Cutting corners at 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 of health and retirement benefits. Conditions in many venues are dangerous and unhealthy— sometimes theworkers 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 Onec an provide low-cost labor because it classifies those workers as independent contractors, not employees. Indeed, while Crew One deploys hundreds of stage--

hands, it claims to have only 12 employees in its five offices.

The Crew One stage hands 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 minimumwage 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 meit’s “committed to providing the highest quality service to all of its clients and to treating fairly all of theworkers.”

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 annualmeeting, possibly because the company’s national contract with IATSE is up for renegotiation at the end of this year, and possibly becausewe 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 cometo 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 fromthe stability of traditional employment. Companies such as McDonald’s hand off their responsibility for front-lineworkers’ 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 maybe 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 downon flagrant misclassification, in part because they are being deprived of much-needed tax revenue. Amajor blow against misclassification came out of California last year, in a case involving 2,300FedEx drivers. FedEx designated the drivers independent contractors and required them to provide their own trucks (paintedFedEx 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 “fromtheir hats downto 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 un ravels FedEx’s business model,” Judge Stephen S. Trott observed in a concurring opinion.

The cost to misclassified workers can be enormous. Pay andwork conditions at Crew Oner eached the point that its work force voted by nearly a 2-1margin last June to unionize through IATSE — a genuine achievement forworkers 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 belowstandard compensation with no fringe benefits.”