The Last Meeting

George felt he learned a few things in the recent meeting that he, Tom and Barrett had with Worker's Comp expert Bob Young. As we've discussed previously, it's not as simple as deciding who is, and who is not, an employee. And since it's a state-controlled decision, things we found out about the practices of venues outside New Jersey aren't really relevant. Neither are the tests used by the IRS; a person could be considered a contractor by the Feds, but still declared an employee by the state of New Jersey. And especially in New Jersey, the Worker's Comp courts tend to make their interpretations broadly. The state wants to be sure there is someone to pay for Worker's Comp claims, so it's in the state's own interests to spread the risks out to private insurers, thereby protecting the government coffers. There are some admittedly improbable situations that could lead to a claim against us, but the penalties are severe. Judy pointed out another aspect of this, in that Liberty Mutual would very likely resist paying a Worker's Comp claim by arguing that the performers weren't employees. That's something they've already implied in some written communications. So it's crazy town. We have to keep it, even if we suspect we will never be able to make a claim under the terms of the policy.

Chris expressed some frustration that in all the hours we've invested in this, we've been unable to get a definitive answer. From the Pro-Bono attorneys who advised us in 2009, to his own contacts in Trenton to this latest meeting with Bob Young, the advice has been consistent: better safe than sorry. He understands it's a complicted area, and that's why all the experts want to hedge their bets. But given that this is the case, he doesn't see how we can do anything other than recommend that we keep the Worker's Comp policy in place. We have one long-shot card still in play, namely the letter to Liberty Mutual asking for a legal opinion. That's the Schaffer Gambit, and while Chris is not optimistic, one never knows.

Lori mentioned that as part of her general exploration on insurance topics, she's contacted a firm in California called SteelBridge Insurance, which has a relationship with The Folk Alliance and which specializes in insurance for non-profits and events. They handle the insurance for the Philly Folk Festival (which doesn't carry Worker's Comp), and had a number of thoughts on how we should proceed. Her contact was familiar with the laws in Pennsylvania, not that familiar with those in New Jersey, but suggested that we should at a a minimum get Worker's Comp clauses into our contracts. He also felt we might want to consider things like Directors & Officers Insurance and something called Volunteer Accident Insurance. Chris thought the idea of standard contracts sounded good, but doubted our ability as an organization to make something like that happen. Does that imply the venues have to submit contracts to some central authority? That might open a new can of worms, with the board being criticized for executive overreach. Perhaps a good suggestion, but we'd have no way to enforce it.

Barrett has always leaned toward keeping Workers Comp, and what he's learned through the commission's deliberations has only deepened that inclination. He was particularly troubled by a story told by the aforementioned Bob Young, regarding a woman who was declared a "de facto director" of an organization that was subject to a Worker's Comp claim. She was being sued personally, separate from the organization. And while she ultimately won on appeal, it cost her thousands and thousands of dollars in legal fees. Yikes!

Our guest tonight, Tom Taylor, is himself a Workers Comp attorney and the meeting with Bob Young turned him around too. He mentioned that Mr. Young is a certified Worker's Comp attorney (the highest rating), and certainly knows the territory. He also explained that the statute in New Jersey is over 100 years old, and was designed to be "remedial" in nature. That is, it's intended to cover as many people as possible. And he explained that Worker's Comp is a discipline unto itself, separate from tax law and torts. There are 12 factors (with sub-parts) that a Worker's Comp judge would consider when making his or her assessment of a given claim. So with that kind of complexity, the better-safe-than-sorry strategy is easier to swallow.

And just for fun, he mentioned that not having Worker's Comp if a judge decided we should have had it, could be a criminal offense. So it could get much, much worse.

Tom liked the letter Chris wrote to Liberty Mutual, but agreed that it's a long shot. And he added that we can't insulate ourselves with waivers, even if we had them written into all our contracts. Only a judge can make the decision. His final comment: "It's not prudent not to have it."

Where We Should Go

Given all of these thoughts, we agreed on some next steps.

Barrett will draft a message to the board, with two recommendations. These recommendations will automatically be considered as motions, and will not need a second at the next meeting (where they could be voted on together or individually). George will write a "minority opinion" that will be included as an addendum to Barrett's report, highlighting some of the arguments against keeping Worker's Comp, even if that is the commission's final recommendation. The two points are:

• • We should continue the Worker's Comp policy that's already in effect, since we haven't found any governing authority willing to declare that we don't need it.

  • We should appoint a liaison to look at the big picture of The Folk Project's insurance portfolio, and make some informed recommendations regarding what would work best for us. The assumption here is that we would sever our relationship with Walter B. Howe (such as it is) and establish a new relationship with SteelBridge. Lori Falco is willing to take on this task, as an outside consultant, since she is leaving the board at the end of the year. ("In for a penny, in for a pound.")

These recommendations were accepted unanimously by the five members of the commission. Barrett will have his report finished before the meeting, so it can be distributed and reviewed ahead of time.

Wrapping Up

The commissioners agreed that while digging into these knotty matters hasn't been what could be called fun, it has at least been interesting.

Chris reminded everyone that Mike Agranoff had agreed to pay for our legal expenses related to this matter, in the event the decision came out the way it has. He will drop him a note, once we have a total bill for how much we owe Bob Young. It will be less than the $500 authorized.