Payroll Basics
An overview of things you should know when payrolling workers with OOTB.
EXPLORE
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Employees vs. Independent Contractors
Classifying a worker as an employee or an independent contractor is not a matter of job title or personal choice. Classification is a legal determination based on specific legal tests, and misclassifying a worker can result in significant liabilities, including back wages, unpaid taxes, penalties, and legal disputes.
OOTB protects clients by applying the correct classification tests, documenting working relationships, and paying workers as employees when required. We keep productions compliant and help clients avoid costly risks, while ensuring that workers receive the benefits and protections they are entitled to.
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Employees (W-2):
Are paid via W-2 payroll.
Employers withhold income, Social Security, Medicare, and unemployment taxes.
Covered by workplace protections such as minimum wage, overtime, meal/rest breaks, workers’ comp, and unemployment insurance.
Employers must provide certain benefits as required by state law.
Independent Contractors (1099):
Are paid via 1099 payments.
Are responsible for paying all taxes, with no withholdings or employer-paid benefits.
Not entitled to most employee protections, as independent contractors operate as self-employed business owners providing services to other businesses.
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Classification is not based on job role, title, or individual choice. Classification determinations must be made using specific legal tests.
Federal: The IRS requires the application of the Control Test, which examines the degree of control and independence in the working relationship.
California: California’s AB5 law requires the application of the ABC Test, which examines the worker’s independence, whether they do work outside of the company’s usual business, and whether they maintain their own business operations.
Borello Test: In California, the Borello test is only used when the worker or role is part of one of AB5’s limited exemptions.
California Overtime Rules and How They Apply to 8/10/12 Schedules
California law has strict requirements for overtime, which must be calculated on both a daily and weekly basis. At the same time, much of the production industry operates on fixed schedules—typically 8, 10, or 12-hour days—where workers are booked on a flat “day rate.”
State law requires employers to calculate an hourly rate for the purpose of calculating overtime. Since 10- and 12-hour schedules are common in the production industry, day rate conversions are necessary for compliance.
OOTB converts each employee’s day rate to an hourly rate at the time the project is assigned. This hourly rate accounts for both industry day rate expectations and California wage and hour rules, streamlining overtime calculations and ensuring productions remain compliant.
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Daily Overtime:
Over 8 hours/day → 1.5× regular rate of pay
Over 12 hours/day → 2× regular rate of pay
Weekly Overtime:
Over 40 hours/week → 1.5× regular rate pay (unless daily overtime has already been paid)
7th Consecutive Day in a Workweek:
First 8 hours → 1.5× regular rate of pay
Over 8 hours → 2× regular rate of pay
It is important to note that there is no “pyramiding” of overtime, meaning the same hours cannot be counted twice for different overtime rules. For example, if an employee works 10 hours in a day, their last two hours of work are only counted as daily overtime, even if those hours also take them over 40 hours in a week.
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OOTB always calculates the appropriate hourly rate based on the employee’s scheduled day rate to ensure they receive their full guaranteed pay while still meeting all overtime obligations.
10-hour schedule → Typically paid as 8 regular hours + 2 overtime hours
12-hour schedule → Typically paid as 8 regular hours + 4 overtime hours
If an employee works a 6th or 7th consecutive day, the corresponding overtime and double-time rules apply.
Pay Rate Notices and Timecards
At OOTB, Pay Rate Notices (PRNs) and timecards are essential tools for making sure employees are paid accurately and in full compliance with federal and state labor laws. They create the foundation for accurate payroll processing, clear communication with employees, and strong protection for our clients against wage and hour claims.
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A PRN, also known as a wage theft notice or notice of pay rate, provides employees with details about their pay and employment.
Show regular, overtime, and double-time rates, plus key employment details.
OOTB issues PRNs to employee for each project they work on or whenever their compensation changes.
Our streamlined PRN system ensures compliance with federal and state laws.
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Timecards are the official record of the hours each employee works each day. OOTB uses timecards to calculate pay according to the wage and hour laws of the employee’s specific work location.
Employee submit their hours through the OOTB Employee Portal, which sends automatic reminders to any employees who have not submitted their hours by the end of each week.
The OOTB payroll team personally follows up with any employees who do not submit hours to make sure we receive the necessary information for timely payment.
