Business Practices of Employed (Salaried) Artists

Sixty-two percent (62%) of the respondents in a recent AMI member survey were employed in a salaried position. These positions include academic/institutional, non-academic, and government jobs.

This complete article is available to AMI members as a PDF document in the Member Community Library.

Overview
According to the 2007 AMI Compensation and Pricing Survey, sixty-two percent (62%) of the respondents were employed, while the remaining thirty-eighty percent (38%) reported being self-employed. Of the employed artists, forty-three percent (43%) reported accepting contract work "on the side". Salaried positions come in several varieties: academic/institutional, non-academic, and government. Of the salaried respondents, there were slightly more individuals working for institutional employers versus corporations [1]. Recent graduates often choose to pursue salaried positions to refine their skills before venturing into self-employment.

Academic and institutional work settings
Academic or institutional positions include those with universities, hospitals, and non-profit organizations. Within academic positions, there are a wide range of classifications and protections of which one should be aware. In academic settings, tenure positions are often pursued. Tenure positions offer a level of protection as they carry an institutional or government distinction in which employees cannot be fired without due process. In tenure track positions, the employee is offered tenure after a certain period of waiting and after they demonstrate excellence in their field of study and teaching responsibilities [2]. Another distinction is a fixed-term or limited-term position in which the employee is hired for a defined amount of time. The limited-term positions are governed by the terms of a contract and therefore may not allow the due process protection of tenured employees. When considering a fixed-term position, one must be aware of the limitations of the position. For example, the position may be governed by budgeting restrictions that do not allow additional terms of employment. However, some limited-term positions offer an option to renew the contract for additional terms. Additionally, limited-term positions may lead to more permanent positions. It is important to be well informed about institutional policies governing fixed-term positions.

Pros


  • Some academic positions offer better vacation time and more benefits than their private sector counterparts.
  • Academic positions give access to cutting edge technology and advancements in the medical profession.
  • Forgoing a tenure track position can be used as a negotiation tool for higher salary or more vacation time.

Cons


  • The number of tenure and tenure-track positions being offered is decreasing. This may lead to less stability in the position.
  • Some institutional positions come with salary schedules that limit upward mobility on the pay scale.
  • Pay for academic positions can be lower than that of a similar private sector position.

Non-academic work settings
There is a range of options for employment in non-academic/institutional positions. Some publishers employ staff medical illustrators. Medical illustrators find employment with medical legal firms, illustration firms, and multimedia firms that specialize in information design for medical specialties. Doctor offices and law firms should not be overlooked when considering a private sector position.

Pros


  • Non-academic positions offer a higher starting salary and better opportunity for advancement compared to their academic counterparts.
  • Some positions offer upward mobility.
  • Private employment positions have a higher instance of unscheduled and performance based bonuses.

Cons


  • Non-academic positions have less vacation time.
  • Private sector have less security as compared to tenured positions.
  • Non-academic positions are more susceptible to economic downturns.

Employment with the federal government
Employment with the Federal Government as a Medical or Scientific Illustrator adheres to a pay scale or General Schedule (GS). Set forth in the Classification Act of 1949, the GS pay scale provides "equal pay for equal work". The Office of Personnel Management (OPM) defines titles, responsibilities, and qualification requirements for federal positions as well as the GS pay scale rating. The GS pay grade is defined from GS1 to GS15 based upon the level of difficulty and responsibility in the position. The pay grade is standardized throughout the federal system, but may include locality pay built into the scale in higher cost of living areas. An employee begins employment within a base pay grade. However, pay increases on the scale according to the number of years in service and job performance. With a first year average of 10 paid federal holiday and 13 vacation/sick, federal positions offer more paid time off than their civilian counterparts. The rate of accumulation of paid time off increases with years served in the federal system. For example, after 15 years of service, vacation/sick days accrue at 26 days per year. Federal employees may accumulate up to 30 days of vacation/sick time and carry these days from year to year. For more information see the 2008 GS pay scale at www.opm.gov/oca/08tables/html/gs.asp

Pros


  • These positions typically have high job security.
  • Salaries are not as susceptible to economic downturns as private sector positions within a fiscal year due to the nature of the Federal budgeting system.
  • These positions offer higher than average paid time off.
  • These positions offer great benefits with comprehensive health care coverage and pension plans.

