One of the biggest issues impacting the operational cost structure of the event marketing industry has nothing to do with marketing budgets. Nope. It’s not the fast-paced worlds of social media or technology, either. It’s not even the changing cost of gasoline or the high price of travel.
The biggest threat to your event marketing portfolio’s bottom line may just be a quiet storm brewing around your people—the hired event staffers and helping hands you contract for days and sometimes weeks to be the faces of your brands in the field.
Here’s what’s going on: Across the U.S., states have been changing enforcement laws about the “misclassification” of employees as independent contractors. Last year in California, Governor Jerry Brown signed into law a measure that increased the penalties for willful misclassification of regular employees as independent contractors. The biggest economy in the country was the 12th state to enact such a law, and many other states are following suit. It’s not just about local regulations, either.
Last year, the Department of Labor hired extra investigators to detect and deter companies from misclassifying employees, and put some money where its mouth is with a $14 million appropriation for this fiscal year, earmarked for state grants to help them identify offenders and recover unpaid taxes and other withholdings. The IRS is in on the game, too, and has entered into agreements with 34 states to share information about investigations and enforcement techniques. Congress recently made an effort to unite all of these efforts and enact federal enforcement and clarification measures. Although that measure failed, it won’t be long before it rears its head again.
This has a huge impact on the event marketing industry, which faces having all brand ambassadors labeled as misclassified.