Taxes, Withholding, and Specialized Payments
Both employers and employees have tax responsibilities, and certain payments require special handling to meet IRS and state requirements. Understanding who pays which taxes and how different payments should be administered is essential for keeping payroll accurate, transparent, and compliant.
OOTB makes sure that all earnings are calculated correctly and that specialized payments like kit fees, per diems, and reimbursements are processed in compliance with federal and state laws.
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Social Security: 6.2% of taxable wages.
Medicare: 1.45% of taxable wages.
Federal Unemployment Tax (FUTA): Generally 0.6% after credits.
State Unemployment Insurance (SUI): Rate varies by state.
Employment Training Tax (ETT): CA only, 0.1% up to the wage limit.
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Federal Income Tax: Based on W-4 elections.
State and Local Income Tax: Based on state tax form elections.
Social Security: 6.2% of taxable wages.
Medicare: 1.45% of taxable wages.
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Paid to employees who use their own tools or equipment for work.
Can be considered taxable wages under IRS guidelines.
Can be paid as W-2 or 1099 income, depending on the type and amount.
Kit fee information can either be collected with the employee’s timecard or entered before the project starts.
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Used to cover daily travel-related expenses such as meals, incidentals, and lodging.
Non-taxable if within the GSA federal per diem limits and supported by documentation.
Taxable if exceeding federal limits or lacking required documentation.
Paid separately from wages but processed through payroll for compliance.
Per diems can be noted with the employee’s timecard or entered before the project starts.
Benefits Eligibility
OOTB provides a competitive and compliant benefits package for eligible employees. We apply clear and consistent eligibility rules and align with client preferences so employees have timely access to the benefits they qualify for.
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Health Insurance: Medical, dental, and vision coverage, health savings account (HSA), and flexible spending account (FSA).
Supplemental Benefits: Legal Shield, Life insurance, short- and long-term disability, and pet insurance.
Retirement Savings: Access to state-sponsored retirement plans.
Paid Sick Leave: Accrual of 1 hour of sick pay for every 30 hours worked. Sick leave time can be used when an employee is unable to work due to illness or other reasons, as required by state law and internal policies.
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Clients have the flexibility to determine when full-time employees become eligible for benefits. They may choose to offer benefits immediately upon hiring or defer to determining eligibility based on ACA guidelines.
Full-time benefited employees:
Employers may offer benefits to full-time employees upon hiring, with a 60-day waiting period that applies before benefits become active.
If benefits are offered upon hiring, all future full-time employees must receive the same eligibility terms to ensure consistency, which is required for compliance.
ACA-Eligibility: If benefits are not offered upon hiring, OOTB utilizes two ACA measurement periods to determine employee eligibility:
ACA New Hire Measurement: Averages 130+ hours per month over a 9-month period from hire date. If eligible, benefits are offered within 3 months from the 9-month mark to allow for the administration period.
ACA Ongoing Measurement: An annual analysis is conducted in December to evaluate employees' average hours worked. If eligible, benefits are effective in February.
Workers’ Compensation and Liability Insurance
All crew and talent who are paid through OOTB as W-2 employees are covered by OOTB’s policies for workers’ compensation, employment practices liability insurance (EPLI), and general liability insurance. Employees must be properly onboarded to be covered by OOTB’s insurance policies.
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Top-rated workers’ compensation policy designed to protect clients and their teams.
Provides prompt, no-cost medical treatment for injuries or illnesses that occur while working.
Coverage up to $1,000,000 for:
Medical care
Temporary and permanent disability benefits
Supplemental job displacement benefits
Return-to-work supplements
Death benefits
No deductible or retention charge—cost is included in OOTB’s fee structure for payrolling W-2 personnel.
Coverage is only provided to workers paid as W-2 employees through OOTB. Independent contractors are not covered.
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$1,000,000 in coverage for many (but not all) employment-related claims, such as:
Discrimination
Sexual harassment
Wrongful termination
Coverage applies only to W-2 employees paid through OOTB. Independent contractors are not covered.
Premium cost is included in OOTB’s fee structure for payrolling W-2 personnel. The client is responsible for the deductible.
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$2,000,000 per incident / $4,000,000 annual aggregate limit coverage for general claims such as property damage and personal injury resulting from operations related to the services of OOTB.
Coverage applies only to W-2 employees paid through OOTB. Independent contractors are not covered.
