BKN, Inc.

National Labor Relations Board - Board Decisions

Jan 31, 2001

333 N.L.R.B. 143 (N.L.R.B. 2001)

BKN, INC. 143
BKN, Inc. and Local 839 of The International Alli-
ance of Theatrical Stage Employees, Techni-
cians, Artists and Allied Crafts of the United
States and Canada, AFL–CIO, CLC. Case 31–
RC–7716
January 31, 2001
DECISION ON REVIEW AND ORDER
BY CHAIRMAN TRUESDALE AND MEMBERS
LIEBMAN AND WALSH
On May 26, 1999, the Board granted the Employer’s
Request for Review of the Regional Director’s Decision
and Direction of Election in this case solely with regard
to his finding that the Employer’s freelance writers, art-
ists, and designers are employees, and not independent
contractors, within the meaning of Section 2(3) of the
Act. A mail ballot election was conducted beginning on
May 21, 1999, and the ballots were impounded.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
Having carefully considered the entire record and the
briefs on review, we affirm the Regional Director’s find-
ings that the individuals in dispute are employees under
the Act.
I. FACTUAL BACKGROUND
The Employer is engaged, among other things, in the
production of an animated series for television, titled
Roswell Conspiracy. The Employer will produce ap-
proximately 30 of the 40 one-half hour episodes of Ros-
well Conspiracy for television syndication.1 This case
involves the Union’s petition for an election in a unit of
individuals working on the pre-production phase of Ros-
well Conspiracy. The petitioned-for unit includes vari-
ous designers and artists who are permanent employees
on the Employer’s payroll. The Union, however, also
seeks to represent writers, artists, and designers who are
labeled “freelance” by the Employer. The Employer
contends that all of these employees are independent
contractors, and therefore should not be included in the
unit. Because their roles and circumstances are distinct
from each other, we will first address separately the
status of the freelance writers, and then proceed to a con-
sideration of the freelance artists and designers.
The Employer’s hierarchy of authority responsible for
the production of Roswell Conspiracy has the executive
producer at the top, with the two line producers and the
art director directly below the executive producer. The
process of creating each one-half hour Roswell Conspir-
acy show begins with a script written by a freelance
writer (hereinafter writer). The writers are hired by and
work under the direction of two story editors (editors),
whom the Regional Director properly found to be super-
visors within the meaning of the Act. The editors were
hired by and report to the two line producers.

