Unit 2: Labor - Orthelious/pdcp_2020 GitHub Wiki

Labor

Professional Development for Creative Practices | Winter 2020

A primer on representation and the relationships the govern our interactions between individuals and between businesses entities.

Chapters

  1. Agency and Representation
  2. Human Resources, Employment and Labor Law
  3. Self-Employment and Independent Contracting

1. Agency and Representation

This is the first of our chapters to focus on relationships. How do we define our relationship to other people when conducting business? Many of these answers can be found in the legal concept of Agency.

"The definition of agency law deals with agent-principal relationship and it's a relationship where one party has the legal authority to act in place of another." Source: upcounsel.com(https://www.upcounsel.com/definition-of-agency-law)

Where one person has the legal authority to act in the place of another.

  • What are some examples of an agency in your own lives?
  • What are some examples of agency in creative practices?

The concept of agency guides us in answering some essential questions in business:

  • Does this person/company represent us? To what extent?
  • Are they our employee? Or are they an independent contractor?
  • Do I represent them? To what extent?
  • Am I an employee or an independent contractor?
  • How much power and control does this person/company have over my work? Over me?
  • What power can I exercise over others?
  • What laws do I have to follow? Do they have to follow?
  • How do we start a relationship? How long does it last? How can we end one?

Three sections to this chapter:

A. Relationships
B. Defining Agency
C. The Essential Four Components

A. Relationships

As an introduction to this topic, we're going to start things off with these three primary types of relationships:

  1. PRINCIPAL AND AGENT
    A party who conducts business on behalf of and in the interest of a principal.

    • This is our default starting point for agency. For any business relationship, the agent and principal should be clearly defined.

    —The following relationships are both types of and Agent/Principal relationship—

  2. EMPLOYER AND EMPLOYEE An agent who works for a principal AND whose methods and working conditions are controlled by the principal.

  3. PRINCIPAL AND INDEPENDENT CONTRACTOR
    A party who is contracted to do work for a principal, but whose methods and working conditions are not controlled by the principal.

These relationships can appear to be straightforward when you're talking about only two or three parties conducting a single piece of business—but few projects are limited to just a few parties.

Let's take a look at some examples of projects in creative practices that involve multiple, sometimes complex, relationships. For each of these examples, try to guess how many parties are involved and what their business structures could be. And what are their relationships of these parties to each other?

  1. Mimus · ATONATON
  2. TransMilenio
  3. The Mexico '68 Olympics · Ramirez Vazquez
  4. Politicized Landscapes · Julie Mehretu
  5. A Subtlety · Kara Walker
  6. Fyre Festival · Billy McFarland & Ja Rule
  7. Space Program · Tom Sachs*

B. Defining Agency

A1 — What is agency?

AGENCY — A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party.

An agency relationship is fiduciary in nature, and the actions and words of an agent exchanged with a third party bind the principal.

// Why is Agency Important?

  • Augmentation — You can augment your creative practice utilizing the skills and knowledge of others.

  • Representation — You can empower someone to carry out your wishes, who (should) have your best interests in mind.

  • Employment — The Understanding agency is an essential aspect of being an employee and/or employer and knowing whether someone is an employee or an independent contractor.

A2 — Some Helpful Definitions

  • FIDUCIARY — A legal and/or ethical relationship of trust. A person in a fiduciary relationship is obligated to act in the best interest of another.
  • PRINCIPAL — The party who authorizes another (an agent) to act on their behalf. A principal could be an individual or a group.
  • AGENT — The party who is authorized to act on another’s (the principal) behalf. An agent can also be an individual or a group.
  • THIRD PARTY — Any person or party outside of the two primary parties (principal and agent).
  • EMPLOYEE — A person (agent) hired to perform duties on an ongoing basis for a principal (employer), whose work conditions and methods are strictly controlled by the principal.
  • INDEPENDENT CONTRACTOR — A person hired to perform limited, specific duties for a party according to a contract, for a specific period of time. The independent contractor's work conditions and methods are not strictly controlled by the principal.

A3 — The Common Types of Agency

  1. GENERAL AGENT — Authorized to conduct every kind of business for the Principal.

    As we discussed in the Business Structures chapter, the Sole Proprietor is the default starting point. Much in the same way, a General Agent is the starting point for Agency relationships. Unless you further define the relationship with your agent, they are going to be a General Agent and empowered to conduct every kind of business for the Principal.

  2. SPECIAL AGENT — Authorized to conduct only specific business activities as outlined in a contract. There are rare cases where you want an agent to conduct EVERY kind of business. Agents are usually limited for a specific purpose. For example, A real estate agent helps you buy/sell a house, a lawyer represents you in legal affairs, an insurance agent for insurance claims.