Cons


  • These positions operate within a political arena.
  • Promotional opportunities may be limited and capped within the GS pay scale.
  • Job descriptions are very specific and reaching beyond the scope of the position may be difficult.
  • Applicants must pass through the merit system, which frequently screens out well-qualified candidates. [3,4]

Employer Responsibilities
It may come as a surprise to those new in the workforce that employers are not required to provide retirements plans; medical, dental, and vision insurance plans; life insurance plans; or paid time off (PTO) such as vacation, holidays, or sick leave. However, most companies and institutions do offer these non-mandatory benefits to remain competitive with other employers. The lack of federal requirement for the aforementioned benefits may account for the wide variety of benefit options offered by businesses and institutions. [5]

Employers are required by federal law to provide the following benefits to employees:

  • Time off to vote, serve on a jury, or serve in the military.
  • Abide by workers' compensation guidelines.
  • Pay state and federal unemployment taxes, which provide for unemployed workers.
  • Comply with the Federal Family and Medical Leave Act (FMLA).
  • Follow state requirements for short-term disability programs if required in the state.
  • Withhold employment taxes (FICA) and pay employer portion of employment taxes. This gives employees access to federal retirement and disability benefits. [5]

To qualify for the required benefits described above the individual must be classified as an employee of the company or institution not an independent contractor. The differences between these distinctions are discussed in detail below.

For more information regarding employment regulations please see the Department of Labor's webpage on employment law compliance see http://www.dol.gov/compliance/.

Independent Contractors vs. Employees


Tax law requires that employers make distinctions between individuals who are contract independent contractors and employees of the company. Employers must "withhold income tax, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee" [6]. In contrast, employers are not expected to pay or withhold any taxes on payments to independent contractors [6]. To determine if an individual is and independent contractor or an employee, employers must consider the amount of control they have over their employees. Areas of control they must consider are: behavioral control, financial control, and degree of independence.

Employee.


An employee is an individual who performs a service for a company, and the company has control over what is produced and how it is produced.

Non-Employee.


Independent Contractor. An individual is classified as an independent contractor if the payer (or client) controls the result of the work performed not the means and methods in which the contractor produces the end product. Additionally, the independent contractor may be performing services under contract for multiple clients. These positions are typically referred to as freelance (or self-employed). See Business Practices of Self Employed for more information on freelance employees.

Example:
Your client, an art director for a Pharmaceutical company, has control over the way the final illustration may look. The client approves sketches and the final color artwork, but the client does not determine the hours in which you work on the project, the software you use, or what other project you work on simultaneously.

Statutory Non-employee.


According the Internal Revenue Service's Publication 15a: There are two categories of statutory non-employees: direct sellers and licensed real estate agents.

For the categories of Common-law employees and Statutory Employees please see full document Business of Employed Artists and the IRS website http://www.irs.gov/publications/p15a/ar02.html#d0e381

Compensation structure

Salary vs. Hourly


Hourly wages and salary are two ways employees may be compensated. Hourly compensation applies to part-time employees, interns, or contracted workers. When an employee is paid per hour, other benefits such as health insurance and retirement plans may be limited. When on salary, compensation remains constant regardless of number of hour worked per week. This typically translates into higher compensation due to the expectation that one will work until the job is done. As discussed further in the overtime section of this chapter, although some employers offer it, creative professionals (such as illustrators and designers) are not legally entitled to overtime payments. The same exemption applies to hourly wages; therefore, unless a position is a contract or part-time position, it should come with a salary [7].

