Contractors As Music Teachers
With employees, you can lead your business without limitations. When your teaching staff is all contractors, you’re leading your business with significant limitations. In this episode, I speak with attorney Dan Messeloff about the legal implications of contractors and the legal pitfalls they can create for your music school.
Be More Competitive With Employees
I had a nice email exchange regarding contractors with John Kozicki, the owner of Michigan Rock School out of Detroit, Michigan. John made a really good point about the ability to be more competitive when your staff are all employees. I think that’s a great point to bring up that if you had two music schools competing on the same block and one music school was comprised of employees and the other music school was comprised of contracts, the music school with the employees is going to be able to be more competitive because their employees are a part of the team, they’re a part of the organization, they’re a part of the mission. There’s a music school with contractors as music teachers, their staff is all separate business entities. They’re not a part of the brand promise or your mission or your marketing efforts.
Not to say that the music school with employees is going to dominate the market, if the music school with employees utilizes and takes advantage of the fact that they have employees and that they can streamline their systems and their teaching and they can guarantee a consistent music lesson experience across the board, they can easily dominate the market. Do you want to lead with limitations or do you want to lead without limitations?
Contractors as Music Teachers Can Limit Your Ability to Scale
For most of us, when we start our music schools, the contractor model makes a lot of sense. Most of us start out as a one-person show. You’re the only teacher in the whole school, you fill up your schedule, you hire another teacher to come on board to take your overflow of students. Maybe you bring on a second teacher and everyone’s doing their own thing. You’re teaching and your two other contractors, they’re teaching. During the day, you deal with administrative stuff. Come three o’clock, you turn into a teacher and that’s basically the essence of your business.
The Painful Transition To Employees
As a music school begins to grow, the owner ultimately realizes that in order to really scale this thing, in order to really manage it effectively, they need to move out of teaching and move more into management. Take on more of an entrepreneurial mindset, develop the skills that a marketer needs, take on the position of a leader. Once the music school owner begins to change their mindset into this mindset of leadership, having contractors as music teachers really becomes a problem because the contractors are not a part of the team, they’re not a part of your mission. You can share with them your mission, but they’re not obligated to adhere to it.
Contractors Limit Your Ability to Lead
A music school with employees and a strong leader is able to work together. They’re all able to row in the same direction towards the same common goal.
- A music school with employees can streamline their music lessons and guarantee a consistent musical experience. A music school comprised of contractors cannot.
- A music school comprised of employees can require that their teaching staff write a short postcard to each student after their first lesson. A music school comprised of contractors cannot.
- A music school comprised of employees can require that all of their teaching staff make a 15-second video wishing their students happy birthday. A school with contractors cannot.
- A music school with employees can integrate their teaching staff into their marketing efforts. This type of school can train their teaching staff on sales and marketing so they can inform and educate parents on programs and promotions going on in the music school. A music school comprised of contractors cannot.
Your Teachers Are Front Line Marketers
Your teaching staff interfaces with your customers in a way that you don’t. Your teaching staff speaks and sees your customers on a weekly basis. It would be so beneficial to have your teaching staff aware of your marketing message, aware of your brand promise, and committed to bringing your brand promise to life in the music lesson. You can’t ask a contractor to bring your brand promise to life in a music lesson. They’re not a part of your brand. They are their own separate brand. I would argue that it’s risky to even have any brand promise at all if your teaching staff is comprised of contractors.
Employees Can Be Champions of Your Brand
Your brand promise could be quality music lessons and you hire quality teachers, there’s nothing emotional in that. Sales are made by appealing to people’s hearts. A music school comprised of employees can focus on the emotional component of their marketing. Imagine the impact you could have as a music school if all of your teachers were not only teachers but champions of your brand and your marketing message.
My guest today, Dan Messeloff is going to break down specifically what you can and can’t do with contractors, what the pros and the cons are of contractors. Dan is a partner at Tucker Ellis Law Firm here in Cleveland, Ohio, and he really gets into the nitty-gritty of the legal implications of having contractors as your teaching staff.
— Interview Highlights —
What Makes a Music Teacher an Employee
many companies around the country are faced with a similar issue. When you need help in one way, shape, or form, do you hire an employee or do you utilize an independent contractor? While there is a debate and there are some practical differences, at least under the law, there really shouldn’t be much of a debate. An employee is someone who more or less works for you, whether full-time or part-time, some set schedule, but they’re more under your control as the employer, as the company. You provide the equipment, you provide the space, you provide the know-how, you provide the training, you provide the infrastructure.
Independent Contractors Are Not a Part of Your Music School
If you are an employee, for many of us who’ve been employees, there’s a certain feel to being an employee. You show up, and you might have some limited experience, but you’re an employee. So you look to your supervisor, you look to the company at large for which you’re working to give you some guidance as to how to go about your job, and then you do what they tell you, and you’re an employee. Independent contractors for the most part are separate, and noticeably so, in the sense of an independent contractor shows up and it’s typically, if not always, a part-time gig, to use a music parlance and other parlance. It doesn’t have to be part-time in the sense of only a few hours a week, but at least it is a short-term, project-based thing.
Are Your Music Teachers Really “Independent”?
The example that I frequently give clients of mine is a company that needs their IT infrastructure updated. So you say, “Okay, this project may take a certain amount of time, but you as an independent contractor, you do this thing. You have your people, you have your know-how, you have your equipment, you upgrade our system. And then when that project is done, you’ll be done. We’ll give you X amount of money for that project, and true to its name, it is an independent contract. We will give you a contract where we’ll pay you $5,000, $20,000, whatever the amount of money may be, but you are largely independent and standalone. You do what you do. You bring your experience, but also your tools and so on to the table, to my business, and you do what you do.”
