Are actors and acting instructors employees or independent contractors for purposes of workers’ compensation?
Maybe. In a recent case, SAIF Corp v. DCBS and Northwest Children’s Theater and School, the Oregon Court of Appeals discussed the legal framework a theater company must evaluate to determine if its actors and instructors are workers for whom it must obtain workers’ compensation coverage. Northwest Children’s Theater (NWCT) operates an acting school. It obtained workers’ compensation coverage through SAIF Corporation for its employees but not for actors, instructors, and production designers, which NWCT considered independent contractors. SAIF indicated workers’ compensation coverage needed to be obtained for all of these workers. The dispute came before the Department of Consumer and Business Services (DCBS), which found that NWCT instructors, actors, and production designers were not subject workers and thus no workers’ compensation coverage needed to be obtained for these individuals.
This case focused on what test applies to determine the need for worker’s compensation coverage. DCBS relied on the “right to control” test but did not apply the “nature of the work” test. The Court of Appeals reversed and sent the case back to DCBS to also consider the “nature of the work” test because there was at least some evidence of control over these individuals by NWCT. (NWCT observed and supervised some of its instructors and actors, meeting this minimal standard.)
So, what does this mean?
The need for workers’ compensation coverage is highly factual, and needs to be determined on a case-by-case basis. The “right to control” test examines four factors: 1) the right to or actual control of the performance of services; 2) furnishing of tools and equipment; 3) method of payment; and 4) right to fire. This test is commonly used to determine if an individual is an employee or independent contractor. However, to determine workers’ compensation subjectivity, an additional test must also be considered if there is any hint of control. The Court explained that the “nature of the work” test meets a specific goal of the workers’ compensation system; namely, placing the costs of work injuries on the consumer as part of the price of a product or service. The “nature of the work” test thus looks at two additional elements: 1) the character of the business and whether the individual is a separate enterprise that can be expected to carry the burden of work injuries itself; 2) the relation of the individual’s services to the company’s business and if the duration and continuation of those services demonstrate this is a regular part of the company’s business. Even if the facts do not meet the “right to control” standard, a worker whose services are integral to a company’s business and who does not truly have a separate enterprise may still be entitled to workers’ compensation coverage.