Contract Work


As a contracted employee of a company, one may work for a company or institution for a distinct length of time or over the duration of a particular project. Depending on the individual's classification as an employee or independent contractor, he or she may be entitled to the required employment benefits that are described above. Non-mandatory benefits may be available with contract positions; however, this depends greatly upon the agreement. Independent contractors, as discussed earlier, are not entitled to any benefits from the contracting company so it is important to understand the nature of the employment arrangement. In the academic sector, these contract jobs may be referred to as limited-term positions, and they can come with non-mandatory benefits defined within a contract. Illustrators may be considered onsite freelancers (and employees of the company) who receive limited benefits, but all work produced is owned by the company that employs them. Copyright implications for these positions are discussed further in the work-for-hire section of this chapter.

Overtime


Most medical illustrators are considered part of the creative professional labor force and are exempt, and therefore, not entitled to overtime payments according to Fair Labor Standards Act (FLSA) [8]. To be considered exempt from the FLSA's overtime pay regulations, one's job responsibilities must satisfy the following:
The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
The employee's primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor [6].

Some employers still offer financial compensation for overtime worked as an option to their employees. More commonly, employers offer compensation time in which employees are allowed to take paid time off for hours contributed toward overtime.

Additional Pay


Potential for additional pay beyond salaries offers great incentives to employees. Incentive programs that create a measurable performance-based bonus structure reward illustrators for meeting performance goals. Unscheduled bonuses can also be offered to employees. These bonuses may correspond with holidays and are mostly determined by employee performance, the company's profits in a particular year, and/or company policies.

Royalties


An illustrator may be granted a percentage of the profits of his or her work. When negotiating a salary for a position, one should consider royalties as another personal revenue source to discuss with a potential employer in lieu of a higher salary.

Health benefits

Health Insurance


Health insurance plans fall into one of two categories; indemnity plans or managed care plans.

Indemnity plans involve reimbursement of health care costs without restrictions on who provides the care. Under indemnity plans, the amount and type of reimbursement varies with each plan. Some plans reimburse for the entire cost of the procedure or service, for a percentage of the service, or for a particular dollar amount per day for a specific amount of time (hospitalization).

Managed care plans involve agreements between the insurance company and specific health care providers. These agreements usually involve predetermining prices for services provided and negotiating discounts on the basis of volume. There are three types of managed care plans: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point Of Service (POS). All three types of plans offer financial incentives to use approved network doctor and hospitals [9].

Health Maintenance Organization (HMO)


HMO plans are based on a monthly fee and services are "prepaid." If the policyholder stays within the HMO network, then the monthly-prepaid fee covers all qualifying healthcare services. The insured is required to choose a primary care physician (PCP) who is his or her initial health care contact. If the PCP feels that it is medically necessary, they then refer the patient to a specialist within the HMO network. If a policyholder uses a provider outside the network, most HMO plans require that they cover a portion of the health care cost [10].

Preferred Provider Organization (PPO)


The PPO network administers healthcare only to a specific group of people. PPO plans pay for healthcare services as they are delivered. PPO insurers will reimburse the healthcare provider or the insured for the cost of the procedure. The cost of these services is arranged previously between the insurer and the healthcare provider. The insured may be responsible for a co-payment. The healthcare providers may file insurance claims on behalf of their patients [9].

Point Of Service (POS)


A POS plan also requires the policyholder to choose a Primary care physician (PCP) that refers the insured to a specialist within the POS network. There is typically no deductible and only a small co-payment associated with the plan when using a provider within the network. If the insured uses a healthcare provider outside of the POS network, he may be responsible for a deductible of several hundred dollars and the co-payment may increase dramatically to cover a percentage of the cost of the service [9].

Other health benefits to consider that may or may not be included with an employer's general health coverage plan are prescription drug coverage, dental insurance, and vision coverage.

