Exposing the employment ploy at concert promoter Live Nation

Brian Hill is a 28-year-old stagehand from Atlanta who’s been planning to address Wednesday’s annual shareholders meeting of the giant Beverly Hills-based concert promotion firm Live Nation Entertainment.

Hill has been hoping to explain that Live Nation condemns stagehands in his home region to poverty-level wages while depriving them health and retirement benefits. Conditions in many venues are dangerous and unhealthy — sometimes the workers aren’t even given water to drink. Safety training is all but nonexistent.

This is the result, he says, of Live Nation’s decision to hire its staff through a subcontractor named Crew One Productions, which provides stagehands and other technical personnel for entertainment venues in Atlanta and across the Southeast. Crew One can provide low-cost labor because it classifies those workers as independent contractors, not employees. Indeed, while Crew One deploys hundreds of stagehands, it claims to have only 12 employees in its five offices.

The Crew One stagehands are not subject to the contracts Live Nation has signed with the International Alliance of Theatrical Stage Employees, or IATSE, for shows in which Live Nation is the direct employer. Union scale for stagehands in Atlanta runs from $18 to $26 an hour; employers also are required to contribute to IATSE’s retirement and health insurance funds. (In Los Angeles, union rates are higher: At Staples Center, for instance, staffers earn a minimum of about $32 an hour.)

When Live Nation works through Crew One, however, the technical workers are paid as little as $9 an hour — a hair above Georgia’s minimum wage of $7.25 — according to testimony delivered by Crew One General Manager Jeff Jackson at a National Labor Relations Board hearing in April 2014. It pays no health or retirement benefits. Crew One’s “independent contractors” have to provide their own hard hats, rigging ropes and steel-toed work boots, which are required on the job. Crew One provides no safety training, Jackson acknowledged, though the firm’s website declares, “We make safety a top priority.”

Crew One told me it’s “committed to providing the highest quality service to all of its clients and to treating fairly all of the workers.”

Glimmers of an agreement between Live Nation and IATSE over the Atlanta situation emerged last week, possibly because of the prospect of an organized protest at Wednesday’s annual meeting, possibly because the company’s national contract with IATSE is up for renegotiation at the end of this year, and possibly because we started asking questions of Live Nation in preparation for this column.

Sources say Live Nation has hinted that it might be willing to sign a contract with IATSE requiring that staffers at its Atlanta shows be assigned through the union’s hiring hall, rather than through Crew One. A Live Nation spokesman would say only that the firm “has over 50 agreements in place with IATSE throughout the country and enjoys a strong relationship with the union.” If there’s sufficient progress in the next few days, Hill may not need to come to California after all.

Workforce advocates say the misclassification of employees as independent contractors is a large and growing problem, especially in industries where subcontracting is common, work is project-based and workers are assigned in small groups or individually. The problem increased during the Great Recession, when unemployment sapped workers’ bargaining power. But it’s been endemic for years in the entertainment industry, and is the cause of continuing friction between truckers and trucking companies at the ports of Los Angeles and Long Beach.

Employers can garner huge benefits by avoiding “employment-related obligations,” says an upcoming report by the Economic Policy Institute, a nonpartisan, labor-affiliated think tank. They “save on labor and administration costs and gain advantage over competitors.” They avoid paying the employers’ half of Social Security and Medicare taxes (workers must pay instead), and unemployment insurance and workers’ compensation taxes. They even can circumvent immigration enforcement — employers can’t be charged with hiring undocumented workers if they don’t have any employees.

Misclassification is part of a larger trend toward separating work from the stability of traditional employment. Companies such as McDonald’s hand off their responsibility for front-line workers’ pay and working conditions to franchisees, and “sharing economy” companies such as Uber and Airbnb function as middlemen. The trends’ boosters say they offer workers flexibility and freedom, though in reality it may be the freedom to struggle in jobs in which one is on one’s own. Much of the job growth in the Inland Empire comes from warehouses operated by subcontractors for companies such as Wal-Mart, Macy’s and Kohl’s, on terms that may allow the big employers to dictate the workload but sidestep responsibility for working conditions.

State and federal authorities are starting to crack down on flagrant misclassification, in part because they are being deprived of much-needed tax revenue. A major blow against misclassification came out of California last year, in a case involving 2,300 FedEx drivers. FedEx designated the drivers independent contractors and required them to provide their own trucks (painted FedEx white and decorated with its logo) and pay for their own uniforms, scanners and other equipment. Yet the company effectively dictated the drivers’ hours, personal appearance and clothing “from their hats down to their shoes and socks,” the U.S. 9th Circuit Court of Appeals observed.

They’re employees in all but name, the court said in a ruling that exposed the company to claims for back pay and overtime. “Our decision substantially unravels FedEx’s business model,” Judge Stephen S. Trott observed in a concurring opinion.

The cost to misclassified workers can be enormous. Pay and work conditions at Crew One reached the point that its workforce voted by nearly a 2-1 margin last June to unionize through IATSE — a genuine achievement for workers with little job security in a region traditionally hostile to union organizing. Since then, however, Crew One has refused to bargain with the union, arguing that it can’t legally be forced to negotiate with “independent contractors.” The NLRB rejected that argument in January, but the company last month filed an appeal in federal court.

The Atlanta workers’ instinct to pressure the ultimate employer, Live Nation, is a sound one. “Our approach is to say to Live Nation, ‘You guys are integral to this problem,’” Hill told me. “Ultimately, it’s Live Nation’s decision where they get their labor force. If not for their decision, we wouldn’t be getting paid way below standard compensation with no fringe benefits.”

Michael Hiltzik’s column appears every Sunday. Read his blog, the Economy Hub, every day at latimes.com/business/hiltzik, reach him at [email protected], check out facebook.com/hiltzik and follow @hiltzikm on Twitter.