On Friday, December 18, 2015, the President signed into law H.R. 2029 – the “Consolidated Appropriations Act, 2016,” which provides fiscal year 2016 full-year appropriations through September 30, 2016 for all agencies. See text at https://www.gpo.gov/fdsys/pkg/BILLS-114hr2029enr/pdf/BILLS-114hr2029enr.pdf. The Act included two provisions of note related to unemployment compensation or workers’ compensation.
Workforce Opportunity Tax Credit (WOTC) Extension and Expansion to Include Long Term Unemployed
The WOTC extension language in Section 142 extends the program through December 31, 2019. The language also adds long-term unemployed as qualifying for WOTC employer tax credit beginning after December 31, 2015.
The language included is
SEC. 142. EXTENSION AND MODIFICATION OF WORK OPPORTUNITY TAX CREDIT.
(a) IN GENERAL.—Section 51(c)(4) is amended by striking ‘‘December 31, 2014’’ and inserting ‘‘December 31, 2019’’.
(b) CREDIT FOR HIRING LONG-TERM UNEMPLOYMENT RECIPIENTS.—
(1) IN GENERAL.—Section 51(d)(1) is amended by striking ‘‘or’’ at the end of subparagraph (H), by striking the period at the end of subparagraph (I) and inserting ‘‘, or’’, and by adding at the end the following new subparagraph:
‘‘(J) a qualified long-term unemployment recipient.’’.
(2) QUALIFIED LONG-TERM UNEMPLOYMENT RECIPIENT.—Section 51(d) is amended by adding at the end the following new paragraph:
‘‘(15) QUALIFIED LONG–TERM UNEMPLOYMENT RECIPIENT.—
The term ‘qualified long-term unemployment recipient’ means any individual who is certified by the designated local agency as being in a period of unemployment which—
‘‘(A) is not less than 27 consecutive weeks, and
‘‘(B) includes a period in which the individual was receiving unemployment compensation under State or Federal law.’’.
(c) EFFECTIVE DATES.—
(1) EXTENSION.—The amendment made by subsection (a) shall apply to individuals who begin work for the employer after December 31, 2014.
(2) MODIFICATION.—The amendments made by subsection (b) shall apply to individuals who begin work for the employer after December 31, 2015.
The longer term extension will enable employers and states to better plan for certification and use of WOTC as an additional tool to reduce the cost of hiring for employers and to assist unemployed workers in obtaining employment after longer periods of unemployment. UWC supported WOTC and worked with the WOTC coalition in support of this provision.
Special Employer Definition Treatment for Motion Picture Projects
Section 346 provides that remuneration paid to a motion picture project worker by a motion picture project employer during a calendar year shall be treated for FICA and FUTA tax purposes as remuneration paid by such employer during the calendar year. The identity of such employer for such purposes shall be determined as set forth in the new statutory provision without regard for the usual common law rules applicable in determining the employer-employee relationship.
The new law will apply to remuneration paid after December 31, 2015.
The definitions of “motion picture project employer”, “motion picture project worker” and “motion picture project” are provided in the new statutory language.
The actual language of the act provides
SEC. 346. TREATMENT OF CERTAIN PERSONS AS EMPLOYERS WITH RESPECT TO MOTION PICTURE PROJECTS.
(a) IN GENERAL.—Chapter 25 (relating to general provisions relating to employment taxes) is amended by adding at the end the following new section:
‘‘SEC. 3512. TREATMENT OF CERTAIN PERSONS AS EMPLOYERS WITH RESPECT TO MOTION PICTURE PROJECTS.
‘‘(a) IN GENERAL.—For purposes of sections 3121(a)(1) and 3306(b)(1), remuneration paid to a motion picture project worker by a motion picture project employer during a calendar year shall be treated as remuneration paid with respect to employment of
such worker by such employer during the calendar year. The identity of such employer for such purposes shall be determined as set forth in this section and without regard to the usual common law rules applicable in determining the employer-employee relationship.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) MOTION PICTURE PROJECT EMPLOYER.—The term ‘motion picture project employer’ means any person if—
‘‘(A) such person (directly or through affiliates)—
‘‘(i) is a party to a written contract covering the services of motion picture project workers with respect to motion picture projects in the course of a client’s trade or business,
‘‘(ii) is contractually obligated to pay remuneration to the motion picture project workers without regard to payment or reimbursement by any other person,
‘‘(iii) controls the payment (within the meaning of section 3401(d)(1)) of remuneration to the motion picture project workers and pays such remuneration from its own account or accounts,
‘‘(iv) is a signatory to one or more collective bargaining agreements with a labor organization (as defined in 29 U.S.C. 152(5)) that represents motion picture project workers, and
‘‘(v) has treated substantially all motion picture project workers that such person pays as employees and not as independent contractors during such calendar year for purposes of determining employment taxes under this subtitle, and
‘‘(B) at least 80 percent of all remuneration (to which section 3121 applies) paid by such person in such calendar year is paid to motion picture project workers.
‘‘(2) MOTION PICTURE PROJECT WORKER.—The term ‘motion picture project worker’ means any individual who provides services on motion picture projects for clients who are not affiliated with the motion picture project employer.
‘‘(3) MOTION PICTURE PROJECT.—The term ‘motion picture project’ means the production of any property described in section 168(f)(3). Such term does not include property with respect to which records are required to be maintained under section 2257 of title 18, United States Code.
‘‘(4) AFFILIATE; AFFILIATED.—A person shall be treated as an affiliate of, or affiliated with, another person if such persons are treated as a single employer under subsection (b) or (c) of section 414.’’.
(b) CLERICAL AMENDMENT.—The table of sections for such chapter 25 is amended by adding at the end the following new item:
‘‘Sec. 3512. Treatment of certain persons as employers with respect to motion picture projects.’’.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to remuneration paid after December 31, 2015.
(d) NO INFERENCE.—Nothing in the amendments made by this section shall be construed to create any inference on the law before the date of the enactment of this Act.
The special provision may provide some clarity and relief in cases in which motion picture projects effectively act as the employer during the course of a project. However, by carving out such projects for special treatment it adds a new set of definitions to be considered.
Also, although the language provides for special treatment under FICA and FUTA, there is no parallel provision with respect to state unemployment or workers’ compensation status and liability. The definition of “employer” and “employee” for purposes of unemployment and workers’ compensation may be inconsistent with the federal FICA and FUTA definition. The provision may raise a question for an employer with respect to liability and coverage of motion picture project employees for workers’ compensation purposes and whether there will be FUTA offset credit for state unemployment compensation paid if the employer entities are not aligned.