To PAY or not to PAY actors?

[Madlabent]

Lets say that you are making a low budget independent film that will only cover necessary materials, and film festival expenses. Should you pay the actors who have worked on the film even if you plan to self-distribute it or four-wall theaters yourself once it is completed?

There seems to be three different options that we can approach:

1-Pay actors upfront
2-Give Credit Only or Credit and a Copy of the Film
3-No Upfront pay, but Deferred pay on the backend per certain conditions.

Which scenario is the best for an independent film that is self-distributed?

 

[Sweetie]

Read something today (it's a little old) that may be of relevance if you are shooting with this idea in LA.

Cast and crew are NOT your employees under Fair Labor Standards Act if you sign them to do a film. (Think about what happens if you hire a plumber -- they are not your employee.) Cast and crew are independent contractors and therefore they do not fall under FLSA. If you are upfront with the requirements of the shoot, sign a proper contract, offer non-monetary renumeration, i.e. credit, copy and meals, you are fine.

The case is also extraordinary for what it says about the status of actors as employees. It is generally thought within the industry that cast members should be characterized as employees of the production company. This is certainly the position that the IRS takes when it comes to penalizing producers who attempt to hire cast as independent contractors. California has cracked down on employers who mischaracterize employees. As of January 1, 2012, a new California law creates large penalties for employers who misclassify their workers as independent contractors. Labor Code Section 3357 creates a rebuttable presumption that a worker is an employee.

Source: http://www.ifp.org/resources/do-your-actors-own-your-film/#.U2AbPVdZV8F

While this is part of a copyright claim case and this is just a snippet of the article, it also bears some relevance to your previous question about liability and hiring them as a contractor...

However, the Ninth Circuit found that because the actress was hired for a specific task, worked only three days and received no health or other traditional employment benefits, she was not an employee. This is contrary to other cases, which have found that actors should be classified as employees rather than independent contractors. Furthermore, if actors are not employees, then they may not be covered by worker’s compensation insurance and the producer can be liable for their workplace injuries.

Hence the reason why I (not chris) said to consult a lawyer (one that is licensed and insured), you may be opening yourself to issues you don't forsee.