Yurcor/The Mill settlement reached in LA, is NY next?

Posted by Staff

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In California, a class action lawsuit against The Mill and Yurcor has been tentatively settled, striking a major blow against Yurcor’s “Employer of Record” service. The core of the dispute was the practice of using employee wages to pay for employer taxes. That’s a no-no.

The Animation Guild (Local 839 IATSE), who provided support to the artists in the class action suit, is setting its sights on NYC next.

Steve Kaplan of TAG:

The New York artists originally voiced many of the same complaints made in California, but added that the practice was much more prevalent in NYC. We are now ready, willing and able to help New York artists. (Source)

Interest form for NYC Artists

If you’re a NY artist who’s worked through Yurcor and want to recover questionably deducted wages, TAG is encouraging you to fill out this form.

NOTE: Please only fill out the form if you’ve worked through Yurcor in NYC.

Further Reading

If you’re interested in learning more about this issue, TAG’s Steve Kaplan has been writing about it for quite some time:

Photo by bruckerrlb / CC BY-NC-SA 2.0

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56 Comments

Eric

You need to do the same thing with MBO Associates as they do the EXACT same thing.

Stephen Kelleher

Congrats to my fellow artists on the left coast, shame on the studios who insist on treating their freelance talent with such contempt and a big FUCK YOU to Yurcor!

Angus

I hope NYC freelancers do something about it.

Rob

That is awesome. So glad those crooks finally got the shaft!

skaplan839

Thanks for posting this Justin! I appreciate your help in getting the word out.

Ben

Great news! Logan LA also uses Yurcor. Any plans to hold them accountable too?

Paul Rand

Some places use Yurcor and tell you that they are doing you a favor by paying the taxes…HAHAHA!!!

My experience with Yurcor was awful. They try to claim my day rate was lower that the agreement and I had to make a stink with them and the studio to rectify the problem.

All around they seemed like a shady and ghetto business.

Little Ben

Companies such as The Mill are to blame as much as Yurcor. First screw them as freelancers, hire them up and now screw them as employees. It doesn’t stop.

Whimsy Collective

Thank you for sharing an update on this Yurcor matter. They took a huge chunk out of my paycheck treating me as W-2 working at said client premise when I’m already an LLC.

hj

I am so glad this is happening.
I never had this awful this experience with other companies but Yurcor and they even have not pay me yet.
I really don’t understand why the Mill work with them.

Bill

SO SO happy to see this. Yurcor is a wretched entity. Shame on those companies involved with them. We know the score.

nobody

They must be shitting in their pants.

bobby

is this just for people at the mill or is this for anyone in LA who used yurcor?

The Mercenary

Digital Kitchen used them. They might still do. Yurcor ended up taking out 40% out of my paycheck. It was insane. I renegotiated my day rate to compensate for this.

Big producer hotshot with lines of charlie on his desk.

Yeah yeah, the Mill this the Mill that. In the end of the day though it means nothing.

Staff, now that you know the Mill’s mentality is Corporate Slavery-Sweatshop, does it going to prevent you from featuring them ?
Are you actually going to start promoting the small one-man crews?

I doubt it.

Jens

very good point! I guess one argument for stiff featuring the mill is that the work done by their artists is still good and for those the exposure is probably a good thing.

But still worth a thought to boycott studios with unethical work practices from getting published on relevant blogs.

-Another question, I’m London based and this is the first time I hear of Yucor, -is it common in the us for a freelancer to go through a 3rd party. As far as I know people who work for the mill over here deal with them directly, and they seem to have an ok reputation.

William Leak

Humm… not sure what all the fuss is about. I used Yurcor, and the rate I was quoted by them was the rate I was paid. I work here with a couple friends, and they seem to feel the same, so not sure if we are missing something. They gave us a pay rate, my paycheck says that rate, and I have just pay my normal taxes. Is that correct or am I missing something? My experience has been good.

Eric

William Leak It’s explained right in the article.

Why are you forced to use Yurcor at all? So you can get paid? That’s ridiculous.

When you sign up with them to be your EOR, you are an employee of Yurcor. As your employer, they are responsible for a portion of that taxes that are paid. What they are doing is paying their taxes with your money. Talk to any accountant and show them what these people are doing and watch their head explode.

Did you know that you cannot write off nearly as many expenses as a freelancer who works for Yurcor? Did you know that as such you are ineligible to use SEP IRAs and other instruments of savings that could save you lots of money on taxes?

This trend of forcing artists to use companies like Yurcor is NOT good for our industry. It’s a tax on self-employed people and as it is, we already lack most of the basic protections under the law.

WilliamsLeak

Thank you for your feedback Eric, I appreciate your views. Though I do not necessarily agree with them. I was hired as an employee not a freelancer, your comments are not making sense to me. Yurcor offered me an employee pay rate, not a freelancer rate. I am not questioning your experience by any means. I respect you had an unpleasant experience, however me and my colleagues have not. My paycheck stubs from yurcor are a replica from my staff paycheck stubs from past staff positions at other studios. Is your complaint that you wish to be paid as a 1099 and not a w2? Then if that is the case perhaps your beef is with the IRS not Yurcor, just saying? Best of luck, and thank you for sharing your thoughts and experience.