    These relationships are all spelled out in an agreement!

    What kind of business would the following agents in creative practices conduct on your behalf?

    • A talent agent?
    • A gallery agent?
    • A record company representative?
    • A tour manager?
    • A studio manager?
    • A sales broker?

  3. AGENT WITH INTEREST — The agent possesses interest (owns or controls) some aspects of the Principal’s business.

    This is an agent with some skin in the game. They will benefit personally from acting as an agent for your business. For example: If an agent representing a author's new book is also a contributing writer, their decision-making will be affected more so than if they had no ownership over the product.

    What's a way that an Agent with Interest could be negative?

  4. SUBAGENT — An secondary agent who is representing both the primary agent and principal.

    Batman empowers Robin to aid him in his fight against crime. If Alfred, the Butler, is commanded by Robin to aid them in their fight against crime, Alfred is acting as a subagent. He is both an agent for the Principal (Batman) and the Agent (Robin), but because he is taking commands from Robin, he is acting as a Subagent.

  • EMPLOYEE/EMPLOYER — An agent who works for a principal, whose methods and working conditions are controlled by the principal.

    If you've had a job in high school or college, this is most likely the relationship you are most familiar with. As an employee, you have to do your job according to the exact conditions laid out by the Principal (your boss).

    Isn't that like every job? Not necessarily. The type and degree of control are one of the primary factors in determining if you're an employee or an independent contractor (more on this later).

C. The Four Essential Components of Agency Relationships

The are four essential components that help us determine what type and to what extent an agency relationships exists:

C1 — Formation · Control · Authority · Liability

  1. FORMATION

    How are agency relationships started?
    There are four primary, somewhat wonky, ways to form an agency relationship:

    • By Agreement: Both parties agree to a relationship by verbal or written agreement.
    • By Ratification: A third party sets up the relationship, and the agent and the principal agree. Think of this like matchmaking.
    • By Operation of Law: Agencies that are recognized by courts in the absence of a formal agreement. Think of family relationships—in an emergency, your parents or guardians would act as your agents.
    • By Estoppel: A second party gives a third party the impression that they are acting on behalf of the Principal—even though there is no established agent/principal relationship. This one is extra sticky and hard to understand.
      • "Agency by estoppel is still considered a legally binding agency relationship. This means that an individual or company cannot unofficially give someone the appearance of working on their behalf but then distance themselves from the consequences of that ostensible agent's actions. In other words, if a company supplies someone with office stationery, branded business cards, and an office in their building – in other words, giving them the appearance of being an official representative of the company – then they are liable for that person's actions on behalf of the company, including any loans or insurance policies they have issued." Source: insuranceopedia

  2. CONTROL

    What level of control does the Principal have over the Agent?
    This component is about to what extent does a Principal exercise control over an agent.

    • What is the scope of work or job duties for the agent?
    • How much direction and control does the principal exercise over the agent’s work?
    • Can the principal determine the agent’s working conditions?
    • Is the relationship exclusive?

  3. AUTHORITY

    What is the agent empowered to do?
    i.e. How much authority can an agent operate with on the Principal's behalf?

    Two types:

    • Actual Authority — The principal assigns express or implied powers to the agent.
    • Apparent Authority — The principal, knowingly or mistakenly, permits an agent to act with authority they were never expressly granted. (This is where agency by estoppel could come into play.)

  4. LIABILITY

    Can you be held responsible for an agent's actions?

    • Certain agents are able to enter into legally binding agreements on your behalf.
    • You could also be held liable for an agent's conduct.

C2 — Let's take a look back at our examples from earlier in this chapter.

How would you now define the various agency relationships?

  1. Mimus · ATONATON
  2. TransMilenio
  3. The Mexico '68 Olympics · Ramirez Vazquez
  4. Politicized Landscapes · Julie Mehretu
  5. A Subtlety · Kara Walker
  6. Fyre Festival · Billy McFarland & Ja Rule
  7. Space Program · Tom Sachs

 2. Human Resources, Employment and Labor Law

Four sections in this chapter

A. The Employer/Employee Relationship
B. Labor Law and the Rights of the Group
C. Employment Law and the Rights of the Individual
D. A Note On Employment Ethics

A. The Employer/Employee Relationship

A1 — Why are human resources and employment law important to creative practices?

Why does understanding human resources and employment law matter? Whether you run a business yourself or work in one as an employee, you are governed by a set of (hard-won) rights and responsibilities. It doesn't matter what the industry is, we all have to abide by these rules.

