Model Payment Question

Those of you who contract models to do shoots, do you make them sign a contract / receipt for any payments?

Im guessing its probably a good idea to include such an item along with the model release stage name list and harrassment policy that they have to sign anyway, just wondered what your thoughts are about getting a signed payment receipt from them to?

Also, how do you handle taxes for the models payment, is this something you 1099 them for if they do enough paid work to warrant it? If so, is it worth mentioning that on the payment receipt somewhere for your/their records also?

Regards,

Lee

our modeling release includes the amount paid to the model for the shoot, but i figure what the heck and have them sign a receipt as well.

Quote:

---

Originally Posted by basschick

our modeling release includes the amount paid to the model for the shoot, but i figure what the heck and have them sign a receipt as well.

---

Yup, thats what ours is going to have on it to but im more concerned about taxation issues with our corporation than whether the model pays their taxes or not LOL

I figure its probably best to get as much documentation as possible from the model, release, id, harrassment policy, payment receipt, etc etc that way if anything ever does happen where we need to have those types of docs available, we'll have them.

I guess i just answered my own question LMAO

Regards,

Lee

This is a great question.

A good habit to get into is to pay your models by check for the purpose of good book-keeping records. When issuing a check/payment to the model, its wise to have them sign and acceptance form or receipt that they have been paid in full.

This will ensure that the model did get paid and you have proof to how much the model got paid, and place all information into a non-2257 file along with anyother info you have on that particular person/model.

-David
D&E
www.allboysvideo.com

A signed payment receipt is important for our books and of course for the taxes, also here.

Generally, we pay them by check which serves as a receipt. If we pay in cash, they sign a separate cash receipt. The only downside to paying by check is the situation where a model changes his mind... doesn't cash the check... can that be considered an incomplete contract? But in all the years I've been shooting, I never once had a model who didn't cash his check.

Our release is a combination release/receipt. The top part has the release, and they fill that out and sign it before the shoot starts. The bottom part has the receipt for payment which is filled out and signed after the shoot, before the model is paid. We generally have them sign that whether or not we pay by check.

We issue 1099 forms to any model paid over $600 in a calendar year.

Chip,

I seem to recall you saying you had some type of checklist that you give your models before a shoot, is there any chance i could sneak a look at it? ;)

Im trying to get all this model stuff sorted out this week and not having done a shoot myself before im not really sure what i need to be letting them know other than making sure they dont have a grotty ass on shoot day LOL

Regards,

Lee

Lee, et al

We have always paid all models by check, period, no exception. If we pay over $600 we have always done a 1099 at the end of the year, no exception. Of course, we have always paid them as independent contractors and we've always felt that paying cash, and not reporting it, like other studio we know, just wasn't the right thing to do.

Now....let me tell you what is happening in California and most folks most likely are not aware of it.

We've been going through an EDD (Employment Development Department) audit. They say that all models that we have had the past three years should have been listed and paid as employees, NOT independent contractors. We hired an employment law attorney and have been fighting this for nearly two years. WE JUST LOST. We were just notified two weeks ago that all of the models have been re-classified as employees (for taxation purposes) and we were sent a bill from the EDD for back taxes, workman's comp, unemployment, etc., plus penalties and interests.

Money isn't so much the issue, but now, if we use a model, we must classify him as an employee, even it it is for one shoot...for only two hours. He has to go on payroll, we have to deduct all the taxes and other bull sh*t. Even though that is a pain in the ass, here's the real problem

Now that we have a employer/employee relationship with all models, we fall under all of the regulations in CA that govern such relationships....and this means, CAL-OSHA. The big bugaboo here is that if we have two models who are sucking dick and rimming holes, and not using condoms or dental dams, we are in violation of CAL-OSHA's regulations regarding the transference of blood borne pathogens since sucking a dick can expose the one doing the sucking to pre-cum, and rimming butt obviously exposes the rimmee to the potential of all kinds of stuff. And, obviously, if it it barebacking, well, any of these activities place us in jeopardy of a major......major fine.

We are of course appealing the decision, but it appears unlikely that we are going to win.

It is also interesting to note that the EDD did ask us, during the course of their audit, for the names of any other studios who we knew might be paying their models as independent contractors. Of course, we simply told them that we were unaware how other studios paid their models.

All of this came about as the result of one model filing an unemployment claim when he lost his regular job. He listed us as having worked for us for a day and earned $500.

