List of VFX studios that insist on EOR’s
Compiled list of companies, how they classify employees and which EOR services they use
- Brand New School (Reportedly classifies employees as freelancers)
- Digital Kitchen (Reported Yurcor)
- Framestore (Reported Yurcor)
- Ntropic (Reportedly classifies employees as freelancers)
- Motion Theory (Reported MBO)
- Psyop (Reported MBO)
- Roger (Reported unknown EOR)
- Spontaneous (Reported MBO)
- Superfad (Reported Yurcor)
- Pandapanther (Reported MBO/Yurcor)
Please contact the web master or add a comment so we can keep this list up to date.
If you know which EOR a specific studio uses we can also add that information to this list.
Psyop is MBO. They pay half the fee, the worker pays half.
Pretty sure Spontaneous has gone this route, but not sure.
I’ll ask around.
Framestore – Yurcor
Superfad – Yurcor
Pandapanther – MBO/yurcor
Motion Theory pays the entire 4.5% pretax MBO fee right now.
It’s not the fee that shocks MBO artists and freelancers — it’s the extra taxes. These taxes are normally paid by employers when the employee works on a W2 basis.
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If you work at an MBO studio, take advantage of the realtime tax deductions. For example, $500 in submitted expenses will pass tax-free into your next paycheck.
Also consider the MBO 401(k), if you can afford to save for retirement. It’s another way to protect a chunk of your money from the employer tax, and you will pay only the deferred employee taxes upon retirement.
MBO sucks! I just finished a gig at motion theory and everyone there hates it.
The commission fee sucks, your take-home pay ends up being around 50-60% of the usual amount due to taxes, and it takes over a month to get paid.
The benefits they taut are pretty much non-existant.
I don’t care if Motion Theory pays the whole 4.5% fee now, we still lose a lot in taxes
Motion Theory is a great company to work for, and I hate to see them lose money to those parasites.
If you want to stand up against MBO please check out my linkedin.com group:
http://www.linkedin.com/groups?gid=2762465&trk=myg_ugrp_ovr
Eric,
I agree. I enjoyed working at Motion Theory, but the MBO Partners scam pisses me off. It pisses me off that I wasn’t told about MBO before I negotiated and agreed to the job. I don’t see how it’s fair to put the burden of employer taxes on the employees, the freelance digital artists. I netted just over 50% of my negotiated rate. The MBO fee is nothing compared to the raping I took in taxes. The only things I would suggest you clarify in your group are that MBO is not strictly a payroll company. Just about every studio uses a payroll company to cut checks and administer benefits if they are of any size, and payroll companies are not a bad thing. MBO is a Pass-through Agency, or “Portable Employer of Record,” which is a whole different ball of wax, only one aspect of which is payroll.
They are getting away with skirting state overtime laws in this situation as well. Legally, if we are W-2 employees, which we are under MBO, we are supposed to be paid overtime, unless we are a supervisor in title, or spend more than 50% of our day telling someone else what to do. MBO is skirting this by reclassifying digital artists as “consultants.” I am not a consultant. Motion Theory should not be negotiating day rates for people that are W-2 artists. It should all be hourly unless they are negotiating with someone who can be expempted by title or function.
I have heard from a producer friend that a house called “Roger” uses an EOR as well. I don’t know which one, and I’m really not familiar with the house. I think they are at this website. http://www.roger.tv
Does anyone know VFX studios that classify freelancers as W2 employees, but put the freelancers on the studio’s own payroll instead of using MBO or Yurcor?
I was signed up with Yurcor in NYC. In response to MBO User, I WAS shocked at the 5% service fee. I was also shocked at having to pay the employer taxes AND the 1.5% charge for WORKER’S COMP INSURANCE!! When I asked why I was being charged the worker’s comp, Yurcor told me how great it was that I no longer had to buy insurance (although technically I WAS, through Yurcor slashing my pay).
In NY state, if you don’t have employees yourself, you don’t need to buy worker’s comp. So to me, this expense would’ve amounted to about an extra $1000 per year I was not prepared for.
http://www.wcb.state.ny.us/content/main/onthejob/CoverageSituations/soleProprietorships.jsp
I had a 401k from the Freelancer’s Union before Yurcor, so I don’t need to continue to get screwed with the fees. http://www.freelancersunion.com/benefits/index.html
As for the ‘real-time’ business expenses that MBO and Yurcor allow, they do so by misreporting your income on your W2. Sure MBO has said they do alot of “under the hood” accounting to make business expenses supposedly legit, but I don’t trust this.
In NYC, businesses have brokered a special deal for employees to deduct pretax $89 monthly metrocards. However, this mere $89 monthly tax deduction is unique and took many years of lobbying to allow. In that context, doesn’t it seem suspicious that MBO and Yurcor are allowing hundreds of dollars of business deductions for all sorts of things???
And unlike MBO and Yurcor’s accounting, these pretax metrocards do not change the amount of money reported on your W2.
