Lighting and audio engineers. Camera operators. Carpenters. Disc jockeys. Stage managers. Cable guys.

Berke knew most from a career of working on events and festivals. He figured they were just the folks he needed to wow crowds packing Park City's Main Street, the area around downtown Salt Lake City's Olympic Medals Plaza and two Coca-Cola pavilions. He also put them to work at three stages within the Athletes Village at the University of Utah.

The Olympics turned out great for Berke - until he was the subject of a random audit 1 1/2 years later by the state Department of Workforce Services.

The agency concluded many of Berke's assembled workers should have been considered employees of his entertainment management company, Jeffrey Berke Productions, not independent contractors as he viewed them. Berke was told he owed the state $2,000 in employment taxes, interest and penalties on $300,000 of "unreported wages."

Berke objected and his appeal was upheld last spring by Administrative Law Judge Suzanne Mellor, eliciting sighs of relief from organizers of other special events, such as the Utah Arts Festival. All feared that Workforce Service's interpretation of "independent contractors" could leave them unable to afford to hire behind-the-scenes specialists for short-term jobs.

But if Berke and others in the industry thought Mellor's ruling would put an end to their wrangling with the state, if they thought his situation would prompt immediate changes to how the state treats entertainment freelancers, they were wrong.

What his case did do is highlight a gray area of Utah employment law and, perhaps, create a test case for how to balance employment safeguards with the economic interests of a state eager to entice filmmakers, television producers, concert promoters and other event organizers to do business here.

"Believe me, there were times I wanted to pay the penalty and have it all go away," said Berke, 41. "But I couldn't do that, because the next thing that would happen is that it would potentially give Workforce Services a precedent to apply their version of the statute to the whole [entertainment] industry."

Stick to their guns: In the wake of Mellor's ruling, Workforce Services agreed to take a deeper look at provisions governing independent contractors. But the agency is sticking by its definition of what constitutes an employee. Its reasoning: Relax the standards and employers will write off numerous workers as independent contractors not subject to employment taxes, which in turn would leave those workers unprotected if they are laid off and undermine the financial security of the unemployment insurance fund.

Agency officials disagreed with the judge's ruling, said department deputy director Chris Love, but did not think it was worth fighting because it didn't establish a precedent that would extend to other cases.

"The facts of the situation are unique every time a judge gets a case," Love said. "We made the decision to live with that."

Love said he understands the concerns of the entertainment industry but insisted his agency must make tough decisions to protect the financial integrity of a system set up to protect workers from being cast aside without any type of help.

"If you simply let employers make the call, many employers would attempt to characterize their workers as independent contractors simply to avoid having to pay payroll taxes," he said. "The unemployment insurance system was founded on principles that would cover workers in this country when they found themselves unemployed through no fault of their own.

"Federal law provides exemptions for certain classes of workers and also allows exemptions for independent contractors. Unless the rules and the law are followed closely, you run the risk of having so many folks outside of the unemployment insurance safety net that the program would lose its effectiveness," Love said.

Strict or stubborn? Berke, meanwhile, says the agency is being inflexible, ignoring evidence that entertainment industry practices differ from other businesses. This is counterproductive to the efforts by other state agencies and legislative task forces to attract more movie, television and commercial productions to the state, he said.

He wants Workforce Services to establish an advisory committee of entertainment industry officials to advise state auditors about the peculiar realities of their business.

"The entertainment industry has its own idiosyncrasies. It's a worldwide industry of freelancers," Berke said.

In his opinion, Love's reluctance to form an industry advisory committee shows that Workforce Services is disregarding Judge Mellor's overriding point that auditors need to consider the overall nature of the industry being evaluated rather than little details, such as: Does the worker have a business card . . . A separate place of business . . . or advertise services in telephone directories, newspapers or magazines?

"This is an agency out of touch and out of control," he said, adding "I'm not alone in this, but I was in a unique position to try to effect some change."

He cited the case of Chris Noble, a commercial photographer with an emphasis on sports action shots, who was audited by Workforce Services in December of 2002

"I'd work with a skier for an afternoon, take pictures and sell them," said Noble. "[Workforce Services] tried to say [the skier] was my employee. But I didn't dictate what equipment he used, how he did his job, anything else. It was a horrible experience . . . I had to hire an attorney and have my [skiers] come in and testify. It cost me a ton of time and money."

Berke's position also is supported by Utah Arts Festival executive director Robyn Nelson.

"The Arts Festival hires many, many contract personnel for its four-day event," she said. If they were classified as employees simply because they did not have business cards, it would "cripple" the festival. "For so many events, [hiring contractors] is our lifeblood. We rely on people with an expertise that can help us pull off what we're doing.

"In some ways, events are the circuses of today," Nelson added. "A lot of people in this industry, the production people, are like gypsies. They don't have business cards. They don't have offices. But they have valuable services that are out for offer."

Keeping watch: Watching this case from afar and hoping for a workable solution is Leigh von der Esch, who has spent years trying to promote the state as a mecca for the entertainment industry, first as Utah Film Commission director and now as director of the Utah Office of Tourism.

"Jeffrey Berke's idea to set up a committee is a good one. The motion picture industry works uniquely," she said. "We're promoting a healthy motion picture business. We certainly want to make sure people understand things on both sides of the equation - Workforce Services and the industry. We don't want to do something that's not welcoming to business."

Berke and Love sat down in early September to discuss Berke's advisory committee recommendation. Berke characterized the meeting as "friendly but unproductive," and left feeling that Workforce Services intends to shake off his case as a minor setback and go about its business as usual.

Love felt the get together was fruitful, citing his pledge to undertake several additional reviews that would affirm or rebut Berke's perception that "we're out of sync with what is going on in other states. Our initial reaction is that's probably not the case, but let's do research and see if there is any merit to his claims."

A questionnaire was sent to 20 other states' unemployment insurance tax divisions to determine how they handle entertainment industry workers. Agency attorneys are reviewing case law to see if Utah's approach is consistent with national trends. And the agency's tax staff will undergo additional training later this year.

"Our plan is to get back with Mr. Berke in December, tell him what we found and go from there."

mikeg@sltrib.com

The Utah Employment Security Act defines an independent contractor as "an individual who is customarily engaged in an independently established trade, occupation, profession or business . . . free from the control and direction of the employer." The act lists a number of factors that can be used as aids to determine if an individual is "independently established":

* The individual has his own place of business separate from the employer.

* The individual has a substantial investment in the tools, equipment or facilities required to perform the services.

* The individual regularly performs services of the same nature for other customers or clients.

* The individual is in a position to realize a profit or loss through his business activity.

* The individual advertises his services in telephone directories, newspapers, magazines or by other methods.

* The individual has obtained required or customary business, trade and professional licenses.

* The individual files self-employment and other business tax forms.

* Another set of provisions defines whether the individual is free from having an employer dictate "the manner and means by which the result is to be accomplished."