All plop, no fizz: Miami’s event companies, workers can’t get relief
As Congress bickers over when and how to get out additional stimulus money to state governments, hospitals and businesses, Alexsandar Salé has a message: You forgot about us.
His company Funkshion Productions is a well-known and indispensable part of Miami Beach’s fashion scene. It puts on an annual swimwear show on Miami Beach, but it also does a lot of the build-out work for a range of fashion-related and charity events at beach-area hotels, sporting events and conferences.
Salé paid out more than $600,000 to contractors last year — so-called 1099 employees — and more than $200,000 in the first three months of this year.
Yet proprietor Salé and the contractors both have been overlooked in the stimulus equation.
For contract workers, that may be changing. Florida is in the process of setting up a new process for 1099 workers that will enable them to apply for federal unemployment benefits more easily, although it would still represent less than what they’d earn if counted on an employer’s payroll.
But the businesses themselves are still out in the cold. Under terms of the $350 billion Paycheck Protection Program passed last month by Congress as part of the federal stimulus plan, Salé can’t count those contractors as payroll employees. He and others like him in Miami’s hospitality and entertainment sectors are limited to applying for funding that covers only salaried workers on payrolls. Nor is that likely to change with the expansion now being considered in Washington.
The PPP program is great for a well-heeled law firm with a dozen attorneys and its legal assistants. It doesn’t help those like Salé who provide work for dozens but are now unable to help workers who report their income to the IRS as independent contractors. Such workers file 1099 forms rather than employer-issued W2 forms.
“The banks are not accepting their 1099 applications. There is no system for that,” said Salé. “These are the people who need money right now.”
Salé was lucky to have a tailwind from work he did for February Super Bowl activities in Miami. But the requirements of PPP and disaster-relief funding are effectively crushing owner-operators and those he paid as contractors.
“Pretty much most of the companies down here that do any kind of event production, wedding organization, bar mitzvahs, entertainment — we’re all in the same boat,” said Salé.
Karim Atash is a veteran of events in South Florida, working in the space since the mid-1980s. He can’t get significant relief because he, too, uses contract employees — even though he paid almost $250,000 to workers last year. There’s little chance that Miami’s famously lavish events will snap back to life anytime in the months ahead.
Atash thinks there’s an additional benefit to allowing contractors to be treated as his employees for purposes of receiving stimulus money that was ostensibly for keeping business activities afloat amid the shutdowns nationwide. “If one person applies for 20 people, it is easier than 20 people trying to apply,” said Atash, whose New Image Productions also does event build-outs with an emphasis on technical displays.
Atash could only file for PPP money for himself and a secretary, covering two months of payroll and a bit extra for overhead costs. He was one of the lucky ones, securing an application for PPP money through City National Bank of Florida, but he has no idea of when his payment will arrive.
“I have three of my guys who I pay for still, but they are staying at home. I pay them something every week, just so they get some money,” he said. Like all Floridians, his workers are struggling to file for unemployment benefits through the state’s disastrous CONNECT system, he noted. “I basically told them it’s only as long as we have money, for a couple of months.”
The summer months are slow for events and tourism in South Florida anyway. Envisioning a difficult environment well into 2021, Atash faces grim choices.
“I have no answer for it — 35 years in the business, and how am I going to make it past three or four months unless I file for bankruptcy?” he said. “My car insurance, my truck payment, renting the warehouse — it’s not going to go away. I’ve got to pay it sooner or later.”
Numerous owner-operated firms reached out to the Herald after getting little response from their elected representatives. With the PPP program fresh out of money and Congress readying for more stimulus spending, these business owners want policymakers to take note of a small-business segment that’s been overlooked.
“We really hope that politicians realize the first program was broken and of no help to sole proprietors and if there are additional funds allocated, the focus should be on small business and sole proprietors,” said Nubia McLean, a small store owner working out of the upscale Sarasota Farmers Market.
She’s sold her own jewelry and artwork there for 15 years as Nubia McLean Designs, and reached out after being locked out of PPP money.
Florida has tens of thousands of businesses with fewer than 10 employees — about 87,000 such firms are in Miami-Dade alone — that are intensely vulnerable to closure. Every day these firms are making the calculation of whether to pay rent and other bills or just shut down.
The timing for the coronavirus outbreak could not have been worse. When the nation begins a gradual process of reopening, it will be in the hot months that in good times leave much of Florida’s hospitality industry, especially in Miami, operating at reduced levels. There’s nothing in view that suggests hotels, sporting events, fashion shows, concerts and tourism are about to rekindle anytime soon.
“There is no event, no setups, no anything. I don’t get any business,” said George Achi, who runs a one-man business that specializes in 3-D visualization for events so the customers can see what their stage or display will look like.
Achi tried to apply for PPP funds, only to learn his contractors would have to apply separately. His bank told him there were no more applications being accepted well before the cutoff date, and when he tried to apply for federal disaster-relief funds he was told he needed an employer ID. He doesn’t have one; he works for himself. Achi used his social security number instead and hoped it works. The website told him his request was processed but that he would not receive any further communication. Either the money comes, or it doesn’t.
Katya Bravo owns Secret Sauce, an event agency and marketing company in Little Haiti that provides bartenders, hospitality workers, promo models and other types of temporary worker for events in South Florida. She estimates she routinely has at least 100 people under contract and paid as 1099 employees. Only four people are on salary and count toward the PPP thresholds.
“For the PPP, we filed for that through the bank, we filed on the first day (the funds) were released,” she said, noting she banks with national giant Chase Bank. “We were told by our bank that unfortunately, they ran out of money, we didn’t make it ‘through the door.’”
Like many in her predicament, Bravo has talked to others who found smaller banks to be more responsive. Complaints abound that large banks are steering stimulus money to customers who already have a business banking relationship, especially those who have outstanding loans — sort of an extra boost for banks through the back door. They’re helping their best customers and backstopping loans they had already made to them.
For now, contractors who received 1099 payments stand to receive federal compensation well below what payroll employees will get under PPP from their employer.
“It’s really sad, all of it; it’s very unfortunate. They have no way of making money,” said Bravo. “They count on you. Can you imagine telling staff ‘I can’t help you?’ I am doing everything I can to make sure it doesn’t (happen). That’s heartbreaking.”
This story was originally published April 18, 2020 at 7:00 AM with the headline "All plop, no fizz: Miami’s event companies, workers can’t get relief."
