Meeting #1

Post date: Mar 16, 2016 3:13:57 PM

Meeting Notes from the Folk Project Workers Comp Commission

March 15, 2016 (8:10 to 9:50); 25 Center Avenue, Morristown, New Jersey

Present (Committee Members): Lori Falco, Elizabeth Lachowicz, George Otto, Chris Riemer (Scribe), Barrett Wilson (Chair)

Present (Guests): Mike Agranoff, Judy Felton Storey

Introduction

Barrett welcomed the group and thanked everyone for their participation. He noted that this WC issue has been a bone of contention in the group for some time, and felt it was time to revisit the details, build a consensus within this committee and prepare a recommendation for the board. That being said, he suggested that we go once around the room to establish our opening positions, and also possibly volunteer to take on additional tasks that might be necessary before the next WCC meeting. Barrett went first.

Where We Stand

He recalled that he, Lori and Chris had all attended a Pro Bono Partners webinar last year, where the content presented made it pretty clear that our performers were contractors, not employees. He thought that was a good first step in building his own understanding. He's also filed some paperwork with the Pro Bono folks, which will let us have a direct consultantion one-on-one, rather than the more casual telephone advisories we've had in the past. But some of what he's learned more recently suggests that the contractor/employee distinction is not really the right "fulcrum" for this discussion.

Lori felt that we've been going round and round for some time, but things seem less clear the more time we spend on it.She thinks the idea that we need to treat performers as if they were Folk Project employees is ridiculous on the face of it, but she concedes that the consequences for not doing so are certainly dire (in the event a case went against us). She appreciates that Mike's research shows WC is certainly not customary in the folk music business, but wants to keep an open mind for now.

Mike started by presenting a document submitted to the WCC by Mark Schaffer (attached below), offering an expert but anonymous opinion supporting the view that our performers are contractors under the law. He also walked through the logic of his original motion (attached here), detailing why he thought we should drop our WC coverage. Chris doesn't find Mark's document to be controversial, and thinks our performers are clearly contractors. That may not really be the point, though. Both his contact with people in Trenton, and the fact that our annual WC audit report has a section specifically addressing contractor payments, indicate that the matter is not entirely clear. In some cases, contractors are considered as employees in a Workers Comp context. It has not been fully adjudicated in the state of New Jersey; some judges might view the matter one way, while others would go another.

So Mark's document is a good exhibit, but isn't getting at the core of the question. We also considered the nature of our liability pollicy (which excludes "any hired person") and the WC policy (which is primarily aimed at hired persons). In Elizabeth's experience, a claimant's status doesn't usually come up when you file a liability claim. It might become an issue later, depending on whether either party decided to lawyer up. She also pointed out that there's a sad but inescable fact here. It will be very hard to find any lawyer who's willing to tell you that you DON'T need insurance. She thinks the WC policy is probably a waste of money, but thinks we may have a hard time getting someone to put that in writing.

Mike felt the odds of a lawsuit were "vanishingly small," and was comfortable taking our chances. Lori wasn't so sure, since humans are inherently unpredictable. There are always outliers, and you just never know.

Questions and Answers

George has re-read all the email that's been exchanged on this topic, and thinks there are some unanswered questions which are still worth exploring.

• Bob McNally asked if NERFA had ever looked into this situation. Mike doesn't think so, but George felt we should follow up given that they are right at the center of this industry, and their opinion would have merit.

• Chris did follow up with the WC department in Trenton, but got an unfortunately vague opinion. Essentially, the offical response was only to say it was a "grey area." The advice was "It's better to have it and not need need it, then need it and not have it." To which Mike countered that it would be even better to not have it AND not need it.

• Chris has not, but will, follow up with a separate department in Trenton, that was recommended as a more specialized source for WC in the entertainment industry. This same source was consultated in a similar context by Kris Lamb, several years ago, with inconclusive results.

• Jay Wilenski mentioned that he'd contacted a WC expert, who also expressed the view that we didn't need to provide such coverage. George felt that was the most important area for followup.