The largest set of these laws and regulations apply to how employees are treated. Not fully understanding the implications of how you treat your employees (right or wrong) can be major. Likewise, it's important as an employee to understand your rights.

Let's look as some local examples:

DISCLAIMER: I was an intern at the Mattress Factory and have worked in different capacities with PF/PCA and KST. By presenting these cases, I am not taking an explicit stance nor am I representing the opinion of this university. I've used these examples as they are well-publicized and relevant to our topic.

A2 — A working definition of "Employee"

EMPLOYEE — A person (agent) hired to perform duties on an ongoing basis for a principal (employer), whose work conditions and methods are strictly controlled by the principal.

The Employer/Employee relationship is one of the most common types of agency relationships. The employer (the principal) controls all the aspects of the employee(s)'s job.

This can include:

  • When the employee is paid and at what rate

  • What conditions (i.e. office or shop) they will work in

  • What tasks the employee must perform

  • What equipment the employee must use to complete their job

    And many more...

What are some employer/employee experiences from your own life and creative practice?

A3 — Laws governing the Employer/Employee relationship

While an employer has a great deal of control over the employee's job, they do not have unlimited authority. All employers must adhere to two basic categories of US law when it comes to employment:

  • Labor Law — The set of laws pertaining to the groups of workers. These set of laws regulate unions and collective action. source(http://www.gotnbc.com/Labor%20Law%20101.pdf)
  • Employment Law — These laws regulate the rights of the individual worker.

It is essential to understand the basics of these laws and practices if you hope to hire and manage employees. In large groups situations (more than 50 people) like corporations, adherence to these laws and regulations is usually handled by a Human Resources manager or department. But for smaller businesses, this is usually handled by general management.

PLEASE NOTE: I am only covering federal laws. Each state has its own additional set of laws governing labor practices and regulations.

B. Labor Law and the Rights of the Group

In general, Labor Law references the area of law that governs how a group of employees must be treated and their right to collective action. Think of a factory, a farm, a museum, the production of a film—all require the efforts of a group of employees to succeed.

This is especially important in creative practices regarding the formation of, and how to work with, labor unions.

Some helpful definitions:

B1 — Labor Laws and Regulations to be Aware of:

// The Fair Labor Standards Act

A federal law passed in 1938 that establishes a few key practices and regulations

  • The right to a minimum wage
  • The right to overtime pay when exceeding a 40-hour workweek
  • Prohibits most employment of minors

There are MANY additional acts that build on this law, further detailing the rights of the collective workforce. You can check out an abbreviated list here on wikipedia

// National Labor Relations Act

Established in 1935, this act effectively enshrines the rights of workers to form labor unions (and other types of organizing activities) and collectively bargain to improve working conditions and wages.

C. Employment Law and the Rights of the Individual

As a complement to Labor Law, we have employment law, which defines the rights of an individual worker and job applicants.

Employment law, generally, deals with the following issues for the individual worker:

  • Discrimination
  • Wrongful termination
  • Wages and pay equity
  • Taxation
  • Harassment
  • Right to privacy
  • Workplace safety
  • 'Whistleblower' rights
  • Leave policies
  • Hiring processes

Want to take a deep dive on employment law and your rights? I've found the website FindLaw to be very helpful as a starting point: Employment Law and Human Resources

C1 — Some Key Laws and Regulations to Be Aware of:

// Title VII of the Civil Rights Act of 1964

// Americans With Disabilities Act

// Age Discrimination in Employment Act

// Fair Labor Standards Act

// Family and Medical Leave Act

C2 — Resources

Here are a few starting points, specifically from the creative practitioner point of view, for reading more about issues of wages and labor:

Here is a good book to keep on your shelf if you have employees:

D. A Note On Employment Ethics

This portion of the lecture is essentially an op-ed by your instructor. As you create your own collaborations and businesses, I hope you will strongly consider the following ethical suggestions

D1 — Be Open to Criticism to Invite Diverse Opinions

Diversity and inclusion should be a top priority for every company. It is my personal opinion that having the greatest variety of experiences, cultural and professional backgrounds, and perspectives build the greatest framework for success.

The way to get there is to create a healthy work environment for spirited, professional debate. The way to create a diverse and healthy workplace is to invite constructive criticism.

D2 — Make the Rules Easy to Find

Employee handbooks are a great standard to adhere to. Post important policies in the break room. Review your policies annually with your employees. Workplace rules are important, but not everyone will automatically know them and all too often the rules are misinterpreted through rumor and gossip.

Do the work for your employees and make workplace policies easy to find.