The following additional types of insurance are included in the complete document in the member community library. Business of Employed Artist

Short-term Disability (STD) Insurance [11].
Long-term Disability (LTD) Insurance
Long-term Care Insurance
Continuation of Health Coverage (COBRA)
Health Savings Plans
Health Savings Account
Flexible Spending Account
Medical Savings Account
Health Reimbursement Arrangement
Cafeteria Plan

Retirement Plans
Retirement plans are vehicles of investment that allow employees to set aside a percentage of their salary to save for the future and defer taxes. To participate, the employee agrees to set aside a fixed percentage of their gross (pretax) salary. In many cases, the employer will reward the employee's efforts by kicking in an additional 25 to 100 cents for every employee-contributed dollar up to a certain level. This free gift is called the "company match." It is something employers do to encourage workers to save, or as part of their general benefits program. Employers get a tax incentive from the government to do this because the government wants people to save for retirement. Typically, contributions made by the employer are subject to vesting rules. Some companies require that an employee work for a certain number of years before the "match dollars" become his property. This is incentive for the employee to stay with the company. Employee contributions made to the plan are always the employee's property and can be rolled over to a new plan when he changes jobs.

Employers may offer a variety of retirement plans including 401k, 403b, pension, stock options, etc.

403(b)


A 403(b), or a tax-sheltered annuity plan (TSA), is an employer sponsored tax-deferred retirement plan. Those eligible are employees of academic and some non-profit institutions. 403(b) investment holdings grow tax-deferred until the earnings are withdrawn, then the retirement income is taxed a regular income [16,17].

401(k)


A 401(k) is a tax-deferred employer sponsored retirement savings plan to which employees may contribute a portion of their pretax income. Income taxes are deferred on the contributed income until withdrawal. Just as in the 403(b) plan, holdings grow tax-free until withdrawal, at which time they are subject to regular income taxes [18].

Roth 401(k)


A Roth 401(k) is a new type of contribution to the 401(k) retirement plan that allows employees to contribute gross income to their 401(k) retirement plan. The Roth contribution is held in a separate account and withdrawals from the account are not taxed. It allows employees to designate some or all of their contributions each year as Roth contributions. One may contribute to a traditional 401(k) and a Roth 401(k) in the same year as long as the total contribution does not exceed the maximum allowed for that year [19].

For more information on retirement plans and tax implications, please visit the website of the Internal Revenue Service (IRS) at http://www.irs.gov/.

Traditional Pension Plans


A traditional pension plan is a guaranteed monthly or yearly post-retirement income offered by employers. The amount of the annuity is typically determined by years of service [20]. Employers may require employee contribution to the pension program in the form of salary reduction (and therefore tax-liability reduction).

Stock Options


As an added benefit, some employers offer stock option incentive programs. Stock option programs provide employees with the opportunity to acquire a certain number of shares of company stock, at a fixed price, for a predetermined amount of time. These may be one-time offerings or a long-term program that is ongoing. Stock options are typically reserved for the executives of the company, but there is a greater trend toward providing stock options for general employees [21].

Other benefits

Paid Time Off (PTO)


Paid Time Off (PTO) provides employees with an opportunity to rest and rejuvenate. Employers may offer PTO in the form of vacation time, sick leave, personal days, and holidays. The FLSA does not legally require employers to offer compensation for time not worked, so employers are not obligated to offer PTO. Therefore, PTO varies greatly from one employer to the next. Academic employers are typically much more generous with PTO than their private sector counterparts [22].

Family and Medical Leave


The Family and Medical Leave Act (FMLA) entitles certain qualified employees up to 12 weeks of unpaid time off. During the time off, medical insurance cannot be canceled. FMLA applies to all public agencies, all public and private elementary and secondary schools, and companies with 50 or more employees. According to the FMLA, "qualified employees are allowed to take up to 12 weeks of time off for any of the following reasons:
  • for the birth and care of the newborn child of an employee
  • for placement with the employee of a child for adoption or foster care
  • to care for an immediate family member (spouse, child, or parent) with a serious health condition
  • to take medical leave when the employee is unable to work because of a serious health condition

To be eligible, an employee must have worked for the company for at least 12 months and accumulated a total of 1250 hours of work in that 12-month period. The employee must work at a location of the company that employs 50 employees within 75 miles" [23].

Life Insurance


In addition to heath insurance, some employers offer group life insurance coverage and disability insurance as additional benefits. Life insurance benefits provide a monetary compensation to an employee's beneficiary in the event of accidental death or death from natural causes.

