Fired from MBO – A True Story with a Happy Ending
Eric Rosenthal writes:
All Right! I’ve just been fired by MBO!
Here’s my personal MBO story. It has a happy ending. Kind of.
December: I book a job with Motion Theory for January. After accepting I learn that I have to go through MBO for payroll which will require a 2.25% fee off the top of my paycheck. I tell MBO to f— off and decide to incorporate.
January: My accountant tells me forming a C-Corp or an S-Corp is not worth the extra time and money. I reluctantly go with MBO. All is well until…
February: The people at Motion Theory start getting their paychecks (about a month after starting work) and see that their take-home pay with the fee and taxes is about 50-60% of what it usually is. Most of us have student loans and all of us live paycheck to paycheck. I get really mad and post a derogatory comment on one of MBO’s youtube videos. They call me immediately asking for feedback (?).
I start the anti-MBO group on linkedin, but few people from Motion Theory want to join, most of them are too scared of being blacklisted or just apathetic. However I do get some people from other companies to join.
Mid February: My job ends. I get my first good night’s sleep in weeks.
Late February: I get my first paycheck from MBO. It appears to have no money taken out. I try to log in to MBO’s web site and find out my account has been deleted.
Early March (Today) I talked to Motion Theory about my check and find out that MBO fired me without telling me!! I guess I was a liability 
Motion Theory will pay me directly for my latest job without any money taken out of my check, which is always nice.
Mid March: Motion Theory wants me for some work. However my only choice is to C-Corp or S-Corp (they won’t allow LLCs), and for now it’s a complication I’d rather not get into.
I call MBO because I need a record of my invoices. The lady I talked to is polite and wants to learn about our industry. I learn that MBO was started by freelancers and isn’t used to being the bad guy. They are currently weighing on weather or not to continue to work in our industry.
Final Thoughts: MBO is not evil or out to get us. However they are not here to help us either; they want to expand their business and make money like any company. They’re more like a symptom of some of the problems happening in our industry rather than the root cause.
Did MBO explain how what they are doing isn’t illegal? That’s the thing that bothers me.
Did you read the post “Artists fight back against MBO and Yurkor Employers of Records”? Sounds like it’s pretty shady.
How is charging employees the Employer taxes and reporting the wrong income not illegal?
If it’s illegal, and they are knowingly involving people in this, it seems pretty evil to me.
I didn’t really find much online about the founder of MBO, Gene Zaino (other than PR releases). His wiki page says he comes from an accounting background. No surprise there, how else would they know about the gray areas in accounting to exploit?
Strange, his wikipedia page has been flagged as an ‘vanity page’ that violates the neutrality of wikipedia. Smells like shameless self-promotion to me.
I’m still not convinced that what MBO is doing is entirely legal. At the very least, MBO shouldn’t claim to be experts on the subject, given that they haven’t complied with labor laws in California or New York.
I hope the State government investigates these Employers of Records to settle the issue. I’m going to fill out a complaint form and attach copies of relevant documents to help start the process.
My hunch is, the state would be more than happy to talk to MBO about the labor laws they have violated…
Thanks for the info! I’ll look into filing a complaint through the state government; maybe it has an incentive to go after MBO since they are taking away potential state income tax revenue.
If anybody has any info that can help me in this regard, please feel free to contact me at eric30202002 at yahoo
Where is the post you’re refeering to:
“Artists fight back against MBO and Yurkor Employers of Records”?
The funny thing is that since I was technically laid off by MBO I’m able to collect unemployment right now which is an unexpected bonus for a freelancer!
Eric
While what MBO and Yucor are doing is probably not illegal, that is ONLY true, IF the workers they are billing for are truly Independent Contractors.
Just working freelance does automatically make you an Independent Contractor. If you check the various IRS and Department of Labor websites you’ll find that they would classify most freelance workers in the industry as temporary employees. As such the freelancers should be employees of the hiring company or of an employer of record payroll service that passes the employer taxes back to the client and not to the employees. This structure is quite standard in the live action film and TV production industry.
So it would be illegal IF you do not pass the IRS and DOL tests as an Independent Contractor and MBO or Yucor bill for your services and deduct the employer payroll taxes from you.
Figuring this stuff can be pretty annoying, thanks for writing this post to clear up some confusion.