D3 — The Rules Should Apply to Everyone

My father, who has an MBA and worked in the corporate telecom world for 40 years, had an essential piece of advice when it came to managing employees:

"Just make sure you treat everyone the same."

Making special cases, bending the rules for personal friends, not establishing clear policies — this is what creates the perfect petri dish for resentment to grow. If you have employees, build the work culture that you want, but build it in such a way that policies protect your employees, empowers them, and create a level playing field.

Avoid a system that awards special favors or exceptions. This is what can lead to a "boys club" atmosphere or contribute to systemic discrimination.

D4 — Some Rules Should Be Broken, Though

In contradiction to the last point, if you find a rule is creating an environment of disadvantage or discrimination—change the rule! Healthy workplaces are in a constant state of evolution and flux.

D5 — Pay People Equitably.

Pay people what they're worth. If you can't pay them what they're worth—be honest and up front as to why before the work begins. Always have logic and reasoning behind pay rates.

And make sure that if they are doing the same work as another employee with the same skill level, that they receive the same pay.

D6 — Document! Document! Document!

Anytime you have an issue with an employer or anytime you need to discuss a human resources related issue with an employee—write it down.

  • Keep good records of when you've reprimanded someone.
  • Keep good records of hiring and promotion processes.
  • Keep good records of what someone's job duties are.
  • Keep good records of annual performance reviews and evaluations.
  • Keep good records when you fire someone.
  • KEEP GOOD RECORDS, Y'ALL.

D7 — Deal with Problems Immediately and Seek Professional Advice

Think of the last time you brought up an issue to your boss. I'm going to venture a guess that the longer it took for them to address it, the more it felt like they weren't taking you seriously.

Deal with problems immediately. If you don't know what to do, seek professional advice from a human resources professional or an employment law attorney.

D8 — Internships

Ah... internships. It is my opinion that internships (unless you're receiving course credit) should be paid positions. If you want to volunteer your time and your skills for no pay—my advice is to get as much of an educational experience as possible. But if you're just fetching coffee for the boss and sitting at a front desk twiddling your thumbs—that is a job and you should be paid.

3. Self-Employment and Independent Contracting

~ Back to Table of Contents ~

This is a brief chapter. The goal here is to draw a distinction between a traditional employee and an independent contractor.

Not understanding this distinction can be one of the primary ways creative practitioners are taken advantage of.

A. Employee VS. Independent Contractor

A1 — Definitions

// EMPLOYEE — A person hired to perform duties on an ongoing basis for an entity, whose work conditions and methods are strictly controlled by the principal.

As we’ve discussed in Chapter 2, the employer/employee relationship is a type of agency relationship.

  • The employee (agent) work environment and methods are controlled totally by the employer (principal)
  • This relationship is additionally governed by labor and employment law.

// INDEPENDENT CONTRACTOR— A person hired to perform limited, specific duties for a party according to a contract, for a specific period of time.

Their work conditions and methods are not strictly controlled by the principal, but by the terms of the contract.

An independent contractor is not (automatically) an agent in their relationship to the principal.

  • The keywords here are “independent”, "limited" and "contract".
  • This relationship is governed by the contract between the two parties and legal standards of contract law.

A2. Understanding the Difference

It's not just whether or not a principal calls you an employee or an independent contractor. The relationship has to be defined and has to abide by a set of standards set out in US law.

The IRS gives us at least these three top-level tests to determine whether someone is an employee or an independent contractor:

1. Behavioral

Does the company control or have the right to control what the worker does and how the worker does their job?

  • If the principal is supplying the office, the equipment, sets your hours, etc — you are most likely an employee.

  • If you operate independently of the principal and determine for yourself how the job will be completed—you are likely a contractor.

2. Financial

Are the business aspects of the worker’s job controlled by the payer? (these include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

  • How, when and in what manner you are paid for a job is a major determining factor. We're going to cover this at a greater level of detail in Unit E.

3. Type of Relationship

Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)?

  • If you are receiving employee-type benefits, you are likely an employee.
  • If you do not receive employee-type benefits, you are likely a contractor.
  • Additionally, the contract between you and the principal should expressly state as much. We will cover more of this in Unit C.

Will the relationship continue and is the work performed a key aspect of the business?

  • If yes, then you are likely an employee
  • If no and the relationship or key aspect of the business has a set end date — you are a contractor.

A3 — Consequences

There are a number of reasons, but the key ones are:

  • Independent contractors pay higher taxes.
  • Independent contractors do not have access to company benefit plans (like health insurance, retirement, etc).
  • Non-salaried Employees are able to claim overtime pay for work over 40 hours per week. Independent contractors cannot.