Who’s in Control-You or Your Teachers?
Now, granted, as I say this, there is no real bright line in a litmus test as to who is an independent contractor and who is an employee. There are a number of factors. It’s almost like a scale. The IRS has a certain model, the Department of Labor has a certain model. There are some minor differences, but for the most part they’re very similar. The real rule of thumb is, how much control do you as the company have over what this individual in question does? The more control you have, the more likely it is to be an employee.
If You’re in Control Your Teachers Are Employees
Whereas the less control you have … To use the example that I gave before, if you have a company and you need your IT infrastructure updated, your mindset might be, “I don’t know what you’re doing. I have no expertise in this. I can’t tell you what wire to put or what mainframe or hardware or anything. You do what you do, and that’s that.” As opposed to in a business with an employee, you say, “Here’s how we do things at our company. You come in at this time, you do that thing, you use this equipment, you perform this service in this model and this framework.” That, again, you have more control over the day-to-day and minute-to-minute operations of what they do. So, that’s really the rule of thumb. The more control you have, then the more likely it is to be an employee.
Music School’s Enter a Gray Zone
Now, in the music industry, that can be a little bit of a gray area. Because depending on the school … Just as I said a few minutes ago, there really is no bright line. So much of this unfortunately is a case-by-case basis based on each company, based on each individual. But in the music school and the music context, a music school might say, “Look, we need somebody. We have an increased demand in students who want to learn how to play guitar. Therefore, we need people to teach our students how to play guitar.” Now, within that framework of how things come up, you could have a wide range of how things work.
The Problem With Treating Contractors Like Employees
You could have some music schools and some systems where they say, “Look, your hours are expected to be nine to five. If you don’t show up you’ll be fired, and you’ll have one person an hour for eight hours, or seven hours with a lunch break, what have you. This is the instruction book that we use. Of course, we expect that you already know how to play guitar, but this is what we use. Here’s the score sheets. These are the performance evaluations that we use at this school. Here’s how we do things here at this school.” Now, applying the thumbnail test, the rule of thumb that I said before, that sounds like a lot of control. Where the music school says, “Yes, I may know how to play guitar, but man, as soon as I walk through that door I’m doing it their way, not my own way.”
In contrast to that, you might have some more free-flowing, loosely organized music schools that might post an ad to say, “Hey, we need somebody to teach guitar five hours a week. Hours are flexible.” And then you say, “Look, this person is 12 years old. You’ll have one hour to learn how experienced they are, and then just go do your thing. We charge these people $50 bucks. We’ll pay you $25 or whatever the rates may be. And then you do your thing, teach them guitar, and that’s how things go.” You can tell in that structure and that format, in contrast to the example that I gave a minute ago, that is pretty loose.
Employees Vs Contractors and Expectations
The employee shows up and says, “I know how to play guitar,” and the entity would say, “Hey, good for you. Go teach it. You do your thing,” and that’s that. And then if you turn down a job one week or one hour, it doesn’t necessarily impact your ability to have future jobs. That again is more in line with an independent contractor as opposed to an employee, where, “Hey, you didn’t show up two days in a row, so you’re fired. Don’t come back the third day.” That’s again, in brief, the general guidelines for how music schools and similar entities might think about that contrast between employees and independent contractors. It shouldn’t be a debate really. It’s really, how do you operate? How does your school operate? Are you more inclined to have an employee, under the one example that I said? Or are you more inclined to have an independent contractor, in the other example that I said?
Contractors Aren’t Considered “Fundamental”
I should add one more element. I don’t have the list of factors that I mentioned before in front of me of what constitutes an independent contractor versus an employee. But one more consideration that’s important for music schools and similar entities to consider is that independent contractors are typically not related to or working on what I’ll describe as the fundamental business of the enterprise, of the company.
For example, in the example that I gave before about IT infrastructure, your business might be a music school, or a bakery, or a marketing company, or a million different things. The IT infrastructure that you would be bringing in an independent contractor, that’s not central to your business. That’s kind of a peripheral thing.
Contractors Can’t Deliver Your “Core Business”
Therefore, yeah, we hired an independent contractor to fix the plumbing, or to fix the infrastructure, or to do something that is peripheral to our core business. The more you have a core business, the assumption is that it’s going to be done by employees because without those individuals your business can’t get done. That is, I suppose you might say an asterisk or caveat to everything that I’ve said before. Because if in a regular business or a typical business an independent contractor doesn’t show up to improve the infrastructure, the business still goes on. Life goes on, the world still goes around and everything is fine.
Minimize Your Risk With Employees
But in a music school, if you think that your instructors are independent contractors, but that is still what you’re selling for the most part, you might have substitutes, you might have fill-ins who could be independent contractors. But if you have a core group of independent contractors in a music school, and those are the people who provide what you do, that is a little bit riskier. The ice in that analysis is a little bit thinner because you’re like, “Well, if these people don’t show up, that’s what we do. We sell music lessons and they do what we do.” Therefore, in the event someone said, “I’m really an employee,” or if the IRS or if the Department of Labor said, “These people really are your employees, because without them you would not be able to operate,” that’s something else to think in mind as music schools and similar entities are weighing how to consider the people who they either hired for employees, or contract with and retain for independent contractors.
Are Your Music Instructors Employees or Contractors?
- Are you instructors employees or contractors?
- If contractors, what is your impression of this interview?
- What is your biggest concern about switching from contractors to employees?
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