Future Planning

From: Robert McNally <bobmcnally@me.com>

Date: July 30, 2019 at 3:09:11 PM EDT

To: FP Board <fullboard@folkproject.org>

Subject: Future Planning Committee Report and Proposals for August 2019 Board Meeting

The first phase was identifying and recognizing some core intentions, to be used as guides to evaluating proposals and activities. These were accepted and passed earlier this year.

Chief among them was the commitment of the FP to the twin goals of Sustainability and Growth, recognizing the interdependence of those two objectives.

The next phase of future planning is looking at more specific proposals to enhance the “Thrive and Survive” intention those goals expressed.

If we look at the history of the Folk project, we see that we have steadily progressed from a shoestring “hey kids, lets put on a show” folkie organization to a substantial cultural arts institution, with a broad audience, and respect and standing in the music and arts community.

Here is a key distinction:

The heart of “let’s put on a show” is the experience of the kids in the barn putting on a play.

The heart of a grownup cultural arts organization is the great experiences for our audiences (as well as us)

We should never forget our eager “Let’s Put on a Show” roots and spirit, it is a part of our brand, in many ways it IS our brand. At the same time, we have been steadily “upping our game” over the years, with more sophisticated technical capabilities and ever more audience related programing. We have grown to the level where our work is more critically about our AUDIENCE’S experience, and that is the direction in which we will Thrive and Survive.

The FP is currently experiencing a financial blossoming, for a bunch of reasons, ranging from our endowment and good investing to putting on better shows, actively seeking new memberships and reductions in unnecessary costs. At this juncture, we have choices among sitting on our increasing resources, spending on OUR experience, or spending on improving the experience of our Audience.

The Future Planning Committee strongly recommends that we continue “Upping Our Game”. That means delivering great experiences (measured both by attendance and increasing membership), and directing our expenditures toward better and better audience experience.

We can ask “does this up our game in terms of delivering the best audience experience?” when evaluating proposals.

We produce 100 events a year. Developing new events are totally dependent on champions stepping forward. Supporting existing champions in improving what we already do is a key component of Surviving and Thriving. Our twin goals are sustainability and growth. Growing by improving is a key part of Sustainability.

FPC proposals for August Board meeting

1. We recommend extending $500 to Event Hosting (one time), for Chair to use to improve the experience of the attendees, with the objective of increasing attendance and enthusiasm for the Evenings of Music

2. We spend a very large sum each year on Workers Comp insurance. The FPC recommends we revisit the past decision that we need workers comp insurance. The decision that we needed it was originally based on the advice of a pro bono attorney, looking at case law. Steve Humphries, attorney and former president of the FP has made an extensive study of NJ case law about Workers Comp (at the request of the FPC in discussing this). In a nutshell, his review indicates that individual itinerant musician performers hired by Folk Project venues for individual one-time performances from time to time are properly classified as independent contractors, not as employees. The only case to the contrary contrasted so strongly with the FP’s situation it even serves as validation. That case involved a musician playing at a venue three times every week, paid as a regular employee, being told by management what material to play, and further directed to act as a greeter and to engage with customers while not performing, as part of their duties. In numerous other cases, musicians (such as we hire) are repeatedly found to be Independent Contractors, not employees.

3. We recommend investigating hiring professional PR services, not as a knock on our PR volunteers but because the FP is upping it’s game. Our PR is largely directed towards events; the FP as an organization, a brand, could benefit from managing how we are known and trusted as an arts/cultural organization. Catch a Fire consultation would be a good start

From: 'Robert McNally' via Fullboard - Current and some former board members <fullboard@folkproject.org>

Sent: Tuesday, July 30, 2019 9:24 AM

To: FP Board <fullboard@folkproject.org>

Cc: Olga Alvarez <alvarez.olga@hotmail.com>; Pat Brangs <pbrangs18@gmail.com>; Lois DeRitter <lderitter@gmail.com>; Elizabeth Lachowicz <elizabeth.lachowicz@gmail.com>; Jean Scully <jean.scully1@verizon.net>; Mark Schaffer <markschaffer100@gmail.com>; Steve Humphreys <sh50984@gmail.com>

Subject: Workers Comp

Paul, and members of the board

The Future Planning Committee is aware that the Getaway is no longer paying Workers Comp for performers, due to the change to the NY venue This prompted us to consider what a large unproductive expense ($2500) per year our paying for Workers Comp is. One of our members pointed out that AMS, the Folk Alliance’s insurance company doesn’t even offer Worker's comp to it’s members.

At our July FPC Meeting we asked one of the Committee members, Steve Humphries, attorney and previous FP president, if he would look into our Workers Comp situation, and consider chairing a committee if the board was willing to revisit the matter.