So, any of you located in California, be damn careful. If anyone turns you in, or one of your models files an unemployment claim, be looking for a visit from the EDD.

This sure seems to me to be an easy way to shut studios down. We have already quit filming in California. Two studios have already been fined $30,000 by Cal-OSHA. Of course, they are working their way through the appeals process, and an EDD audit. For us, it just doesn't seem worth the risk to keep filming in that state.

Bill

Wow Bill that is a very interesting and enlightening story. Makes it very tough to create content here in California and of course dramatically increases cost of production to travel out of california to produce.

I can't even begin to see how this would work on the set as most models that shoot gay videos just want the quick buck, and telling them they will have to be on payroll and wait for a check to be cut with payroll taxes excluded, I think will be a detriment to the production of porn here.

Unless of course you shoot in your office and have checks cut as they are performing..

Glad we shoot our stuff out of the country.

and I just noticed your quote by James Madison at the bottom of your signature..... and how true it is. what forsight.....

Tom,

We tried putting the guys on payroll. We use PayChex for our payroll services and we would call them, tell them the amount of deductions the model would be getting, how much he was getting paid, and then we could subtract the deductions from the gross check and issue a check right away.

Problem of course was, model didn't like the withholdings, and PayChex had to enter the model as an employee on our account, and then terminate him, and of course, they charge for all of that. It was costing a fortune just in their fees, not including what I was having to pay one my "real" employees to make sure we had all the required paperwork for an "employee" and then getting a termination signed by the model after we filmed and we legally "fired" him, which was what we had to do.

Way too many hassles.:(

Bill

We pay everyone by check. The check is our legal receipt.

We also include the amount to be paid on the model contract however, this does not always correspond to the actual amount payed...for instance, if we end up by docking the model $$$ for not providing a cum shot or not performing as outlined in our contract, etc., the new amount may not agree with the already signed amount so, we make eveyone acknowledge the changes, etc., etc...

We treat all payed sub contractors the same and 1099 them as required.

Its all very simple, legal and easy.

are you shooting in california? if so, have you run into the problem hdkbill has run into?

and does anyone have a link to the regs about models having to be paid as employees? i searched around the california edd site but haven't found it yet.

Quote:

---

Originally Posted by A_DeAngelo

We pay everyone by check. The check is our legal receipt.

We also include the amount to be paid on the model contract however, this does not always correspond to the actual amount payed...for instance, if we end up by docking the model $$$ for not providing a cum shot or not performing as outlined in our contract, etc., the new amount may not agree with the already signed amount so, we make eveyone acknowledge the changes, etc., etc...

We treat all payed sub contractors the same and 1099 them as required.

Its all very simple, legal and easy.

---

I can't imagine this will hold up in the end. Not only does the average model easily comply with the standards of the IRS 20 point test (or whatever it is), but if it does eventually stand, it will impact not only the adult industry, but also every single performance by a model in still photography, live fashion shows, television commercials, product demonstrations, and everything else. And, from everything I've heard, none of those people are employees. Likewise, I could see the EDD trying to extend that to musical entertainers playing concerts... all of the principles and practices are pretty much the same.

It sounds to me like greed on the part of EDD combined with incompetence by some government bureaucrats at EDD is what's at work here.

My guess is that when the mainstream modeling/entertainment industry gets hold of this and gets on board, lobbyists will start coming out of the woodwork to get something in place that excludes models/actors/musicians/entertainers from EDD control.

Good thing we're only about 60 miles from the NV border :)

Quote:

---

Originally Posted by basschick

are you shooting in california? if so, have you run into the problem hdkbill has run into?

and does anyone have a link to the regs about models having to be paid as employees? i searched around the california edd site but haven't found it yet.

---

Basschick,

All you need to do is go to the EDD website and do a search for Independent Contractors. Then look for document number de38.pdf You may be able to go right to it using this link: http://www.edd.ca.gov/taxrep/de38.pdf

Read it very closely and I think you will find why models are considered by the EDD as employees. The big issue, and which is what the EDD basis their opinion on is the issue of "right of control".

During the hearing we were asked some very pointed questions such as:

Did we tell the individual when to report to work?
Did we tell him what to do?
Did we have the authority to tell him to leave if he wasn't performing?
Did we provide the equipment, supplies or tools? (they meant the cameras, the lights, the location.
Did the individual have a substantial investment which would subject him or her to financial loss.

Obviously we tell the models when to report for the shooting. How would you shoot a video or photos if you didn't?