It’s an extremely shady way of handling money. I’m just not the type of person who can blindly accept that this is legit just because a MBO tool tells me it is.
The elephant in the room is, if MBO and Yurcor were really legit, why aren’t all companies across all industries offloading their costs onto their employees this way? It’s probably because the populace would start a massive revolt.
Thanks for the info Josh!
I actually just got “fired” from MBO for rocking the boat. So I guess I have to incorporate now if I want to freelance
That would be so funny if I sued MBO for wrongful termination…
Are there any state or federal agencies I can file a complaint against MBO with? I would love to see them get squeezed…
Eric, consider emailing this web page to every artist you know. Ask them to forward it to other artists. I think that will help the VFX community.
Also consider including these links:
http://animationguildblog.blogspot.com/2010/02/sub-contracting-scam.html
http://animationguildblog.blogspot.com/2010/03/organize-mbo.html
Hey Guys,
Wanted to pass along this email I just sent out to a lot of my freelance friends. Some Very useful information for those of you looking to take action against MBO/YUCOR. Please read through carefully!!
Hey Guys,
So I’m sure everyone’s been dealing with or at least heard about the whole MBO/Yucor fiasco. While the best ways around their policies at the moment are either to go through the process of incorporating and all that it entails, jack your rate up by an amount that somewhat compensates your loss, or just avoid dealing with those companies all together, my buddy has been digging up some more info on the companies that I wanted to pass along. He’s been speaking with his accountant and attorney about the procedures MBO/Yucor use and it’s pretty interesting stuff for those of you looking to take some action. I’m attaching all the emails he sent me. I’d recommend reading through them! Please forward to anyone that could use the info!
I just got back, from my accountants, figuring out my taxes and then i showed him the yurcor stuff thats been happening – how we filled out a w-4, which makes us an employee of yurcor, but then they took out employer taxes still and our that money didnt show up in our gross pay pay stubs. Anyway, he said what they’re doing is illegal and can’t believe they’re getting away with it. Then he laughed when i told him they were telling us to scan our writeoffs for their approval!
He said he actually has a client, in New Jersey, currently going through the same situation, not with yurcor in particular, but still how they were taking away funds as an employer when they shouldn’t have and the New Jersey Dept of Labor got them their money back. So he said contact the NY City (or state?) Dept of Labor telling them of the situation. It gets a bit sticky since Yurcor is supposedly based in Florida (according to their tax forms we got) and the DK i worked for is based in chicago so the NY Dept of Labor may think it doesn’t have anything to do with them since those are out-of-state companies. HOWEVER, yurcor/dk paid NY state wages and withheld NY state taxes which makes it a NY Dept of Labor problem. By taking away employer taxes (which are rightfully ours), they are taking away money from NY state since that should ALL be our money that NY state taxes and we receive. Our loss of income is actually the states loss of income – make sense? Look at your pay stub and you’ll see the only income listed is just the employee section and nothing is reported of the employer income – ILLEGAL. The employer tax they are withholding is actually helping to pay DK’s taxes. It gets even funnier because Yurcor uses the pay service ADP to cut us our checks. WTF? ADP does the SAME kind of service Yurcor does just NOT shady. How so? We called them up and i was doing some research on the ADP website. They provide the same sort of service as yurcor, but when we explained to them what Yurcor was doing they were completely baffled since we are classified as yurcor employees. Put 2 and 2 together and you see that ADP has been handling the ‘employee’ part of the pay that yurcor has been reporting to them, which sounds legit. This employer part is the scam that yurcor is helping front for DK and these other studios to help pay for their taxes (which other freelancers have started to figure out correctly).
Anyway, 2 accountants at the firm we were at said to contact the NY City Dept of Labor and see if they have a ‘wage and hours’ division. Thats what New jersey has that helped get their jersey clients their money back. If for some reason this doesnt work, he said DEFINITELY contact the IRS. Also, besides the IRS contact the National Labor Relations Board (http://www.nlrb.gov/) to get on Yurcor’s ass (and mbo for that matter). Either way, they all agreed what Yurcor is doing IS completely illegal and all that employer money being held is rightfully ours. Their clients have won the case in Jersey so we should win ours. If we can spread the word around, a bigger force in numbers always helps. If this sounds confusing feel free to contact me and i can better explain what went down at my accountants office today. I feel a lot better about this all, but i’ll feel much better once i get my money back!
spread the word! i’m contacting the dept of labor this Monday. I’ve already saved all of Yurcor’s payroll information they provide on the sites that show all the employer taxes they withheld. Great to have since our paystubs don’t mention any of this.
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Here’s links to all the places they recommended contacting. Might as well contact them all so they all hit yurcor and mbo at once!
http://www.labor.ny.gov/agencyinfo/aicontactus.shtm
http://www.tax.state.ny.us/
http://www.nlrb.gov/about_us/locating_our_offices/index.aspx
http://www.irs.gov/localcontacts/article/0,,id=98318,00.html
seriously, lets get this ball rolling.