He dove into it in with typical Steve Humphries thoroughness. His findings are so persuasive I am sending the report to the board, with the intention of proposing at the August meeting that we drop our workers Comp at the soonest possible date.

The key thing for us is whether the Musicians we hire to play at the Troubadour and elsewhere Independent Contractors, or Employees of the Folk Project. Steve explained that case law (what courts have held in past cases) is the determining factor; the Workers Comp statutes give guidelines who is an Employee and who an Independent Contractor, but do not spell out specifically which work situation falls into what class. Steve’s discovery is that the case law overwhelmingly supports “Independent Contractor”. He told me "I was actually kind of taken aback at how unambiguous the NJ case law is.”

Attached here are Steve’s report, copies of relevant cases, and Mike Agranoff’s 2016 memo proposing we drop Worker’s Comp.

It is work to read through this, but it is costing us $2,500 per year that does not go towards "upping our game" and delivering great experiences for our audiences.

Bob McNally, chair, Future Planning Committee

Begin forwarded message:

From: Steven Humphreys <sh50984@gmail.com>

Subject: Fwd: Workers Comp

Date: July 27, 2019 at 7:11:19 PM EDT

Bob - As requested at the July 17th meeting of the FPC, I have researched and reviewed applicable New Jersey case law concerning the legal distinction between independent contractors and employees. My review indicates that individual itinerant musician performers hired by Folk Project venues for individual one-time performances from time to time are properly classified as independent contractors, not as employees. Indeed, I do not see this as a close question. Under prevailing New Jersey case law trends and controlling case law precedent, I am of the view that it would be very unlikely for a New Jersey court to conclude that itinerant musicians hired on an infrequent and irregular basis are employees of FP, and instead would conclude that they meet the applicable tests under New Jersey of independent contractors. See, e.g., Koza v. New Jersey Dep't. of Labor, 307 N.J. Super. 439 (App. Div. 1997); Russell v. Torch Club, 26 N.J. Super. 75 (Super. Ct. 1953); Trauma Nurses, Inc. v. Board of Review, New Jersey Dep't. of Labor, 242 N.J. Super. 135 (App. Div. 1990).

My review of the 1953 Russell v. Torch trial court opinion, wherein the court found that a musician performer at a night club met the definition of an "employee" under New Jersey law, reveals that the case turned on facts so distinguishable from the circumstances involved with itinerant performers at FP venues as to make clear the likelihood of an obverse outcome in FP's case -- i.e., that application of the "control" test criteria used by New Jersey courts would lead to the conclusion that FP's performers are independent contractors. For example, the court's ruling in Torch Club was strongly influenced by an unusual and extraordinary extent of control exercised by the venue owner over the performer, who was seeking to be treated as an employee so that she would be covered under the bar owner's workers compensation insurance for severe burns she had suffered when her costume caught on fire from an open-flame heater unit in her dressing room. For example, the court took extensive note that the performer was hired on a regular recurrent basis (three times per week), was paid a regular salary, and that the nature of her performances was so strictly controlled by her supervisor that she was not permitted to play songs of her own selection. The court went so far as to point out that she was asked to sit with individual patrons at the bar and have drinks with them.

The critical defining circumstances of FP's engagement of musician performers for its various venues could not be more distinguishable from those at issue in the Torch Club ruling. To the contrary, they are more akin to those at issue in the more recent 1993 Koza case, which, unlike the Superior Court ruling in Torch Club, is an appellate decision and therefore is controlling precedent for New Jersey trial courts. In Koza, the court found that a band leader who hired band members for gigs at various venues was not the band members' employer even though he hired them and paid their salaries. The Appellate Division's analysis included the following detailed summary of New Jersey and out-of-state court rulings in analogous entertainment cases, which emphasized the "joint venture" nature of relationships of venues and itinerant musicians hired for individual, one-time performances:

What we see before us, as compared with other arrangements, yields a resultant joint venture rather than "employment," even under the term's extended meaning under the Unemployment Compensation Law. There are two New Jersey entertainment cases which reflect a usual employment relationship. Examples of performers receiving pay and being considered employees of the theater or amusement companies can be found in Empire Theatre Inc. v. Unemployment Compensation Comm'n, 136 N.J.L. 254, 55 A.2d 238 (1947), aff'd,137 N.J.L. 301, 59 A.2d 623 (E. & A.1948) (specialty act performers engaged by a burlesque theater were employees of the theater), and Steel Pier Amusement Co. v. Unemployment Compensation Comm'n, 127 N.J.L. 154, 21 A.2d 767 (1941) (members of an orchestra were considered employees of the amusement company, not the orchestra director). We note that in the latter case, the orchestra members were not found to have satisfied part C of the test, but that the resultant employment was considered to have been by the entity hiring the orchestra, not the orchestra leader.