Of course, when filming we tell the model what to do. It's called a script, even if it's not written. And, of course, if he wasn't performing, or appeared to be on drugs, or couldn't get it hard, etc., we have the authority to ask him to stop performing and leave.

And, yes, we provide the cameras, the lights, the mic's, the lube, the location, etc.

And does a model have a "substantial investment" that could cause him or her to be subject to financial loss. I guess that point could be argued but for the most part the answer is no.

Another question they asked was; "was the individual there for any purpose other than to further your business?" Obviously not.

After the hearing, where we initially loss, the hearing officer spoke to me "off the record" She said that the EDD has never lost one of these cases in the 13 years she has been with them. She went on to say that they have had rulings on all of the major studios; MGM, United Artists, etc., and that they have won them all. She said that when you see all the extras on a movie, they are all paid as employees even if they are only there for one day. The major "stars" generally have corporations which are paid directly instead of the "stars" so they are excepted.

Our attorney essentially told us the same thing that the hearing officer did, and, he specializes only in employment law.

Our case was heard before an administrative judge, and she ruled against us.

The only reason we are appealing is in order to drag it our at least 3 years. The reason for that is that the State of California will report their findings to the IRS who will then just send us a bill for what we owe them and then they may conduct their own audit. The statute of limitations for this type of thing with the IRS is 3 years....therefore, we appeal, drag our feet, etc., trying to get past the 3 year period. We do't want the federal government nosing around our business for any reason.

Two MAJOR straight studios are currently undergoing this type of audit. Most adult studios are completely unaware of this. We weren't aware of it and neither are most attorneys unless they specialize in labor law. But, when you get big enough, or a competitor turns you in, or one of your models files for unemployment, be prepared, it's probably going to happen. It's easy money for the state.

Another issue that has caused the EDD to start looking at adult companies was the AIDS scare back a couple of years ago when the straight model came back from Brazil with AIDS and infected several female models. OSHA fined the studios that he worked for. The studios said that their models were independent contractors. That was when it came to the attention of the EDD and they began an audit of those companies.

Bill

Wow.

Thanks so much for providing this information.

Did you get any read on

-- A California entity (LLC/Corp) shooting content outside of California, such that the models never set foot in California... would those still be employees?

-- A California entity contracting with either a temp agency, a PEO, or a non-California (maybe Delaware or Nevada) corporation/entity that provides the models to the California entity, such that the California entity pays the Delaware corporation for the model's services

These would be my first thoughts on a legitimate strategy on how this issue could be resolved. Of course, I'm no attorney and all that, and I'm sure that you've explored every possible avenue... but never hurts to ask.

hdkbill - thanks for the link and the info. sure is bullshit, huh? but what if you go through an agency for your models? then they tell them when to appear. my daughter used to work through agencies for banks and had no control - she was basically an employee but was paid as a contractor with no benefits. they supplied her equipment, etc, and this is pretty standard in california for long-term and short-term temps.

just thinking... as far as cameras, they are not equipment the models use - they are equipment the photographer uses. the model brings his own warddrobe - that is his equipment. also he may bring a comb etc.

Quote:

---

Originally Posted by boyfunk

Wow.

Thanks so much for providing this information.

Did you get any read on

-- A California entity (LLC/Corp) shooting content outside of California, such that the models never set foot in California... would those still be employees?

-- A California entity contracting with either a temp agency, a PEO, or a non-California (maybe Delaware or Nevada) corporation/entity that provides the models to the California entity, such that the California entity pays the Delaware corporation for the model's services

These would be my first thoughts on a legitimate strategy on how this issue could be resolved. Of course, I'm no attorney and all that, and I'm sure that you've explored every possible avenue... but never hurts to ask.

---

Hey Boyfunk,

I'm no attorney so take what I say with a grain of salt, but I have posed those same questions to our attorney.

A California company, regardless of LLC or Inc, would not have to worry about the California EDD if the filming takes place outside of California UNLESS, both the model is a resident of California and the Company is incorporated in California and the EDD could prove that the company is doing this on a regular basis JUST to avoid paying the taxes. Frankly, I would think this would be very difficult for California to prove.

If a California company contract with a modeling agency for the model, and then pays the modeling agency, the California company is home free and clear. It would then be the modeling agencies responsibility to pay all applicable taxes. The key here is that you pay only the modeling agency. That is no different than hiring a licensed plumber to come in and fix your crapper. You pay the plumbing company. The plumbing company is responsible to pay the plumber his wages and pay applicable taxes.