Employer Sponsored Childcare


Employer sponsored childcare is a benefit in which employers provide childcare in one or several of the following forms: on-site full-time childcare, backup childcare, vacation or summer childcare [24,25]. This benefit decreases absenteeism and may provide wage savings to employers [26]. Employer sponsored childcare is not as common as dependent care expense accounts which allow employees to reserve a portion of their pre-tax salary to pay for childcare.

Training and Professional Memberships


Employers may offer a wide variety of educational reimbursement opportunities. Employers may provide reimbursement for training courses and college classes that update work related skills or simply foster personal growth. Many academic employers provide a wide range of tuition forgiveness or reimbursements for classes taken at their institution by employees and dependents. Academic employers may also reimburse tuition from classes taken at other institutions.

Employers may also have room in their budgets to pay for professional society membership dues and attendance at annual professional meetings. It is important to be aware of these options and inquire about an employer's policies.

Copyright agreements
The 1976 Copyright Act acknowledges that once a work has been "fixed, written down, or otherwise set into tangible form" it is protected by copyright, and that author of the work possesses the copyright [27]. This is the general rule, but there is an exception under US copyright law for "works made for hire". Under the "works made for hire" provision, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright [27].

Work for Hire Statutory Definition:


Section 101 of the copyright law defines a work made for hire as:

a work prepared by an employee within the scope of his or her employment; or a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a "supplementary work" is a work prepared for a publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes; and an "instructional text" is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities [27].

How to Determine if a Work is Made for Hire


Whether or not a particular work is made for hire is determined by the relationship between the parties. This determination may be difficult, because the statutory definition of a work made for hire is complex and not always easily applied. That definition was the focus of a 1989 Supreme Court decision (Community for Creative Non-Violence v. Reid, 490 U.S. 730 [1989]). The court held that to determine whether a work is made for hire, one must first ascertain whether the work was prepared by (1) an employee or (2) an independent contractor.

If a work is created by an employee, part 1 of the statutory definition applies, and generally the work would be considered a work made for hire. IMPORTANT: The term "employee" here is not really the same as the common understanding of the term; for copyright purposes, it means an employee under the general common law of agency. This is explained in further detail below. Please read about this at "Employer-Employee Relationship Under Agency Law."

If a work is created by an independent contractor (that is, someone who is not an employee under the general common law of agency), then the work is a specially ordered or commissioned work, and part 2 of the statutory definition applies. Such a work can be a work made for hire only if both of the following conditions are met: (1) it comes within one of the nine categories of works listed in part 2 of the definition and (2) there is a written agreement between the parties specifying that the work is a work made for hire.

Employer-Employee Relationship Under Agency Law


If a work is created by an employee, part 1 of the copyright code's definition of a work made for hire applies. To help determine who is an employee, the Supreme Court in CCNV v. Reid identified certain factors that characterize an "employer-employee" relationship as defined by agency law:

  1. Control by the employer over the work (e.g., the employer may determine how the work is done, has the work done at the employer's location, and provides equipment or other means to create work)
  2. Control by employer over the employee (e.g., the employer controls the employee's schedule in creating work, has the right to have the employee perform other assignments, determines the method of payment, and/ or has the right to hire the employee's assistants)
  3. Status and conduct of employer (e.g., the employer is in business to produce such works, provides the employee with benefits, and/or withholds tax from the employee's payment)

These factors are not exhaustive. The court left unclear which of these factors must be present to establish the employment relationship under the work for hire definition, but held that supervision or control over creation of the work alone is not controlling.

All or most of these factors characterize a regular, salaried employment relationship, and it is clear that a work created within the scope of such employment is a work made for hire (unless the parties involved agree otherwise) [27].

Examples of works for hire created in an employment relationship are:
  • An interactive flash animation created within the scope of his or her duties by a staff illustrator for XYZ Medical Illustration Corporation.
  • Medical Illustrations created by a staff illustrator for publication in the textbooks published by the publishing company that employs her.
  • A script written for use in an online training module for XYZ Interactive Design Company by a salaried interactive designer on its staff.
  • A brochure design created by a staff designer of XYZ Design Company for promotion of an upcoming product launch.
  • A web design created by the salaried staff designers of XYZ Interactive Design Company.

