Contractor payroll, overtime exemptions, and what Volkswagen’s scandal teaches us
Heads up: The way the production industry has traditionally approached contractor payroll just isn’t going to cut it anymore. Though currently stalled, new overtime regulations are questioning outdated payment practices—including day rates in the production industry.
Wherever you find new guidelines radically changing previously-accepted practices, you will also find someone trying to get around them. But it behooves companies to be ahead of the guidelines instead of trying to work around them. Just ask Volkswagen.
For its shady dealings (which the BBC broke down here), Volkswagen is paying the price to the tune of $20 billion—one of the most expensive corporate payouts in United States’ history. But it’s not all about the money. While the circumstances differ, the production industry can learn a few lessons from Volkswagen’s scandal about how to walk above board and avoid ending up in court.
Culture is everything, and it’s about to shift for the production industry
Martin Winterkorn, Volkswagen’s then CEO, implicated “the terrible mistakes of a few” in his apology. But a scandal so deep doesn’t happen without a company culture (hello, Supervisor B!), and a broader auto industry culture, that tolerates or encourages finding a way around the rules.
A New York Times article points to the cultural element in industries that traditionally require long hours—like video production—that has always made room for fudging paperwork. Companies negotiate a flat rate and contractors work as long as it takes, even up to 12 or more hours, to get the job done. Since it’s standard practice, submitting time sheets that read “9-5” when everyone knows it was actually 9-9 hasn’t necessarily seemed unethical or unfair to either party. That’s just the way it is. Or at least the way it has been.
The new proposed regulations make it clear that even when workers claim to be okay with not getting paid accurately, it’s not actually okay. Employers must be prepared for the culture to shift and for workers to start questioning their overtime eligibility.
When the press talks, the people talk…
There’s nothing that shifts culture more than attention. As laws change at the state level and contractors and workers start thinking “this relates to me,” there will be pushback against industry norms. And it’s not just the workers. The media love to find and expose wrongdoings. Nobody wants to be the center of the biggest scandal of the year. Once again, just ask Volkswagen.
A mutual expectation of a flat rate for an undetermined number of work hours doesn’t count as compliance. Duties and level of pay dictate whether or not someone is eligible for overtime, not tradition. The more the press highlights these points, the more the people talk. And the more the people talk, the more the wink and nod approach in the video production industry will come under scrutiny.
…and money always talks
The air is dirtier, the ozone is thinner, and consumer trust is shattered. Unfortunately, Volkswagen isn’t the only company bending the rules or blatantly cheating in order to make a buck. Theirs is a tale as old as time. They just got caught.
And it’s coming to our industry too—the same New York Times article states that Fox is in litigation with a former worker who alleges he was paid unfairly. Once a studio gets shut down with a class action lawsuit, everyone will suddenly tighten up their practices and fall in line. But why risk finding yourself at the defense table in a courtroom? It’s not the amount of money that makes it relevant to our industry, it’s the fact that people are paying attention to it.
Don’t be the Volkswagen of the media production industry. It’s going to happen to someone. Why gamble your business instead of just starting to recognize eventual changes to overtime regulations now?
Producing multimedia content and executing live events is chaotic. At PayReel, we make sure our clients are able to hire who they want, when they want and that everyone is paid properly. Leave the details up to the PayReel team so you can focus on pulling off a flawless production. Contact us anytime at 303-526-4900 or by emailing us here.
Relax. We got it.