Motion Theory ditches MBO
Good news from Motion Theory. Tina Van Delden of Motion Theory tells us that they are transitioning away from using MBO as an Employer of Record and are moving to a traditionally structured payroll service, absorbing the cost of doing business. They should have everyone up and running on their new payroll system by September 7th 2010.
FXDAG applauds this move and hopes that other studios which employ freelancers follow suit.
“…traditionally structured payroll service,….”
What exactly does that mean? Are they still paying vfx artists as independent contractors? Or are they classifying them as employees?
Maybe I should file an IRS Form 3949-A (http://www.irs.gov/individuals/article/0,,id=106778,00.html) or IRS Form SS-8 (http://www.irs.gov/businesses/small/article/0,,id=99921,00.html) and see what happens?
Note to Tina Van Delden: All it takes is for one current or past free-lancer to file IRS Form 3949-A, SS-8, and/or 8919 and you will have the IRS on your ass for possible tax fraud. I hope that Motion Theory has retained some good legal counsel regarding the issue of proper employee classification.
“…traditionally structured payroll service,….” means that Motion Theory is absorbing the costs of administration, workers comp and social security for their W-2 employees using a payroll service. Under MBO, these costs were passed on to the employees.
I have no information about Motion Theory’s practices regarding independent contractors.
Per the fxguide recap of the recent VES “1099″ (http://www.fxguide.com/article648.html) seminar, it is very clear that Motion Theory has been misclassifying employees as independent contractors, and further, attempted to use MBO in an attempt to violate California and Federal labor and tax laws.
The statute of limitations for EDD labor misclassifications is 3 years in California. Anyone who has been employed at Motion Theory and misclassified as an independent contractor can file an unemployment claim with the California EDD that will trigger an investigation. They can also file a claim with the IRS regarding withholding of Social Security and other Federal taxes.
If Motion Theory never filed 1099′s, then there is NO statute of limitations according to the IRS. And, whoever was responsible for signing and/or authorizing paychecks can be held PERSONALLY liable for taxes due and penalties.
If I owned or managed Motion Theory, I would be very very nervous. Best talk to your lawyers. You’re gonna need them.
More to come…