Folschild

This is not a post about subjective ideas with which you may or may not agree, this is a point of fact: Yurcor and the Mill knowingly broke the law and are now paying for it thanks to a group of dedicated artists. Your ignorance is detrimental to the already fragile state of our business.

Drizzledick

Dude. There was nothing in his post that called for that response. Your vitriol is more detrimental than anything he said.

deez

Maybe ignorance was the wrong word? Naiveté is more appropriate. It is against the law for “me” to have “you” pay my taxes. That’s what this is about.

janvanflac

WilliamLeak sounds like a paid troll, but if not:

You do know that Yurcor has been charging the employee BOTH sides of the payroll tax? (hence the lawsuit) and charges large admin fees as well. And also charges the freelancer for their own workers comp insurance.

Bottom line….Yurcor shaves the first 10% off of your paycheck, before you pay a dime in regular taxes.

Bruce Chen

When it just started, paychecks were cut 20% until your gross income reach a certain number, and then there is an administrative fee of 4.5% (which certain companies were nice enough to contribute half of that), then you have to pay Yurcor employees state and federal taxes on top of your own which they withhold. The quote you give the company will end up less then half on your final paycheck.

Drizzledick

I’m not sure about this. I work at the Mill, get paid with Yurcor and I took the time to get paid via 1099. Therefore I get 100% of rate. No taxes, no fees. All of it. Also, with an S-corp, I can work the taxes & get my SEP-IRA on.

I believe Yurcor stopped the practice of taking your money for taxes, which was super shitty of them to be doing. And you’re not forced to be a W-2 employee with Yurcor. Jump through a few hoops and you can bypass and go 1099 and fuck them out of keeping a single dime.

All I’m sayin’ is make sure what you’re saying is true before you speak it as fact.

deez

What he’s saying is true i was contacted by the mill for work and yurcor would not allow me to be hired as a freelancer, i have an s-corp and I have many friends who have had the same experience.

Drizzledick

Without knowing the timing, I’m not sure what happened in your situation. I’m certainly not an advocate for Yurcor (fuck those guys), I just want people to be informed how to work within the shittiness so we can get our due pay.

deez

Well then your goal is one in the same as the artists who brought on the suit.

R

I tried to become a 1099 through Yurcor. I was told I need to actively pay for two types of insurance: Workers Compensation and General Liability. I don’t have any employees so these aren’t services I normally pay for. Neither are cheap. I’m forced to go W-4 which, with independent tax incentives, is considerably less. The Mill knows this and will not fully compensate, from my experience.
As long as you have an EIN number, it’s in your right to use it. You can’t be forced to be employed by a company you’re not working for. I really hope this case has an impact in the industry.

Drizzledick

Fair point on the cost. However I found that the decrease of tax liability offset this cost multiple times over. It’s annoying and costs something, but the option is there if you’re willing. Also, this is from the IRS website:

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

In the eyes of the govt, we’re not ICs, so I wouldn’t go so far to say we have a RIGHT to use it. Just gotta werk the advantage till it’s dead.

R

So are you saying it’s worth it to forgo my 10% tax loss? My taxes as an independent contractor are pretty legit and I don’t have any large- red flag purchases per my income at 100,000, plus that’s really the minimum amount auditors investigate anyhow. I’m not really concerned about being audited. If I felt I was doing something illegal or if I had the opportunity to make more money dong the same thing, I would not be complaining over a 10% loss.

Drizzledick

Oh hell no! Sorry if that was confusing. I’m saying it is totally worth it to work the system. The cost of the insurances is tiny compared to the tax benefits of being 1099 with Yurcor. I just wanted to point out that technically we’re not ICs (from the IRSs view), which is not a problem for us, it’s the studios that will get in trouble (i think its a 10k fine) for dodging taxes paying 1099s, not us.

R

Oh I see, thanks for your reply… can I ask how much you pay per month for both those insurances and which ones you use??

Drizzledick

No worries! I think it was 20/mo for gen liability and 40/mo workers comp. Or maybe you could photoshop some forms. 0;)

R

haha. Thanks Drizzledick!

Bruce Chen

When it just started, paychecks were cut 20% until your gross income reach a certain number, and then there is an administrative fee of 4.5% (which certain companies were nice enough to contribute half of that), then you have to pay Yurcor employees state and federal taxes on top of your own which they withhold. The quote you give the company will end up less then half on your final paycheck.

MFF

Yurcor is a business in Florida, a state with no individual income tax. I wonder how this all plays out in the legalities. Seems like NY state must lose out in tax revenue because of this as well.

M

I worked at Logan NYC a little over a year ago. And they wanted me to use Yurcor at the time since I wasn’t an LLC. I was cautious so I billed through a friend’s LLC instead and got 100% of my earnings.
A little later I heard that other people on the job were really unhappy when they got their paychecks from yurcor, which took out a huge chunk, way beyond standard withholdings.