Copyright Implications for Employed Artists


The closer an employment relationship comes to regular, salaried employment, the more likely it is that a work created within the scope of that employment would be a work made for hire. However, since there is no precise standard for determining whether or not a work is made for hire under the first part of the definition, consultation with an attorney for legal advice may be advisable [27].

Additional information on work made for hire can be found at the following:
US Copyright Law [PDF]
Work Made for Hire Circular [PDF]

Moonlighting policies
There is a wide range of policies related to "moonlighting", or non-work-related freelance. A few of the options to consider include: no moonlighting, moonlighting allowed only with non-competing clients, unrestricted moonlighting, and freelance through an employer. It is important to be open with a potential employer if one wishes to moonlight and to inquire about their policies during the interview process.

Non-compete agreements
Under provisions of non-compete agreements, employees are not allowed to work with clients previously associated with the employer for a specified time after employment with the company. Additionally, employees are not allowed to work for a direct competitor of the company for a specified amount of time after leaving employment. Non-compete agreements may also apply to moonlighting policies of current employees, preventing the employee from working with clients of their employer on a freelance basis.

Work environments
There are many things to reflect on when considering a position. One criterion to consider is the work environment and how it may affect personal comfort. Do the other employees appear happy? What is the employee retention rate? Is there a sense of camaraderie amongst the employees? Are there other medical illustrators on staff who may provide professional support?

Dress Policies


There are a variety of dress policies in the business world. Some illustrators may not work directly with their clients. Therefore, casual dress, such as jeans or shorts, in the workplace is accepted as a company standard. Others may consider business attire (sport coats, ties, and slacks) the only option for the company's employees. Some companies may feel that business casual attire (collared shirts and khakis) is acceptable to maintain a professional environment. The best person to look to as an example for dress is one's supervisor. By following his/her lead one will be sure to avoid breaking the boundaries of acceptable dress. In certain work environments, how one dresses and carries oneself is as important as the quality or work done [28]. If this is an important incentive for choice of workplace, be well informed to make the best personal decision.

Client interaction


There are likely established procedures within the company governing client-illustrator interaction. Some illustrators are granted direct access to clients and experts, while others may work through an intermediary. There is a wide range of options and the type of work that is produced largely determines these policies.

Performance Parameters


It is always a good idea know how job performance will be measured. Look for a clearly defined job description so that job duties are clear. Additionally, regular performance reviews are the best way to know where one stands. Some employers offer a once-a-year review and may include a salary increase if the review is favorable. It is more common for new hires to have more frequent reviews. For example, after initial hiring, there may be a review following a three-month probationary period while the employer and employee are "testing" the fit. After that, it is not uncommon for a new hire to have a six-month review. Each employer is very different. It is important that one is informed of the employer's policies on performance reviews and salary increases.

Flexible Schedule


Some work places offer flexible time to accommodate employees' schedules. There are sometimes hassles such as high-traffic commutes and inflexible daycare centers to consider. Some employers have the freedom to offer flexible schedules; so don't forget this as an option when juggling work and home life.

Intangible benefits


In addition to the standard benefits such as health insurance and retirement plans, employees should be aware of intangible benefits offered by certain employers that may greatly add to workplace satisfaction.

Job structure affects day-to-day interactions. Getting along with supervisors and team members increases job satisfaction. When considering a position try to meet the people that will affect day-to-day operations.

The level of independence one is given may affect employment decisions. What is one's preference on teamwork or working alone? Do employees assist in decision-making or have decisions dictated to them?

The opportunity for advancement is another intangible benefit that can add to job satisfaction. Does the employer offer opportunity for upward mobility in terms of promotions or salary increases?

Physical environment is another factor that affects job satisfaction. Is the office space ideal for creative work? Some illustrators must have an ergonomic computer setup to safely work at their computer for hours. Is the employer willing or able to work to create a safe environment? Another thing to consider is the frequency in which an office updates computers and programs. While this may be a "small perk", it is always nice to have current software and hardware that can keep up with processing demands.