
employee of his or her own entity, and retain the same right as any
other such corporate executive/owner to elect to forego workers
compensation benefits, and have the relationship with the venue be
determined under traditional common law principles in the event of
injury.

The proposal would have no significant impact on the beneficial
purpose of the 1986 amendment. The question of employment status would
arise only where there was a written contract by which the performer
is stipulated to be employee of a corporation owned solely by the
performer, or owned by the performer and one other person, in which
the performer is an executive officer. The musician hired by a night
club or restaurant to entertain during weekend brunch hours, or the
semi-professional comedian performing at a comedy club, who has not
established a corporation in this or another State, would still be
automatically covered by the statute as amended in 1986. A written
form contract by which the performer agreed to independent contractor
status would not invoke this proposed change, because the change would
not be applicable to written contracts directly between the performer
and the venue.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: This act shall take effect immediately and shall apply
to all cases, matters or proceedings pending on such date, or which
have not been finally adjudicated on such date or commenced on or
after such date.