There are also out-of-state cases describing orchestras or bands that operate differently from the one before us, and that were sufficiently institutionalized that they had regular employees with specific salary arrangements, even if the negotiated fees were dependent upon pay from the contractual sums remitted by the band's client. SeeCutler v United States, 148 Ct. Cl. 537, 180 F. Supp. 360 (1960) (federal unemployment taxes were due from band leader who paid the musicians working for him based on the union minimum rates and who negotiated the contracts that contained a profit for himself after expenses); Barge v. Indus. Claim Appeals Office of Colorado, 905 P.2d 25 (Colo.Ct.App.1995) (plaintiff was the acknowledged leader of the band with a memorandum of understanding signed by each musician requiring the musician to conform to the leader's sound and style standards, and the musicians were paid according to a schedule); In re Sybco Int'l, Inc., 244 AD.2d 614, 663 N.Y.S.2d 932 (1997) (company "in the business of providing musical entertainment for catered functions" found to be an employer, based on the extent of the company's control and the methods of remuneration); In re Philip R. Sims, 196 A.D.2d 912, 602 N.Y.S.2d 225, 226 (1993); (payments to the musicians were based upon hours worked and the local union's scale and included mileage); In re Captain Kishka, Inc., 158 A.D.2d 814, 551 N.Y.S.2d 631 (1990) (same). See also In re S. Di Carlo, Inc., 234 A.D.2d 802, 651 N.Y.S.2d 248 (1996) (where a bar owner was found not to be the employer of the musicians in a band he had hired where the band leader had agreed by contract that he would retain control over the band personnel and manner of performance and be responsible for the payment of all taxes and charges under federal and local law). In none of these cases was there a band operating on a cooperative basis without an oral or written contract placing responsibility on a band leader.

(internal citations omitted.) From the foregoing analysis, it is abundantly clear that the FP's engagement of itinerant performers in return for cash payment falls squarely on the "joint venture" side of the control criterion relied on by courts in determining the independent contractor vs. employee status of the performers. The performers do not depend on FP engagements for their livelihood, as they normally perform at a range of venues, FP does not control the content of their musical selection, their performances are not provided on a regular and recurrent basis (such as three times a week in the case of the Torch Club ruling), and the essential aspect of the performers' craft is provided through musical instruments in which the performers make substantial personal monetary investments (i.e., "tools of the trade"), just as any plumber, electrician or carpenter commonly hired as independent contractors by a homeowner for a home improvement project. As in Koza and the even more analogous In re S. Di Carlo, Inc. case relied on by the Appellate Division in Koza, it is difficult to imagine a scenario in which a New Jersey trial court would depart from the analysis taken in Koza to find that the nature of control exercised over FP performers by FP venues is that of an employer-employee relationship, as opposed to a venue-independent contractor relationship.

I am attaching the three cases cited in the first paragraph above for your information, as well as a background memorandum for a motion to the Board that was made by Mike Agranoff in February 2016 for discontinuing workers compensation insurance. My review of Mike's memo indicates that it is well-researched and well reasoned and strongly supports discontinuation of FP's workers compensation insurance at this time.

Please note that my observations as provided above are for informational purposes only and do not create an attorney-client relationship between myself and The Folk Project.

Regards,

Steven Humphreys

From: Mark Schaffer <markschaffer100@gmail.com>

Sent: Tuesday, July 30, 2019 11:54 AM

To: Chris Riemer <chrisriemer@verizon.net>

Cc: Bob McNally <bobmcnally@me.com>; Olga Alvarez <alvarez.olga@hotmail.com>; Pat Brangs <pbrangs18@gmail.com>; Lois DeRitter <lderitter@gmail.com>; Elizabeth <elizabeth.lachowicz@gmail.com>; Jean Scully <jean.scully1@verizon.net>; Steven Humphreys <sh50984@gmail.com>

Subject: Re: Workers Comp

Bob,

This is an excellent email and Steve’s work invaluable — or better yet, let’s put a value on it: $13,247.00 in the last five years. (See attached Transaction Report.)

As Mike points out, we are unique amongst our fellow folk music organizations.I will add, according to my Workers Comp legal connections, we are unique amongst New Jersey nonprofits.

The board is the guardian of the Folk Project’s resources.We have a responsibility to stop spending the next $13,000 on contrived safety that doesn’t conform to insurance norms.

Chris mentions when the board started paying Worker’s Comp, he would have argued passionately against it. Today I am of the same mind. Let’s all do that tonight.

Mark