1 Additional episodes will be produced by separate companies not
involved in this proceeding.
There is a common thread of a story line that will run
through all 40 episodes of the Roswell Conspiracy, but
each episode is intended to be an individual story that
stands alone. It is the editors’ responsibility to ensure
that the scripts that are being developed follow the the-
matic thread that is supposed to flow through all the epi-
sodes. The script-writing process begins with the writer
or editor creating a premise, which is an idea behind a
specific episode that is in keeping with the direction of
the series. This premise, which can be as short as two
lines or as long as a half a page, is submitted to the pro-
ducers for their review. The producers decide whether
the premise is a viable one for the series, and if it is, they
return it to the editors with comments for the next step.
After an editor has reviewed with a writer the produc-
ers’ suggestions regarding the premise, the writer pre-
pares a script outline, which expands on the premise by
setting out in general terms the characters and events that
will take place within the script. The outline can range
from two to eight pages in length.
Based on this outline, the writer next produces a first
draft script (also known as a teleplay), which is approxi-
mately 30–36 pages long. This script is submitted to the
editors, who regularly note changes that they would like to
see made to the script. The script is then sent to the pro-
ducers, who mark desired changes on the script and send it
back to the writer or editor to be revised. On occasion,
these requested revisions are made by the editors, but or-
dinarily the editors ask the writers to make the changes.
Thus, the final step of the script-writing process is the pro-
duction of a revised script by the writer, which is submit-
ted to the editors for their approval and transmission to the
producers. At each of the four steps of this process, the
editors and the producers give suggestions and directions
to the writers regarding the style of writing that is being
used to ensure that it is consistent with the overall tenor of
the series. This includes suggestions concerning charac-
ters or backgrounds that could be utilized in the episodes
being developed. Although the executive producer and the
line producers oversee the entire script-writing process,
they do not have any direct communication or contact with
the writers who work under the two editors. Instead, the
producers communicate with the editors, usually only by
telephone.
The writers are paid $6500 per episode script. They
receive their payments directly from the Employer, based
on invoices that they submit to it. The writers set their
333 NLRB No. 14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 144
own hours, decide where to work (many work out of
their homes), and provide and use their own equipment
and materials. The writers are not subject to any type of
discipline from the Employer’s management personnel.
The Employer does not require the writers to work for it
exclusively. The writers do not receive any fringe bene-
fits from the Employer, and the Employer does not with-
hold payroll deductions or workers’ compensation insur-
ance premiums from the invoiced payments made to the
writers.
II. ANALYSIS
Section 2(3) of the Act provides that the term “em-
ployee” shall not include “any individual having the
status of an independent contractor.” In determining
whether an individual is an employee or an independent
contractor under Section 2(3), the Board applies the
common-law agency test and considers all the incidents
of the individual’s relationship to the employing entity.
Roadway Package System, 326 NLRB 842 (1998). The
multifactor analysis set forth in Restatement (Second) of
Agency, Section 220 includes the following factors to be
examined:
(1) The control that the employing entity exercises
over the details of the work;
(2) Whether the individual is engaged in a distinct oc-
cupation or work;
(3) The kind of occupation, including whether, in the
locality in question, the work is usually done under the
employer’s direction or by a specialist without supervi-
sion;
(4) The skill required in the particular occupation;
(5) Whether the employer or the individual supplies
the instrumentalities, tools, and the place of work for the
person doing the work;
(6) The length of time the individual is employed;
(7) The method of payment, whether by the time or by
the job;
(8) Whether the work in question is part of the em-
ployer’s regular business;
(9) Whether the parties believe they are creating an
employment relationship; and
(10) Whether the principal is in the business.
Thus, no single factor is controlling in making this de-
termination. For example, in Roadway, the Board found
that the drivers in dispute were employees based on the
following factors: (i) the drivers did not operate inde-
pendent businesses, but rather performed functions that
were an essential part of one company’s normal opera-
tions; (ii) they constituted an integral part of the com-
pany’s business under its substantial control; (iii) they
had no substantial proprietary interest; and (iv) they had
no significant entrepreneurial opportunity for gain or
loss.
Here, the Regional Director found that there is no
doubt that the work tasks performed by the writers are
governed by the Employer, and that the BKN production
team is responsible for the supervision of the script writ-
ing. The Regional Director noted it was the norm in this
industry for the writers to work out of their homes and to
be paid on a project-by-project basis. He concluded that
given the frequency of the “freelance” working arrange-
ment in the animation entertainment industry, and “the
Board’s public policy interest in not disenfranchising
workers simply because of the peculiarities of their
trade,” the “Restatement scales” tipped in favor of find-
ing the writers to be statutory employees. We agree with
the Regional Director’s reasoning and findings, but wish
to emphasize certain factors that support the conclusion
that the writers are employees, not independent contrac-
tors.
Just as a party seeking to assert that an individual is a
supervisor within the meaning of Section 2(3) has the
burden of proof,2 the party asserting that an individual is
an independent contractor has the burden of establishing
that status.3 Based on the record in this case, we find that
the Employer has failed to carry its burden of proving
that the writers are independent contractors who must be
excluded from the unit.
There are, to be sure, a number of factors that militate
in favor of a finding that the writers are independent con-
tractors. These factors are that the writers work out of
their homes; set their own hours; provide their own
equipment and materials; are not subject to discipline;
sign agreements to work on each episode; are paid per
episode pursuant to invoices submitted to the Employer;
may work for other employers; receive no benefits; and
have no taxes or other payroll deductions withheld.
Nevertheless, we find that viewed in its entirety, the
record establishes that there exists an employer-
employee relationship between the writers and the Em-
ployer. A significant factor leading to this finding is the
degree of supervision that the editors exercise over the
writers’ creation of the scripts. Although the writers
work out of their homes, they are held accountable to the
editors, who set deadlines and edit the script. This su-
pervision is, in turn, vitally affected by the significant
role that the producers play in the development of a
script. Through the revisions and suggestions made by
the editors and producers, the Employer exercises exten-
sive control over the details of the writers’ work.

