Would Michael Stipe file for Oregon Unemployment?
Chip Shields
Sometimes all the law needs is a little more common sense. Sometimes it gets it.
Back in December 2007, Jim Brunberg of Mississippi Studios called to ask for help.
His intimate music venue and recording studio in my Oregon House District was being audited by the Oregon Employment Department. A quirk in the law required him to pay unemployment insurance for musicians that played in his venue if the music contract did not clearly indicate who was responsible for unemployment insurance taxes.
From an OPB story in December 2007: Before Jim Brunberg got in this fight with the Oregon Employment Department chances are most musicians had never heard of ORS 657-506. But that state law says clearly that a musician is assumed to be employed by the venue, unless a contract specifically says otherwise.
Brunberg could pay his $6000 bill. Instead, he’s fighting the employment department and trying to get musicians to declare what he considers obvious--that they are not his employees.
Jim Brunberg: So I’m having people write letters. I’m getting hold of bands that have recorded here who are really hard to get a hold of. Like REM. Things like that show up on the list of employees that I have because I wrote them a check.
Colin Fogarty: You employ members of REM?
Jim Brunberg: Isn’t that fantastic? They don’t know it. (laughs)
Absurd law happens in the legislative sausage factory, like this law that ends up making Michael Stipe Mississippi Studio's employee. And a governnment agency can look absurd for following the law like the Employment Department did by making a small businessman pay into the Oregon Unemployment Insurance system just in case Michael Stipe or his colleagues file an unemployement claim in Oregon.
Again from OPB...
The agency’s Tom Fuller says employment department managers don’t write the law, but they do have to enforce it. Tom Fuller: This was passed originally by the legislature in the 1960s and amended in the 1980s and it really is very specific, so that there is no choice here. There is no judgment. There are no decisions. It is the law. We simply have to look at the contract that’s there.
Fuller says all venues need to do to comply with the law is include one line in the contract saying who pays unemployment taxes. Fuller’s agency was backed up recently by an advisory opinion from the state Attorney General’s office.
Now state lawmakers – including -- Portland Democrat Chip Shields -- want a change in the law...
Chip Shields: North Portland has a great music scene and that music scene needs to be watered, nurtured and encouraged to grow. And I’m committed to doing just that. It’s important culturally. It’s important economically. And besides I like good music.
But absurd law can be corrected. And that's what was started Friday when HB 2540 passed out of Rep. Mike Schauffler's House Business and Labor Committee.
In these awful budgetary times, where the legislature will be forced to make some stupid choices, it's nice to know that occasionally common sense prevails in Salem. A special thanks to Jim, his lawyer Ann Koch, Bruce Fife of Musicans Local 99, the Oregon Restaurant Association, Sen. Margaret Carter and the other bill co-sponsors for working to put the law right.
And thanks to Tom Fuller and Director Laurie Warner of the Oregon Employment Department for their help too.
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Feb 21, '09
Great leader orders him to report to a re-education camp! Mom and Dad are sending me to the carribean for spring break, so there, proles!
Feb 22, '09
Oh, I have so many voices! It must be the proletariet voices of victory over the capitalist classes!
p.s. How many capitalists does it take to change a lightbulb?
9:47 a.m.
Feb 22, '09
Nice catch Rep Shields.
One of the main things that critics of gummint look for is brain dead legislation and/or chances to ridicule "the bureaucrats", yet when a prominent Democrat highlights some of this unintentional craziness, we get mostly yawns from our own, and more evidence of cluelessness from random trolls unclear on the concept.
Anyhow, thanks for keeping an eye peeled........
Feb 22, '09
Schaufler, with one "f".
Feb 23, '09
this bill proposal is outrageous.
