It’s safe to say that advertising is becoming increasingly dependent on talent for hire. Clients are staffing leaner and running into needs they didn’t plan for. The domino effect has agencies turning more often to more kinds of outside talent – not just the usual production hands but creative and strategy folks who left the full-time-employee life over the past five years thanks to big agency reorganizations and the firehouse of client cutbacks.   

The good news is there’s an ocean of talent at the ready. The bad news is we can’t just hire at will and account for them with 1099s anymore. That change has been brewing for years, with tech companies as the primary focus, but now it’s real for agencies. We’re liable for fines and penalties if we don’t classify, pay, and report independent talent the right way. And the burden of proof is on us, not our talent.   

So, we need to consider new questions, parameters, and resources.   

Everyone’s an employee. Labeling someone an independent contractor doesn’t make them one to the Department of Labor. DOL has made the rules murky (on purpose), but essentially, anyone who does work that is part of our usual remit, under our direction, for any length of time qualifies as an employee – unless, of course, they’ve established an LLC or S-Corp. Start by asking for an independent’s business tax ID, then check on whether they use their own equipment and consider the degree to which their service is outside the usual scope of the business. When in doubt, rule them out as a contractor and process them as an employee.   

Get a third-party provider. If you want to play it safe, run everyone through a third-party payroll provider. You don’t have to use the company payroll; you just need to process taxes and workers' compensation for every payment. I use WrapBook and Media Services to pay anyone I don’t want to be considered an employee.  

Put pros on speed dial. Don’t even think about floating a freelance offer without talking to your accountants. And get an employment attorney – not your general counsel – on the team. These are essentials that smaller agencies tend to step over, thinking, “that’s for the big cos.” You can’t walk back a bad first move, so the extra two steps that seem like slowdowns will actually speed you up.  

Nobody really wins under the new rules, except the states, which can now collect more employment taxes. But freelancers do derive an important benefit. Those being hired as quasi-employees – often by production and other creative support services – get the access to unemployment, worker’s compensation, and insurance they deserve. And those who want to stay independent have to run their practices as businesses, not side hustles. Most will be far more successful when they stop operating like it’s a side gig.   

This isn’t an area where you can play the averages. If they find one infraction, many states will now subpoena your business records looking to find more. So, everything you do to get it right has a material, positive impact on your business long-term.