In the entertainment industry, union productions often rely on third-party payroll companies to manage payroll, calculate union benefits, handle tax withholdings, and ensure compliance with collective bargaining agreements. However, a common misconception among line producers, UPMs, and even studio executives is that once a payroll company is hired, the production is no longer liable for employment compliance. That is not the case.

Understanding the legal distinction between what the payroll company does and what the production company is responsible for is essential. It helps avoid legal missteps, ensures audits go smoothly, and guarantees that benefits and pay are handled correctly. This article outlines the division of responsibilities and what UPMs and line producers should keep in mind when overseeing a signatory production.

Who Is the Employer? The Answer Might Surprise You

One of the most misunderstood topics in entertainment payroll is the difference between the "Employer of Record" and the "Common Law Employer."

The payroll company typically acts as the Employer of Record. This means they handle administrative tasks such as processing payroll, issuing paychecks and W-2s, filing taxes under their EIN, managing garnishments, and handling unemployment claims.

The production company, on the other hand, is usually the Common Law Employer. This is the entity legally responsible for hiring decisions, supervising working conditions, ensuring wage compliance, and making required union benefit contributions.

Even if the payroll company signs the paychecks and files taxes, legal responsibility for compliance with wage and hour laws or proper funding of benefit contributions still falls on the production. Federal and state regulators, including the IRS and Department of Labor, recognize the Common Law Employer as the entity that directs and controls the worker’s job functions. On a film or television set, that is nearly always the production company.

Tax Filings and Withholdings: Operationally Shared but Legally Separate

Payroll companies such as Entertainment Partners, Cast & Crew, and others manage federal and state tax withholdings on behalf of the production. These include:

• Federal income tax
• State income tax, based on where the work is performed
• Social Security and Medicare
• Federal and state unemployment taxes
• State disability insurance and paid family leave, where applicable

These taxes are filed using the payroll company’s EIN. However, the production company remains responsible for making sure that the information provided to the payroll company is correct. That includes properly identifying the work location, the employee’s tax residency, and the correct state and local tax jurisdictions.

If your team misidentifies the state where work was performed, the payroll company may process the information as submitted. For example, treating a New York-based crew member as if they worked in California could result in unpaid local taxes, penalties, or audit findings. It is up to the production team, not the payroll company, to ensure the accuracy of this data.

Union Benefit Contributions: Shared Process, Singular Responsibility

Union benefit contributions are another area where confusion can lead to costly consequences. Under contracts like the IATSE Basic Agreement, the DGA Agreement, or the SAG-AFTRA Basic Agreement:

• The payroll company calculates and submits contributions to the proper benefit funds.
• The production company, as the signatory employer, remains responsible for making sure the amounts are correct and the contributions are complete.

If a benefit calculation is based on incorrect job classes, missed penalties, or misclassified employees, the payroll company will not be held liable. The union will look to the signatory production company to correct the issue and make up the difference.

Here is what the production team must monitor, even if the payroll is outsourced:

• Approving accurate wage rates and job classifications
• Communicating any guarantees or special conditions, such as kit rentals or box rentals
• Identifying whether crew members are union or non-union
• Confirming work location and tax jurisdiction
• Reviewing benefit reports to ensure accuracy each week

Payroll companies act on the data you provide. They do not audit it for compliance. That responsibility remains with the production.

Legal Liability and Employment Law Compliance

From a legal perspective, the Common Law Employer bears the responsibility for wage and hour violations, misclassification issues, discrimination claims, and noncompliance with labor laws. Payroll companies handle administrative tasks, but they do not:

• Supervise workers
• Schedule hours or manage working conditions
• Discipline or terminate employees
• Negotiate wages or employment terms

As a result, if a crew member is denied their required meal period, paid late, or receives less than the minimum wage, the liability falls on the production company, not the payroll service. The same applies to union grievances or arbitration. Unions hold the signatory production responsible for contract violations, not the third-party processor.

What UPMs and Line Producers Can Do to Prevent Problems

UPMs and line producers are responsible for the day-to-day management of labor compliance. Here are some key steps to stay on top of your responsibilities:

1. Review Your Payroll Agreement Carefully
   Many payroll company contracts include indemnification clauses that limit their liability. Know what you are signing.
2. Set Clear Communication Protocols
   Establish a reliable process between your team and the payroll coordinator or paymaster to ensure wage rates, allowances, and classifications are reported correctly.
3. Review Payroll Reports Weekly
   Make this a standard part of your production workflow. Catch errors early, while they are easier to fix.
4. Confirm Work Locations at Start
   Crew members should indicate their work state and tax residency during onboarding. This determines the correct tax treatment.
5. Use a Comprehensive Start Packet
   Include union dues authorization forms, pension redirection forms, and work state declarations. Do not assume the payroll company will follow up if something is missing.
6. Know the Union Rules
   Learn the wage minimums, overtime provisions, meal penalties, and rest period requirements for each union on your production. The payroll company will not interpret these for you.

Final Thoughts: You Still Own the Risk

Payroll companies are valuable partners in handling the technical aspects of paying cast and crew. However, they do not assume legal responsibility for employment law compliance or contract enforcement. They follow your lead.

As a UPM or line producer, you are the one accountable for ensuring the production complies with labor laws, tax requirements, and union contracts. Missteps in these areas do not fall on the payroll provider. They fall on the employer of record from a tax standpoint, and more importantly, the Common Law Employer from a legal and contractual perspective — which is your production.



Know your responsibilities. Use the payroll company to your advantage, but do not hand over the steering wheel. You are still in charge of making sure the production stays compliant, funded, and protected.