The Law, Considered

George once took a course on tax law, through which he came to an important understanding. The law begins as legislation, where elected representatives write the statute. So that's the law you can see on the books. But the meaning of the statute evolves over time, as it's discussed by lawyers and considered by judges. The law as written is not as important as the law as interpreted by the courts. Laws are not "self actuating," said George, but are refined by lawyers, judges and juries over a period of months or years. That's why the input from a lawyer who specializes in WC is the key to making the right recommendation. We can't make plans based on our relative opinions about the odds of a lighting strike. We need sound legal advice.

Barrett will pursue Jay's contact, but also continue his conversations with the Pro Bono Partners. George thought that was fine, but he felt Barret should contact Jay's friend first. "Start with the gladiator," said George. He also mentioned the earlier observation that LLCs are exempt from WC. If that's true, should we consider changing our registration from a 501(c)(3) to an LLC? This was a can of worms no one wanted to open.

Chris added that in an earlier conversation, Mark said his legal expert felt the attached PDF was something we could use as a lever with our own insurance agent. The idea is that if we asked the insurance company to comment on a sound legal opinion (even an anonomous one), it would lead them to the conclusion that we don't need the coverage. And then we would have the insurance company's letters or emails on the record. Insurance being a contract, an acknowledgment from the insurance company would be a good defense. Interesting idea, but Elizabeth was skeptical that it would play out that way. As she mentioned earlier, lawyers are not going to tell you not to get insurance. Especially lawyers who work for insurance companies. She herself thinks it's a waste of money, and has also been a huge waste of our time. She also wondered if Mike had considered adding language to his contracts, stating that we expect performers to have their own insurance. He has not, but he would be willing.

Going on the Record

Lori mentioned Scott Sheldon, a Folk Project member and attorney who ran the Sanctuary Concerts for many years. She has emails from him telling her we don't need WC, and he never carried it at Sanctuary. Would he give us something on the record, or do we have the same problem?

George pointed out that lawyers who don't specialize in WC are more likely to hedge. Experts are not. We need someone who has been living with these issues for years and years, who can tell us in confidence that it's something we don't need to worry about it. And we should be willing to pay for that opinion, assuming the fee is reasonable. Lori agreed to follow up with Scott. And if he does not consider himself a WC expert, he could perhaps recommend someone who was. Ditto on Jay's friend. If he doesn't want to be our counsel in this area, perhaps he could recommend someone who would.

Barrett asked for a straw poll of those in the room. George, Chris, Elizabeth and Mike were all firmly in the drop WC camp. Barrett and Lori were still undecided.

The Processing Question

Judy Storey had joined the conversation by this point, in her role as mistress of the house and given her background as an HR professional.

She pointed out that when you process a WC claim, it always turns on the question of compensation, usually over a period of time. As in "how much did you pay this person over the past 12 weeks." WC is primarily about replacing lost wages in the event someone is unable to work, and is generally calculated as 2/3 of the wages they'd have been paid if they were working. Given the nature of what we actually pay performers, such calculations would be meaningless. It would be better for the performers if we just gave them a few bucks as an act of kindness.

Mike thought this was interesting, and also a new idea to him. He thinks it's another question we should submit to our insurance agent. How would you process a performer's lost wages claim, in the event we had one? Judy wasn't suggesting that we set up a formal self-insurance program, just pointing out that we could be nice guys without getting an insurance company into the mix.

Action Items

Here are the things we agreed to do before the next meeting:

• Barrett will contact Jay and ask about his WC expert, the possibility of getting a written opinion and our willingness to pay for same.

• Barrett will also continue to work through the Pro Bono Partners contact, and try to get a more definite opinion on that channel; something more useful than "better safe than sorry."

• Lori will contact Scott Sheldon, and also do some background reading of the minutes that started all this.

• Chris will follow up with the additional contact recommended by the WC folks in Trenton.

• Mike will follow up with our insurance agent on the question of how WC claims would be processed.

Barrett will also use his Doodle tool to set up a second meeting of the WCC, about a month from now.

Closing

By way of closing remarks, Chris felt that we shouldn't get too anxious about this.

In 2009, we decided to purchase Workers Comp coverage out of an abundance of caution. We did that because someone on the board thought we needed it, and we couldn't find any truly authoritative voice to tell us we didn't. Since then, we've spent roughly $15,000 on WC insurance. But if our research in 2016 leads us in another direction, that's the recommendation we should make to the board. If we made a mistake in the past, we don't have to keep making it now.