2 St. Alphonsus Hospital, 261 NLRB 620, 624 (1982), enfd. 703 F.2d
577 (9th Cir. 1983); Tuscon Gas & Electric, 241 NLRB 181 (1979).
3 Central Transport, Inc., 247 NLRB 1482–1483, JD fn. 1 (1980).
BKN, INC. 145
The record clearly demonstrates that it is the editors’
responsibility to make sure that the scripts that are being
developed follow the story line that is supposed to flow
through all 40 episodes of Roswell Conspiracy. Thus,
the Employer specifies what the writers are to produce
from the beginning of the script-writing process until its
end, and the Employer’s production team guides the
writers’ performance of their work at every step of the
process, and oversees the writers’ creation of their final
products.
Further, the writers clearly perform functions that are
an essential part of the Employer’s normal operations,
and they constitute an integral part of the Employer’s
business under its substantial control. Although afforded
much autonomy in performing their work, the writers do
not operate as independent entrepreneurs. Instead, when
writing scripts for the Roswell Conspiracy, they are
working exclusively for the Employer, and the scripts
that they produce must conform to the Employer’s speci-
fications.
The situation in this case is distinguishable from that in
DIC Animation City, 295 NLRB 989 (1989), relied on by
the Employer, where the Board found that freelance ani-
mation writers hired by an employer were independent
contractors within the meaning of Section 2(3). Unlike
the writers here, some of the writers in DIC formed their
own “loan out” companies, with which the employer
contracted for the writers’ services. Other writers in DIC
formed their own writing teams, and decided which part
of the script each member of the team would write, and
how much each member would be paid. Further, the
DIC writers negotiated the number of scripts, residuals,
royalties, and any guaranteed work on future projects.
Here, the Employer has failed to show that the writers
hired for Roswell Conspiracy share any of these charac-
teristics. Instead, the record evidence demonstrates that
BKN’s editors have far greater control over the writers’
work than did the editors in DIC.
Significantly, the Board found that the writers in DIC
bore some of the risks and enjoyed some of the opportu-
nities for gain associated with an entrepreneurial enter-
prise, inasmuch as they exerted time, effort, and travel to
solicit work, and faced the possibility that their ideas
could be rejected, with the result that they would not be
paid. That is not the case here, where the writers do not
operate independent businesses, but rather perform func-
tions that are an essential part of the Employer’s normal
operations. The writers have no substantial proprietary
interest and no significant entrepreneurial opportunity for
gain or loss when they are writing scripts for the Em-
ployer for the Roswell Conspiracy. Rather, the writers
are paid the per script fee set by the Employer, and they
have no ability to increase their compensation through
the exercise of discretion in how they perform their
work.
We agree with the Regional Director that the anima-
tion industry’s irregular patterns of employment must be
taken into account in determining the writers’ status un-
der the Act. The fact that the writers are hired and work
on a script-by-script basis explains the absence of some
of the usual indicia of employee status here, but this in-
dustry’s working arrangements do not diminish the cen-
tral fact that the record establishes that the Employer
closely directs the writers’ work performance.4
We now turn to a consideration of the so-called free-
lance artists and designers. Our review of the record
convinces us that the Regional Director was clearly cor-
rect in finding that these individuals are statutory em-
ployees, not independent contractors. Thus, there is am-
ple evidence that the freelance artists and designers work
side-by-side with the Employer’s other artists and de-
signers who are classified as regular employees. All of
the artists and designers—both freelance and regular—
share common terms and conditions of employment,
work at the same location, engage in similar artistic work
on the same project using the same equipment, and have
common supervision. Although the freelance artists and
designers apparently are free to work for other employers
while employed by the Employer, they are required to
sign confidentiality agreements regarding their work for
the Employer. The Employer has failed to show that the
freelance artists and designers possess the entrepreneurial
discretion to perform their work by their own methods or
the ability to increase the compensation received from
the Employer while working on projects connected with
the production of Roswell Conspiracy.
Accordingly, we affirm the Regional Director’s find-
ings that the individuals designated by the Employer as
freelance writers, artists, and designers are employees
within the meaning of Section 2(3) of the Act, and we
sustain his direction of election.
ORDER
The Regional Director’s Decision and Direction of
Election is affirmed. This proceeding is remanded to the
Regional Director for further appropriate action.

4 Chairman Truesdale agrees with his colleagues that the freelance
writers are employees. Although the evidence regarding some factors
prescribed by the Restatement favors a finding of independent contrac-
tor status, Chairman Truesdale finds that the Employer has failed to
satisfy its burden of proof that the writers are not employees within the
coverage of the Act.