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Ed Driscoll

Prepare for Maximum Schadenfreude Overload

June 27th, 2013 - 11:47 am

Alternative headline: World’s Biggest Celebrity Risks Decimating Hollywood.

As PBS’s Tavis Smiley said at the dawn of the Obama Administration on MSNBC, the far left’s in-house close-circuit television system, “Harry Reid, put down the crack pipe. You don’t work for Barack Obama?  We’re all working for Barack Obama.” And nowhere is that more true than Hollywood, which immediately saw the star power in which Mr. Obama was packaged in 2007 and 2008, and embraced him as one of their own.

And now it’s time to pay the price.

“Obamacare Hits Hollywood: Studios Brace for the Affordable Care Act,” according to the Hollywood Reporter. Prepare for maximum schadenfreude overload:

Three letters have been giving the payroll-services industry fits for several months now: ACA. That’s the semi-acronym for the Patient Protection and Affordable Care Act, better known as Obamacare, and it’s up to the payroll industry — which cuts checks to production workers and offers related financial services to TV and film studios — to help educate its clients on the rules before a good portion of the law kicks in Jan. 1.

“It’s a morass of regulations and requirements, and everyone’s trying to figure out what their exposure is,” says Eric Belcher, president and CEO of Cast & Crew Entertainment Services. Adds Mark Goldstein, CEO of Entertainment Partners, which has held 16 seminars to help studios understand ACA: “It’s going to be a very big deal.”

Determining the exact nature of the new laws has been difficult, given that many ACA terms have yet to be worked out. Hollywood productions, for instance, might find it irksome simply trying to categorize employees as full- or part-time, seasonal or variable, and it’s important that they get the classifications right lest they face hefty fines. “ACA is thousands of pages, and it wasn’t written with this industry in mind,” says Belcher.

Yes, it was written to benefit that giant multimedia production studio on the Potomac. Did you think they cared a jot about your industry? Hey rube!

One of the unintended consequences, say some industry insiders, is that it could lead to productions running to foreign countries, given that ACA doesn’t apply to U.S. citizens working abroad. Some also say the number of production days in the U.S. are likely to be cut due to ACA because there’s a 90-day waiting period before productions must either pay a penalty or offer health insurance to full-time workers. That rule provides big incentives for a production to wrap in less than three months. While big-budget movies and season-long TV shows might not have such a luxury, smaller films or TV pilots could easily rush their schedules to make sure they come in at under 90 days.

But like much about ACA, the 90-day rule is subject to interpretation, says Daniel Cox, controller of payroll-services company PES Payroll. “Historically, if an employer had a 90-day wait period,” says Cox, “the benefits would kick in on the first day of the fourth full month of employment. Thus, that 90-day wait period was, in reality, as long as 119 days. The ACA is unclear on this. Does 90 days mean 90 days? If so, it really means 60 days.”

In order to dial down the frustration level, the major payroll-services companies are hiring outside tax, legal and benefits consultants — Cast & Crew has engaged Henehan Co., for example — and are setting meetings with production clients. Payroll firm Entertainment Partners has authored a 39-page report that includes 81 frequently asked questions. FAQ No. 7, for example, contains the seven steps to determine whether or not a production employs 50 full-time workers, which would trigger an “employer mandate” for health coverage. In a nutshell, if you’ve got about 40 employees who work 130 hours a month and an additional 20 who work 65 hours monthly, you’re probably subject to the mandate.

As Moe Lane writes, “Ain’t that a shame. But, hey, look on the bright side: at least Hollywood elected Barack Obama, right? Brilliant move there, guys. Brilliant.”

I expect Hollywood to embrace ObamaCare exactly as written, as enthusiastically as they embraced the law’s namesake. If you’re not head over heals in love with it, why should anybody else be? (Also keep the above article in mind as the Obama administration works with Hollywood to promote the “benefits” of their product.)

But in the meantime, since last year, Glenn Reynolds has been making the case for repealing the Hollywood Tax Cuts. Fortunately for everyone, the movie industry was way ahead of him — even if they didn’t know it.

(Still waiting for the GOP Congress to slip in some legislation banning the movie lights that Hollywood uses as well. Just a hint there, fellas…)

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