i have to say if you are running a business, especially one as successful as mississippi studios, and it doesn't occur to you to check whether the musicians you employ are considered independent contractors (easy answer: obviously) and whether hiring independent contractors in your state requires you to pay unemployment taxes (yes in most states, including oregon, if they work at your place of business, which applies here), then you're an idiot. and since he's probably not an idiot, i suspect he is in fact trying to smokescreen the fact that he avoided paying the taxes by saying the law is stupid, and obscure. the whole "why does mississippi studios have to pay in case michael stipe files for unemployment in oregon?" is like that propaganda the other week on the beer tax titled something like "gov't wants to increase beer tax by 1900%!!!" not only is it misleading in it's focus, it's an essentially republican message in the guise of thinking locally and protecting small businesses. and the funny thing is that at the end of the day most of the costs to businesses of paying taxes get passed on to the consumer! -- taxes that ensure, in this case, that unemployed people can continue to pay their bills, and that health and human sevices agencies (in the case of the beer tax) get funded. what the?! this guy tried to get away with not paying taxes either because he thought he could, or maybe because he didn't want to look bad to the musicians by having an exemption in the contract that effectively says "even though the state of oregon says i should be paying unemployment taxes on you guys please sign here to absolve me of this and don't forget to pay them yourselves." and as you will see below in the law that they are trying to get repealed, making the musicians pay the taxes stands to be more problematic because if not everyone signs then the musician or musicians who do become liable for the others' taxes, not to mentions the musicians having to negotiate the tax laws of every state they play in. the law as it is is perfectly reasonable:
657.506. (1) The person or organization engaging the services of a musician or musicians shall be considered the employer for the purposes of this chapter, except when the services are performed pursuant to a written contract [which] that expressly designates one or more musicians who sign the contract as responsible for the filing of any reports and the payment of any taxes based upon wages or earnings of a musician or musicians performing services under the contract. A written contract [which] that so designates a musician or musicians as responsible shall be conclusive evidence that the person or organization engaging the services is not the employer of a musician or musicians performing services under the contract. The musician or musicians who sign a written contract designating them as responsible shall, for purposes of this chapter, be considered the employer of any musician performing services under the contract who did not sign the contract. (2) The provisions of subsection (1) of this section do not apply to services performed for a nonprofit organization, as defined in ORS 657.072, for this state, [or] for a political subdivision of this state or for an Indian tribe
all the mississippi studios guy has to do, if he doesn't feel he should pay unemployment taxes for people who are making him money, is factor those costs into his contract and/or ticket prices. he like a weasel (forgive the expression) who got caught by an audit and is trying to save face, spin it, or just doesn't want to pay, and has the resources and political clout to try and create a law that forces musicians to pay their own unemployment taxes, unlike all other independent contractors that work at the site of the business they are employed by. that's messed up, and he's only thinking of himself. and suddenly now the story is about him having to possibly pay unemployment taxes for a superstar multimillionaire because he "wrote him a check." well what the devil do you write people checks for that get taxed other than for services rendered? but if you frame it like this somehow now your the victim of bad government: Jim Brunberg: So I'm having people write letters. I'm getting hold of bands
chip is on the side of the businessperson and not on the side of the tradesperson. why? because the businessperson is higher up on the totem pole and that means it's good for his career if he helps him. that makes him, as a democrat, a sell-out, posting proudly on blue oregon, either not seeing the irony (i'm only assuming blue oregon's claim to progressive politics here, not necessarily buying it), or abusing it to his advantage.
as for Musicians Local 99, i don't get it. this bill certainly doesn't help musicians make a living. i went to their website and under the "campaigns" tab there was this vaguely-worded listing:
Independent Contractor Rules -- The State of Oregon is making changes to the laws governing independent contractors. These changes may effect how musicians do business and pay taxes. Local 99 is working to ensure that musicians are represented in the lawmaking process.
i suppose it's possible, given his track record on this issue, that chip is making it sound like the union is enthusiastic when it is perhaps not. perhaps the union is making some sort of concession to a powerful man, be it chip or, more likely, jim brunberg, realizing that unemployment taxes per musician might not amount to much, if they pay them at all. but that's still bullshit. speculation, here. but i wrote an email to the president of the union asking for an explanation!
Feb 23, '09
Ben, thanks for your comment.
Here's the link to the hearing audio that may be helpful.
Feb 28, '09
thanks for your reply, chip. my apologies for any unwarranted rudeness. after listening to the hearing my disagreement with the politics of this bill remains. firstly, ms. koch's claim that not a single person she contacted in the music industry had any knowledge of the requirement to pay unemployment taxes on musicians is very hard to believe - i will go so far to say that i don't believe it. a simple search - "unemployment taxes musicians" or even "unemployment taxes independent contractors" - will yield relevant search results on the first page. it is much more likely that this is an instance of complicity within a peer group than it is an (adaptive) strategy by ms. koch and mr. brunberg and rep. shields, although i would have to think that this is not a representative industry position; there must be venues out there that complied with 657.506.
coming from a position of dishonesty, or perhaps of denial - if geithner can get away with it so can i (i'm making a point not a timeline) - we can prop-up ourselves with a lack of hard evidence on matters of personal intention.
mea culpas, public ones, generally succeed private ones, but the post above indicates that mr. brunberg perhaps has yet to suffer the latter and has no intention of paying his backtaxes. it is my understanding that even if HB 2540 passes - and i predict that it won't - he will have to.
the simple and just solution, in general, is one that provides umemployment benefits to all workers, but until we have that at least let us have full funding for all currently eligible recipients. there is no denying that the musicians represent the majority value in your business; the least you could do is pay unemployment taxes on them so that it goes into the pool of money that benefits, among others, oregon's unemployed and underemployed musicians, and is saved, specifically, in order to soften the blow of a contracting economy.
if that perspective doesn't motivate you, then change your contract, and, if your feeling generous, start a PR campaign to inform other venues of their obligations.
the tax law, in context, is fair.
in closing, you are not the second largest employer in oregon. disingenuous arguments are dishonest arguments. the musicians are independent contractors. all that is asked of you is to consider the option of whether or not you want to offer to pay the unemployment taxes on your musicians.
.ben
Feb 28, '09
at 27.30 in the hearing Jim momentarily recalls the contractual language of ORS 657-506 as it existed in the 80's.
Feb 28, '09
it appears that something like 90% of the ORS 657-506 tax can be offset through the payroll tax, which would result not in a "5% industry tax" as was suggested at the hearing, but a 0.5 percent industry tax.