Don't accept an arbitrary (and illegal) cap
(Note: This is a blog about script coordinating. None of this should be construed as financial or legal advice, even in your wildest imagination.)
When script coordinators accept a job, they're often offered a choice between receiving a computer from their employer or being paid a weekly rate (usually capped at a max payout of $500) as a rental fee for their laptop. This box rental fee is often referred to, either erroneously or nefariously, as "tax-free" money by producers and accountants.
The truth, however, is anything but.
W2 and 1099 Income
Before we can dig in, it's important to distinguish between the two types of income you'll receive as a script coordinator.
W2 income is the type of income most of us think of when we hypothesize about the glory of being a gainfully employed employee. Your employer pays a payroll tax on your income and contributes on your behalf to social programs like unemployment. You're responsible for your income tax. Then, when you receive your paycheck, your employer withholds federal and state taxes (and your social program contributions), and you keep what remains. At the end of the year, you report the income earned as an employee on a W2. 1099 income is freelance income. If you were to write a blog for a website, for example, and you were paid a fee for that work, you'd receive that chunk of cash outright. It's then up to you to produce both employer and employee taxes on it (often called "self employment tax") at the end of the year, as well as other required contributions. This freelance income is reported on a 1099.
Employer Obligations to an Employee
When you're paid by W2, you enter a strictly regulated relationship between an employer and employee. For example, an employer must compensate an employee financially for their work and an employer must provide any equipment the employee requires to do said work. (This is a two-way relationship, and the employee must perform the work in the way prescribed by the employer and at a time and place specified by the employer). When you begin working, the studio is required to provide you with the computer you'll need to accomplish the multifaceted and adventure-filled work of a script coordinator. This is where the box rental comes in: the studio is renting your equipment from you (playing the role of an independent equipment rental house) to loan to you (the employee to whom equipment must to be provided). Therefore, the money paid to the equipment rental house (e.g.: you) is classified as freelance income.
The Real Cost of Freelance Income
"Contrary to what was promised, you'll pay twice the tax rate on a kit rental since it's classified as freelance or self-employment income."
You see where this is going: the "tax-free" box rental is anything but. Contrary to what was promised, you'll pay twice the tax rate on a box rental since it's classified as freelance or self-employment income. And that income, reported on your 1099, requires you to pay the employer's payroll tax and the employee's income tax.
It is tax-free for the studio though, bless their hearts.
Deducting Business Expenses From Your Rental
There is a way to wrap your head around the studio's line of thinking, however. When businesses pay tax, it's on their profits. And Econ 101 tells us:
profit = income - expenses
You, the rental company, have now received money from the studio. And if you, the rental company, also incur expenses, then the total profit you make is less. If your expenses equal (or exceed) your income, then you've made no profit and, thus, pay no taxes.
To pay as little tax as possible on this double-taxed income, you need to itemize your expenses at the end of the year. If you bought a new computer or Final Draft, a printer or printer ink to print the scripts you proofread, or a Scriptation subscription, those are business expenses. How you itemize these expenses is why a good accountant comes in handy.
Capped Box Rentals Are Illegal
"Every dollar they don't pay you is a dollar in their pocket."
Producers have long been in the progress of imposing an arbitrary limit on the amount they compensate you, usually $500. But when they stop paying your box rental, they are effectively ending the rental agreement and are no longer in labor law compliance: the employer is failing to provide their employee with the equipment they need to do their job.
Being out of compliance with the law is quite literally the definition of illegal. When your box rental ends, the studios must provide you with a computer. But the truth is that studios get away with it because nobody pushes back. People don't complain to their union, and until an enterprising attorney realizes there's a juicy class-action compliance/wage theft issue just waiting to be filed, studios will keep doing it. Unless you actively push back and refuse to accept a capped box rental, they have no reason to offer it to you. Every dollar they don't pay you is a dollar in their pocket. And putting as many dollars into their own pockets is precisely why studios exist.
Stick Up for Yourself — You're Worth It
Studios and producers often have a take-it-or-leave-it attitude. Your rate is the guild minimum, your box rental is capped, and you should just be grateful for the opportunity to crew up.
But in any other industry, having more experience means earning higher salaries. If you agree to the first offer (that, according to the union bargaining agreements, can't be any lower), that's your fault. You need to counter with an hourly rate that reflects your skill level and a demand for an uncapped rental.
You might get laughed at. They might say no. They'll employ any strategy they can to hold onto their money. You have the power and the thing they want — the labor that creates the project and makes them more money. You're holding all the cards. And no showrunner ever said, "well, they played ball with the producer when it came to salary, so they deserve a freelance." Quite the opposite: negotiating your rate, even if it pisses off the producer, shows you know you bring added value to the show. And in an industry where big personalities steamroll decisions, you're laying the groundwork to show that you won't be pushed around later, say, when you work overtime, but the show doesn't want to pay for it (which, again, constitutes illegal wage theft. There's a pattern here.) It's ultimately up to you to decide whether a show is such a great opportunity for your career that you'll accept a scale rate. Statistically, it isn't. So get the money now that you deserve.
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