The Compliance Channel: Independent Contractor Compliance For A TV Leader 

The Dilemma

Our client, a mass media and entertainment company, was hiring Independent Contractors (ICs) often due to the fluctuating demand of the television industry. Managing contingent talent can be more challenging than permanent talent because of the increased rules and regulations that the IRS enforces for ICs. Our client needed talent experts to ensure they were meeting all compliance guidelines and properly classifying all of their talent to avoid any penalties. They also wanted to ensure their contingent workers were being properly onboarded, managed, paid in a timely manner, and offboarded, which is why DZConneX's (DZX's) experienced teams stepped in to help.

The Strategy

We were originally only responsible for vetting candidates to assess whether or not they qualify as an IC, but when the client saw how we succeeded with this task, they hired us to fully manage ICs from top to bottom. Following vetting, DZX's experts would draft a contract for both party's approval, implement it into the VMS platform, and eventually execute the contract. After a four month implementation, we worked with hiring managers to assist with the collection and organization of data, centralized all IC contracts, and installed new auditing procedures and VMS technology. Our ultimate goal was to deliver full visibility into IC procedures, and we achieved that.

The Impact

Since our experts took over, all ICs are fully managed through the VMS system, providing full visibility into IC status, spending, deadlines and more. The newly implemented VMS system drastically improved organization and structure throughout the talent acquisition process. Now, vetting upwards of 450 ICs per year, our client can easily find and track the status of an IC at a moment's notice, and they can be confident that they are meeting all compliance standards with our help.

TV Industry Fast Facts

• $134.7 billion industry
• 1,715 U.S. television series
• 5,083 television production businesses
• 65,156 television production employees 

In most households around the United States, you will find televisions with viewers gathered around them watching their favorite shows each night. In order to produce the high volume of quality TV shows that viewers want to see, there are many people working behind the scenes to direct, edit, produce, conduct, market, and disseminate episodes.

Many organizations in this industry do not hire permanent talent due to the fluctuating demand and requirements for each series. Instead, they hire ICs with a specific skillset for each project to work on it, fulfill the organization's orders, and move on. One of DZX's clients, a mass media and entertainment company, recognized that they could benefit greatly from contingent talent, but they needed help from our talent experts to acquire and manage their workforce. 

Building A Foundation

The first task our client assigned us was to properly classify each individual entering their organization as an IC or a full/part-time employee. The IRS has strict compliance guidelines concerning who qualifies as an IC and how long they can work for a company before they are considered an employee instead. This presents significant risks because if contingent talent is misclassified, harsh penalties will be imposed on the organization. 

As part of the initial phase of the process, DZX's teams provided each new potential hire with a 10-minute questionnaire replicating the questions an IRS agent would commonly ask to determine whether an IC meets their guidelines. We then determined the details of each project and delivered recommendations to our client to ensure that the ICs were appropriately vetted and a good fit for the project at hand. With this initial process completed by our experts, our client no longer had to worry about misclassifying their talent. Once the client realized we were efficiently solving this problem for them, they decided to take our relationship further and give us more tasks to help manage their talent. 

Expanding The Role 

After seeing the level of DZX's compliance knowledge, our client was certain they should be using our experts to their full capacity. Some of the client's principal problems included company leaders lack of insight into how long contingent workers were on a project, what their status was, how they were being paid, or what the overall spend was. To overcome these challenges, they turned to our knowledgeable teams for a fully implemented IC management system. 

Once an individual has been accurately vetted and both the individual and the client agree on project specifics, DZX takes over. Our experts draft the contract, including the  Statement of Work. This details the project duties, the project expectations, the timeframe, the agreed-upon payment terms and more. The contract is then sent to the IC for final review, sign off, implementation into the VMS system, and eventual execution.

Throughout this process, our dedicated teams assist the client with the collection of current IC data, the organization of existing data, and the verification of various projects to provide end-to-end visibility into the company’s contingent workforce. With that knowledge, we deliver consistent auditing from our shared service organization, which supplies additional checks and balances for the company’s IC program.

Additionally, our experts conduct all necessary screening and background checks for candidates. We provide them access to advanced tools and systems, then train individuals on how to use the unique VMS technology through webinars. Finally, DZX manages the invoicing, payment, and seamless offboarding of talent after project completion. 

A Successful System

Over the course of the four month implementation, our team of experts vetted more than 250 ICs, introduced them to the VMS system and built an IC management system from the ground up. Before DZX came aboard, the company had no formal IC system, no compliance auditing, no centralization of contracts, no contingent talent database and no visibility into the process.

Now, vetting upwards of 450 ICs per year, our client can identify and track the status of anyone in their contingent workforce at a moment’s notice through the DZX-implemented VMS. The client saves money not only by having an organized database to reference when budgeting projects, but also saves potential fines and penalties from the IRS by avoiding compliance issues. DZX successfully showed this client how to properly vet and manage their contingent talent with the appropriate tools, allowing the client to feel confident in their talent management abilities.