Senate Bill S7709

                                 BILL NUMBER:  S7709                Revised 07/08/16

 TITLE OF BILL :

An act to amend the workers' compensation law, relating to the
definition of employee; and providing for the repeal of such
provisions upon expiration thereof

 PURPOSE OR GENERAL IDEA OF BILL :

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 SPECIFIC PROVISIONS :

Amends Workers' Compensation Law section 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 Workers' Compensation Law was amended to
define "employee" as including, for purposes of the Workers'
Compensation Law: "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 employee's favor."

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.
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. Some performers set up private corporations through which
they purchase health, including major medical, insurance, and these
policies, which may provide a choice of physicians and other medical
care providers superior to the choices afforded under workers
compensation insurance, but will decline coverage for medical
treatment of any injury that is covered by workers compensation, thus
relegating these individuals, who planned for their own choice of
medical coverage, to the providers who accept workers compensation
insurance, and then compel the worker to establish the need for each
treatment to the satisfaction of the Workers Compensation Board, thus
complicating the performer's ability to access medical care which
could be obtained simply by visiting a provider who accepts their
private insurance. If the performer has also chosen to purchase
private long-term disability insurance, the performer may receive no
added benefit from the lost wage aspect of workers compensation
either. In such instances, the amendment has the unintended effect of
relegating an individual who planned and paid for their own medical
and disability insurance needs to a system which they did not choose,
and which may provide benefits which are not only redundant to the
benefits he/she purchased privately, but also present administrative
and often legal challenges to access medical treatment and a
continuous flow of disability benefits. The amendment would also have
the beneficial effect of permitting the performer to pursue legal
rights which would be precluded by the automatic imposition of workers
compensation coverage.

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 restores the same right as any
other such corporate executive/owner to elect to forego workers
compensation insurance, and, in the event of injury, to maintain their
right of action under traditional tort principles, while accessing
their own privately purchased medical and long-term disability
coverage.

What the proposal would not change: The proposal would have no impact
on the beneficial purpose of the 1986 amendment. Every musician or
other performing artist would still be automatically covered by the
statute as amended in 1986, unless the performer (1) is an executive
corporate officer of his/her own corporation, and (2) establishes that
he/she is not an employee under traditional common law principles.
Thus, no musician or performing artist would lose any of the benefits
provided by the 1986 amendment.

 PRIOR LEGISLATIVE HISTORY :

This is a new bill

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :

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;
provided, however, that this act shall expire and be deemed repealed 3
years after such effective date.