Premium cost is included in OOTB’s fee structure for payrolling W-2 personnel.
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Employees must be fully onboarded before starting work to be covered by OOTB’s insurance policies. Proper onboarding ensures:
Workers are classified and documented as W-2 employees.
All employment forms are completed in compliance with federal and state law.
Insurance coverage is active from day one on set.
Failure to onboard prior to work may delay claims processing or result in no coverage.
Protocol for Workplace Injuries or Accidents
To maintain a safe workplace, everyone involved must be aware of and practice safe working habits. However, in the event of an accident or injury, OOTB will assist clients and employees as soon as we are informed of the incident. Clients are responsible for immediately notifying OOTB about any accident or injury involving an OOTB employee, however minor.
All crew and talent who are payrolled through OOTB are covered by our workers’ compensation, employment practices liability (EPLI), and general liability insurances. OOTB will manage any applicable insurance claims that arise.
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Clients and producers are responsible for:
Maintaining a safe environment for employees.
Training and guiding staff on best safety standards for proper use of equipment.
Posting the legally required notices throughout the work location.
In case of an incident, no matter how minor, report it to OOTB immediately.
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At the start of a job, please submit the shoot location address(es) to your OOTB Account Manager.
Your OOTB Account Manager will then provide you with information about the medical clinic location that is closest to your shoot location(s) in the event of an accident or injury on set.
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VERY IMPORTANT: In the case of a life- or limb-threatening emergency, always call 9-1-1 so the employee can receive immediate emergency medical care.
Clients MUST report any work-related accident or injury involving an OOTB employee immediately, no matter how minor the incident.
Call, text, or email OOTB:
OOTB Main Office Line: 415-969-6928
OOTB HR Contact, Alan Gomez: 628-200-4009
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In the case of an emergency, immediately call 9-1-1. When the emergency has been addressed, notify OOTB.
If it is not an emergency, but the employee needs medical attention, complete the following steps:
Notify OOTB.
Give the OOTB employee the information for the medical clinic location that OOTB provided to the producer on set at the start of the shoot. Employees will need to go to the medical clinic OR a pre-designated medical provider (applicable to California employees who have made the request in writing prior to the incident). If the incident occurs outside of the pre-designated clinic’s business hours, please have the employee go to any urgent care clinic.
OOTB will provide the employee and their immediate supervisor with the necessary documentation so the employee can receive treatment accordingly. This includes an Authorization to Treat form, which MUST be brought to the medical clinic when the employee goes for treatment.
If an employee refuses medical treatment, OOTB will have them sign a Refusal of Medical Treatment form.
Meal and Rest Break Requirements
Each state has its own meal periods and rest break laws. In California, the law requires employers to provide all non-exempt, hourly employees with timely, uninterrupted meal and rest breaks. Failure to provide these breaks results in penalties equal to one additional hour of pay for each missed meal or rest break. These penalties are paid to the employee as wages and charged to the client.
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The first meal break must begin before an employee completes 5 hours of work.
The first meal break can be waived if the total work time is under 6 hours.The second meal break must begin before 10 hours are worked (between hours 6-10).
The second meal break can be waived if the total work time is under 12 hours.Minors under 16 cannot waive meal breaks.
Meal breaks must be at least 30 minutes. Employees must be off-duty and free to leave the set.
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The first meal break must begin before an employee completes 6 hours of work.
The second meal break must begin no later than 6 hours after the first ends.
Meal breaks must be at least 30 minutes. Employees must be off-duty and free to leave the set.
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One 10-minute paid rest break for every 4 hours worked (or major fraction thereof).
If an employee is entitled to two rest breaks, one must be before the meal break and one after.
Rest breaks cannot be waived or combined with a meal break.
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If a meal or rest break is missed, the employee is owed one additional hour of pay. Only one penalty per day is allowed.
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Employees must be fully relieved of duties during breaks.
Call times determine the exact timing for meal and rest breaks.
OOTB can provide meal waiver elections prior to the shoot for scheduling.
Harassment, Discrimination, and Unsafe Behavior On-Set
OOTB maintains a strict zero-tolerance policy against harassment, discrimination, retaliation, and abusive behavior on set. This includes conduct based on race, color, religion, sex, gender identity or expression, sexual orientation, national origin, age, disability, genetic information, marital status, veteran status, or any other protected category under federal, state, or local law. Inappropriate conduct—whether verbal, physical, written, or visual—will not be tolerated in any form.