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So the accountant said the first people to contact is NY Dept of Labor to see if they will do anything about this since it IS their problem. The lady at first tried to tell me we aren’t covered under NY State law since we got paid daily wages and that there was nothing I could do except hire an attorney and take them to court. Before she hung up on me I told quickly told her i signed a w4 form with the company making me an employee and i got an end of year w2 tax form showing employee taxes they withheld, but it didn’t show the employer taxes they withheld, which they shouldn’t have since i am an employee and since it was NY taxes being withheld this is a Dept of Labor problem. So she then directed me to this PDF complaint form and where to send it to. She said when you fill it out and mail to them, you must have ALL your proof. The IRS tax forms (i guess thats the w2), but i’m also including scans of my pay stubs and their online payroll tax withholding breakdowns. I suggest you do the same and pass the word around. The next step would be to contact the NY State Dept of Taxation and Finance because their site will really pursue if “your situation represents a systemic flaw that may adversely impact other taxpayers” & “You believe that the unique facts and circumstances of your case warrant assistance by the Taxpayer Rights Advocate” which it does.
DIRECT PDF FORM:
http://www.labor.state.ny.us/formsdocs/wp/LS223.pdf#page=1
information:
http://www.labor.ny.gov/search/search.asp?query=ls223&submit=GO
mail to:
New York Dept of Labor
Bldg 12, RM 185C
Albany, NY 12240
Even though I am an S-Corp, I am incensed at Yurcor and MBO taking advantage of freelance artists. This is going on in Los Angeles as well. I too verified on both the CA Dept of Labor and IRS websites that it is the employer’s responsibility to pay Workers Comp, FUTA, SUI, and half of FICA. If you’re on a W-4, Yurcor is your employer, plain and simple. I have found the form for filing IRS complaints. You print it out, and you can FILE ANONYMOUSLY! thank goodness for whistle blower protection laws!
So let’s get these bastards!!
http://www.irs.gov/individuals/article/0,,id=106778,00.html
Click on the PDF for form 3949-A.
I think False Deductions is a good box to check off. Maybe Unreported Income, for their shady way of rejiggering the numbers for your business expenses. And maybe check off Other and just put plain Fraud? I think it would be lovely if someone crafted a pithy statement of the facts in one or two paragraphs and posted it here, so we can all print it out and attach it to our complaint forms. The more complaints we send in, the faster we can TAKE THESE *SSHOLES DOWN.
I just found this and am reposting. Original source:
https://be.freelancersunion.org/forum/topic.php?id=958
Since my last post about Yurcor, I’ve found some more information about how they operate.
According to the IRS, it’s illegal to charge W2 workers the employer taxes that Yurcor deducts from a freelancer’s pay.
Instead, they simply have LOWERED the wage of freelancers by the amount of the employer taxes, which is about 10% of the agreed fee.
It may seem like splitting hairs, but it’s enough of a distinction that they can get around the tax law, and have freelancers pay the employer taxes.
Then they tell the freelancers that the employer taxes and the employee taxes they are paying are roughly equivalent to the Self Employment Tax in order to suppress any new wage negotiations that might happen.
But there’s still enough of a difference that after taxes, a Yurcor W2 worker who was formerly 1099 might have a couple thousand dollars less than they used to at the end of the year.
Yurcor themselves confirmed that this was how they handle the finances.
Lessen learned: get a contract that guarantees you a certain wage. Do not agree to a fee, because Yurcor will deduct all sorts of administrative expenses from the fee. What is left over will be your actual wage. Instead, insist on clarifying the wage you will receive.
BTW, the US doesn’t have a law that says employers have to consult you before dropping your wage, as long it’s above minimum wage. They do not even have to notify you, which is why I think there was so much confusion about pay when freelancers sign up with these employer of record companies.
For your own protection, get a contract.
I just spoke with the Los Angeles Dept of Labor. Their number is 213-620-6330
They told me that what Yurcor is doing (ie, deducting FICA, FUTA, SUI, Workers Comp, and taking a 5% fee) is not legal as long as you are classified as an employee, and not an independent contractor. Which I believe you are if you fill out a W-4. They are underreporting taxes and taking illegal deductions.
You can report them at the Tax Fraud hotline: 800-528-1783
And download this form to file a claim (it can be anonymous)
http://www.dir.ca.gov/dlse/HowToFileWageClaim.htm
Be sure to write Attn: Field Enforcement on the envelope and the form, and then the violations they are committing. The more letters they receive with your personal experiences (be sure to detail what your paystubs actually say versus what you agreed to), the more they will take this seriously.
Also there *is* free legal advice. If you call 213-243-1500 and tell them you need legal advice for Labor Law violations at your workplace, they should direct you to the right place.
What do you all think of a strike?