These days, I’ve gotten in the habit of asking studios how they pay before I quote my rate. If they use some weird sketchy service I usually ask for more money. The whole thing is super shitty. Plus, sometimes producers get indignant when you start asking them about the specifics of how you’re going to paid too(like if they use yurcor or a similar service)

GD

I have worked with the Mill: LA plenty. The hoops in which you need to jump through to become a 1099 independent contractor through Yurcor are absurd for a freelancer with NO employees: Two Certificates of Insurance (Workers Compensation AND General Liability), an LLC active for over 12 months, and must have previously filed for an 1120 tax return. Because I’m not about to pay insurance for employees I don’t have, I lose 10% on my bottom line due to tax incentives. As a W-4 employee through Yurcor, they take out 17% on top of your withholdings. The Mill does a nice job of compensating for that 17% (you NEED to ask) but they will not compensate for the 10% loss in taxes. Really the bottom line is The Mill is saving money by screwing over freelancers and they know it. Shame on them. Freelancers seriously need to stay away from companies that practice this.
All the studios I freelance at in LA have no problem taking my EIN number as a 1099 or W-9, please use these companies… I’ve only run into this circus act at Logan and The Mill in my experience.

Drizzledick

Just a heads up that every place that takes your EIN is putting themselves in serious risk. We don’t fall in the technical definition of an IC. They risk fines of 10K per infraction. The state and fed are looking for tax revenue wherever they can find it and this is low hanging fruit for them. Shops like IF had switched over to w-2 to avoid this. It’s a pain in the ass and we’re sort of screwed from every angle.

Pablo Honey

If that’s truly the reason, then companies that use Yurcor should instead pay their freelancers as temporary employees… Oh wait, they don’t want to do that because then THEY would be responsible for the employer taxes and insurance.

Drizzledick

uh, yes… the best possible situation is 1099. we pay less taxes, they pay less taxes. win win…. i just wanted point out that, EoRs and shops that W2 are trying to make the best of the tax laws just like we are! you want companies to succeed… they pay you money. yurcor took it too far and should be fucked up with lawsuits.

Eric

As far as I understood it, that’s the whole point. When you incorporate, you are no longer an independent contractor for the studio, you are an employee of your own company. That company pays quarterly taxes and payroll.

Along with the other companies mentioned, Psyop and Mass Market also got rid of the EOR several years ago after using them for a year or two (I am 99% sure of this, I am incorporated now, so I haven’t had to deal with it), I think it just ended up being less of a hassle to put those that are not incorporated on payroll instead which then satisfies all of their requirements under the law.

So basically, if companies like The Mill would all just cut the shit and put people who aren’t incorporated on their payroll, it would solve the problem.

Drizzledick

I think it’s reverse, when you incorporate you become an IC for the company. They are contracting your company to work. However, you are right that in this instance, you are an employee of your own company.

Michael

Really glad that someone raised this issue! The laws on independent contractor is crystal clear (Google: microsoft worker misclassification case). Just makes me what other shady practices the DOL will uncover in that place?!

Looney Tunes

Ha! Immigration fraud? I heard 90% of them are on visas.

Xenophobicmuch?

Awww are ‘they’ coming over here taking all the American jobs?? If they’re on visas then how could there be immigration fraud genius? Try again.

Eric

Well, to be fair, at The Mill London. They don’t like Americans over there “taking jobs from one of their own”. Don’t chalk it up to be some kind of American phenomenon.

Xenophobicmuch?

Oh no, I’m sure people in London say that too – there are fearful assholes all over the world.

Anon

I use to work for The Mill and was in charge of bringing in Freelancers. I hated Yurcor so much and actively protested them and our involvement with them to the point of things I can’t discuss. Any shop that uses this sham system should be shamed.

Lawrence Duenas

My accountant said that I should invoice Yurcor for charging me to pay to do my payroll. They are totally illegitimate. I hope Digital Kitchen is called out on the using Yurcor too.

Kurt Miller

My experience with Yurcor: Came in on a freelance gig where I knew about their shenanigans before the job, and still ended up in a fight. When they unsuccessfully tried to enforce a contract I had never signed, the Yurcor rep then got nasty and threatened to
‘report me to my supervisor’ for being uncooperative. I would assume that kind of thing is illegal, but I never followed through. I’m glad to see Steve Kaplan followed through, tho

Jack

Where are the original comments

mmk

These comments help newbie or other freelancers understand why Yurcor is a piece of shit. Not sure why they are taken down.

PixelPusher

I had the whole Yurcor thing sprung on me by surprise right before I started at Logan a few years ago. As everyone else has said, it is a total scam. Companies like Roger and Motion Theory do the right thing (the LEGAL thing) and pay their freelancers as temporary employees with w-2s.

If they can manage to do the right thing, what’s the excuse for everybody else?

The truth is that the whole 1099 payment system is bullshit and Yurcor is just the shitty band-aid solution that actually makes it worse for the innocent freelancers who are counted on to not know any better.

Comments are closed.