In January of 2020, California passed a law completely changing the event staffing world: AB5. This law, which many states are also considering, requires all Brand Ambassadors and Event Staff to be classified as W-2 employees. What does this mean, and how is it important to you? Let's dive in more to explain all the nuts and bolts.
What is W-2 Classification?
When a company hires an employee, the employee is often given an I-9 and W-4 to fill out. This sets a worker as W-2 and allows the government to take out taxes from their pay. W-2 employment also gives additional rights to workers and lets employers train the staff in. To understand the importance of W-2 employment, let's talk about the other major classification: independent contractors.
What is an Independent Contractor?
For years, Brand Ambassadors and Event Staff who were classified as Independent Contractors dominated the events industry. Independent Contractors are transient workers hired on for temporary work, and are not hired by an employer directly. As a result, independent contractors can set their schedules without making any commitment to their temporary employer. Think of a plumber. You hire them for a specialized task, they tell you when they will arrive, and there is no work after they fix the issue. While this works for some industries, there are some key issues when applying this to event staff.
3 perks of W-2 Brand Ambassadors
Using W-2 employees instead of Independent Contractors lets us provide in-depth training to our teams. Going back to the plumber example, you don't train them in when they arrive. However, for event staff, there's often training that needs to occur for a strong event. W-2 classification allows us to train the staff for success!
2. Employees, not Contractors
Most Independent Contractors are staff brought on for one event only. This means that people may show up to your event that have never worked with an event staffing agency before. W-2 classification allows us to create relationships with our employees, ensuring that the right staff work your event.
3. Consistent and timely pay
A big downside of using Independent Contractors is that it often takes a while to pay the staff. The pay schedule is often uncertain and can make it hard to bring the best teams onsite. Hiring W-2 brand ambassadors and event staff allows for quick and easy pay. When you pay fast, you get a better team onsite.
- Melissa with Time Out
Let's Talk Law
Now that you know the benefits of W-2 classification, let's talk about the legalities. California started the trend with AB5, but many states, such as Massachusetts, Washington, New York, and Illinois, are looking into it. Let's look into why some states are moving to W-2 only.
Taxes. One of the biggest problems with Independent Contractors is that taxes do not get taken out of their pay automatically. This makes it difficult for contractors to file taxes and for states to collect tax revenue. Many states are looking to ease this issue by requiring W-2 status.
Gig workers aren't independent. As mentioned before, Independent Contractors come with a specific skill and set their own hours and pay. Event staff workers, however, are trained in, get scheduled for a shift, and get a set pay. Because of this, many states see brand ambassador and event work as an employment status and are requiring the designation.
Workers rights. When event staff are Independent Contractors, they do not receive the same rights as W-2 employees. They are not required overtime or breaks. They also cannot file for unemployment, an issue that has come up a lot over the past few weeks due to COVID-19 cancellations. W-2 classification helps calm these issues.
Did you know...
We at Kinetic Events have always seen W-2 status as important and have been using solely W-2 employees since 2006. We have strong relationships with our Brand Ambassadors and Event Staff nationwide. Our teams are dedicated to providing great service and making sure your activation or event runs smoothly. Give us a call at (888) 351-4126 to get started on your event!