We expect our clients and producers' collaboration to ensure that any claims are taken with utmost seriousness and communicated promptly to OOTB.
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Any employee who experiences or witnesses harassment, discrimination, or unsafe behavior should report it immediately to:
OOTB’s HR Department via phone (626-200-4009) or email (admin@ootbsolutions.com)
On-set producer or designated supervisor
Reports may be made verbally or in writing and can be submitted confidentially. OOTB will investigate all reports promptly, take appropriate corrective action, and protect against retaliation for good-faith complaints.
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Ensure the set environment is professional and respectful.
Take immediate action to stop prohibited conduct and report it to OOTB.
Cooperate fully in any investigations.
Model appropriate workplace behavior at all times.
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OOTB’s WVPP complies with California’s SB 553 requirements by providing employees with the required training.
Sets must be free from threats, intimidation, and acts of violence.
Producers must communicate WVPP protocols to crew, including reporting steps and emergency procedures.
All incidents of workplace violence—whether physical or verbal—must be reported immediately to OOTB.
Timecard Approval Process
Accurate timecards are critical for paying employees accurately and on time. OOTB will proactively connect with employees to make sure they report their hours. In some cases, we may ask producers to remind crew members on set to submit their timecards. However, producers are generally only responsible for approving a project’s payroll.
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Employee Entry: Employees record start/end times, meal breaks, and expenses in the OOTB Employee Portal by the end of the work week (Monday–Sunday).
OOTB Follow-Up: The OOTB payroll team personally reminds employees to submit their timecards.
OOTB Initial Review: OOTB’s payroll team reviews timecards for accuracy, meal and rest break compliance, and missing or unclear entries.
Producer Review: Producers receive an email notification when payroll is ready to review in their portal. This includes hours, wages, expenses, and any important notes from the OOTB team. Multiple project approvals may be required.
Producer Approval: Producers approve or flag any discrepancies. The OOTB payroll team works with producers to answer questions and resolve any issues.
OOTB Processing: Once payroll has been approved, OOTB will finalize and process payroll.
I-9 Verification and Onboarding Timing
All W-2 employees must complete onboarding before starting work. This process confirms each worker’s legal eligibility to work, ensures proper classification, and sets them up for accurate, on-time payment. Missing or incomplete onboarding can cause payment delays, legal penalties, and compliance issues.
It is critical that producers inform OOTB about all employees before their first day.
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The I-9 verifies a worker’s identity and eligibility to work in the U.S. If the I-9 is not completed before the employee’s first day, they must not perform any work.
Federal law requires all new hires to complete Section 1 of the I-9 on or before their first day.
Section 2 must be completed within three business days of the start date.
Hiring or allowing someone to work without a completed I-9 can result in fines, legal action, and—in some cases—hiring someone who is not authorized to work in the U.S.
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Employees must complete onboarding before the first day to avoid payment delays and ensure compliance.
The onboarding process includes tax forms, direct deposit setup, emergency contact information, and any state-required documents.
Incomplete onboarding can hold up payroll, while late I-9 completion can trigger government penalties.
Offboarding and End-of-Employment
Producers and clients must always communicate with OOTB before taking any disciplinary action or moving forward with a termination. We will guide you through best practices to ensure compliance with employment laws, protect the production from legal exposure, and handle the situation professionally and fairly.
OOTB has an open-door policy. We want our clients to feel supported in all employee matters, including any tough conversations.
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Discuss concerns with OOTB as soon as issues arise and before action is taken.
Document performance or conduct issues with specific examples and dates.
Remain professional and objective during all discussions with the employee.
Avoid making promises or statements about continued employment or rehire unless approved by OOTB.
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OOTB conducts quarterly audits of its employment roster to review active and inactive employees. This helps us keep accurate records, meet compliance requirements, and only retain employees who have current or upcoming project assignments. Inactive employees may be terminated during these quarterly audits when they:
Have not worked on a client project in the last 12 months.
Are not expected to have future work opportunities based on client needs.
Have no foreseeable project assignments.
Employment is at-will and may be ended without advance notice. Eligibility for rehire will depend on business needs and future project availability.
If an employee has been terminated from OOTB’s employment roster and is hired for a future project, they will need to be re-onboarded before they can work.