We are no longer a California company. We are now a Nevada corporation. Even so, if we shoot here in California then we would be responsible for pay taxes for the model if we paid him directly. If we were doing this on a regular basis, even though we didn't have a physical location in California, California could attempt to make the argument that we should have incorporated as a foreign corporation, paid those fees, and then hired the models as employees and pay all applicable taxes.

From what several labor attorneys have told me, California is the most aggresive state in going after companies they think are operating in such a way as to avoid paying California taxes.

Hope this answers your questions.

Bill

Quote:

---

Originally Posted by basschick

hdkbill - thanks for the link and the info. sure is bullshit, huh? but what if you go through an agency for your models? then they tell them when to appear. my daughter used to work through agencies for banks and had no control - she was basically an employee but was paid as a contractor with no benefits. they supplied her equipment, etc, and this is pretty standard in california for long-term and short-term temps.

just thinking... as far as cameras, they are not equipment the models use - they are equipment the photographer uses. the model brings his own warddrobe - that is his equipment. also he may bring a comb etc.

---

Basschick,

Yep, it's bullshit for sure. California is doing this for two reasons. First, we become the tax collector and they are assured of collecting what they think they have due. Seems that most models, even though you provide them with a 1099 and report it appropriately, don't pay the taxes that are due.

I really believe that second reason is to try to make it much harder on adult companies to operate in California, and maybe even shut them down, without the hassles of trying to prove obscenity. Much easier for Cal-OSHA to just start levying fines for violation of the blood-borne pathogen part of of the OSHA regulations.

Hiring models through an agency is the best way to go. Pay the agency directly and then let them worry about the tax collection. The problem for us is that doing our type of films and photos, we really can't go through an agency.

Cheers,

Bill

Quote:

---

Originally Posted by basschick

are you shooting in california? if so, have you run into the problem hdkbill has run into?

and does anyone have a link to the regs about models having to be paid as employees? i searched around the california edd site but haven't found it yet.

---

As producers, we do what we have been told to do by our accountants and the EDD and, we do what all companies we ever worked for (as models) do...with one exception, Titan.

When we were hired as models by Titan, they were the only company we ever worked for as models that withheld taxes. All other companies did not make withholdings and sent us 1099 forms.

If we are operating with misguided information as producers, then so are All Worlds, Bachus, Pleasure Productions, SX, Talos Entertainment, Pacific Sun, MSR, Chi Chi LaRue's Live and Raw (to name a few) and, every other web company and film company we have worked for as models over the past 6-7 years.

I do know from experience, that what the EDD, IRS or any other agency tells you "on the phone" will not hold up in court. It is always advisable to get important information, guidance, tips, etc. in writing when dealing with these agencies...

Quote:

---

Originally Posted by A_DeAngelo

As producers, we do what we have been told to do by our accountants and the EDD and, we do what all companies we ever worked for (as models) do...with one exception, Titan.

When we were hired as models by Titan, they were the only company we ever worked for as models that withheld taxes. All other companies did not make withholdings and sent us 1099 forms.

If we are operating with misguided information as producers, then so are All Worlds, Bachus, Pleasure Productions, SX, Talos Entertainment, Pacific Sun, MSR, Chi Chi LaRue's Live and Raw (to name a few) and, every other web company and film company we have worked for as models over the past 6-7 years.

I do know from experience, that what the EDD, IRS or any other agency tells you "on the phone" will not hold up in court. It is always advisable to get important information, guidance, tips, etc. in writing when dealing with these agencies...

---

We were also doing exactly what our attorney and accountant told us to do. During the hearing we had with the EDD we were told that most attorneys and accountants, unless they specialize in labor law, do not understand these regulations.

Their is no doubt that many of the studios you mentioned are still hiring models as independent contractors. And, I hope I'm wrong, but if they get audited, that may change for them. I believe that Falcon was audited a few years back and they now pay their models as employees.

In my original post I only relayed the history of what has occured with us. Wasn't posted to create argument, just to let everyone know what is happening on this front.

The attorney we are using to fight this issue is a labor attorney who specializes in this type of thing and who does in fact represent a couple of the studios you mentioned. In fact, it was one of the companies you mentioned who referred us to him. He says we have very little hope of winning and he says that the other studios must decide for themselves what risks they are willing to take.

Bill