Changing Regulations Affect Independent Planners

Author: Jasmine Zhu       

independent planner

(Photo Credit Adobe Stock)

There have been several new regulations for U.S. contractors in the past couple of years, including New York State’s “Freelance Isn’t Free Act,” established in 2017 to enhance protections for freelance workers. And in the landmark 2018 Dynamex Operations v. Superior Court of Los Angeles, the California Supreme Court made it more difficult to designate workers as independent contractors in that state.

For companies, rulings such as Dynamex have made the hiring process for independent and third-party planners more challenging. Under the newly adopted “ABC test,” according to Forbes, a worker is an independent contractor in California, only if the hiring entity establishes all of the following:

A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Michael Schaumann

Michael Schaumann, HMCC

Breaking It Down

“It doesn’t matter how big your company is. You can’t have an independent freelancer doing the same thing as a full-time employee,” Michael Schaumann, HMCC, told Convene. Schaumann is vice president of industry relations at Plannernet, which oversees a global network of 2,000 specialized meetings and event planners, and matches them to corporate clients. “That’s a major no-no in the eyes of Uncle Sam,” he said, although “there are ways to avert this or circumvent this.”

Companies that classify meeting planners as independent contractors bear the burden of compliance with local, state, and federal laws. Worker misclassification is common and potentially costly.

Here is Plannernet’s guide to compliance for hiring organizations and third-party or independent event organizers:

Compliant

  • Meeting planner has their own independent business
  • Meeting planner provides services for other companies
  • Meeting planner covers their own business expenses
  • Meeting planner is responsible for providing their own equipment

Non-Compliant

  • Controlling or directing how the meeting planner performs services
  • Training the meeting planner before she/he performs services
  • Meeting planner working more than 30 days
  • Meeting planner performing the same services as full-time employees

Stand Out From the Pack

Schaumann’s No. 1 piece of advice is for independent and third-party planners to form their own business entity. In many states, if contract workers don’t form their own business, they can risk running in violation of the law. “It’s basically that you can be viewed as an employee much easier if you’re not your own business,” Schaumann said. “When you form a business, you’re in business for yourself. If you don’t have your LLC or your S corp it’s really dangerous for both you and for the company that you choose to work for.”

In addition, Schaumann said that earning credentials like the CMP and HMCC (Healthcare Meeting Compliance Certificate) can help independent and third-party planners stand out from the crowd, allowing them to get matched more easily to companies who are looking for contractors with specific skillsets. “The more knowledge you have under your belt, the more work you’re going to see,” Schaumann said. “There are … jobs out there that need to be filled with people and [companies] can’t find people with that specialty. We see day by day, people, clients, partners coming in and getting more specific with what they want.”

Finally, if North American planners working internationally have an understanding of VAT (value added tax), that can make them more appealing to companies hosting global events. Schaumann says that it’s important to reach out to tax specialists who can help circumvent additional challenges in different countries, especially in Europe. VAT “can really get expensive sometimes,” Schaumann said. “In Italy, if you’re sourcing a venue and you’re doing so from the U.S., they’re going to tack on 20 percent on top of any purchase (including but not limited to venue rental, audio/visual, and F&B) just as a value-added tax because you’re not doing business in [their] country.”