In the experiential marketing industry, hiring field team members as 1099 independent contractors is a common practice and has been the standard for decades. But are these people really contractors? Or are they employees? More importantly, what is the risk associated with getting employee classification wrong? In his article “A Brewing Storm”, found in the February/March issue of Event Marketer Magazine, Ken Briodagh discusses the paradigm shift taking place in the event marketing industry, as a recent IRS crackdown surrounding employee misclassification is forcing everyone in experiential marketing to rethink how they hire staff. Ken asked EPS founder and CEO, Jessica Stackpoole, to weigh in on the debate surrounding how agencies classify their workers and her decision to go against the industry grain.
Five years ago, EventPro Strategies saw this “storm” coming. The IRS uses the following basic common-law rule to identify whether someone is an employee or a contractor: Anyone who performs services for you is your employee if you can control what will be done and how it will be done. This basic rule seemed crystal clear and, as a result of the nature of the work our field teams were performing, EPS switched to a W-2 model. This change overhauled the entire way that we did business; it was an immense and expensive challenge, but it was a critical and necessary move, both for our field employees as well as our corporate health.
Employee misclassification can result in substantial liability and penalties for agencies, including back taxes, overtime pay, workers compensation, employee health benefits and more. In addition, there have been many cases in which the client (agency or brand) has been named as a “co-employer” in audits. This has resulted in the agency or brand also being held liable for corresponding fees and fines on behalf of the staffing agencies they subcontracted. All of these risks, both to EPS as well as to our clients, were not something that Jessica or anyone at EPS was willing to roll the dice on.
By hiring 100% of our experiential marketing field talent as W-2 employees for the past 5 years, EPS has provided our clients with peace of mind in knowing that we are a compliant staffing agency whose field talent are a true extension of our team. Even outside of liability and compliance, Jessica is focused on the fact that making the switch was “the right thing to do.” She says “I’m more certain than ever that these people are employees. And it will become an industry standard. It’s moving that way.”
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