Many of you may now have heard of California legislation AB5 which was created to ensure that most workers in California are classified as employees, not independent contractors. Introduced by California Assembly member, Lorena Gonzalez, AB5 was created to incorporate the Dynamex ruling, which was a California Supreme Court decision from last year, into state law. That decision limited an employer’s ability to classify certain types of workers as independent contractors.
Some members have asked if this new law will negatively impact the practice of using loan out companies as a way of ensuring fair tax treatment for our members. It is our view that AB5 will have no impact on the use of loan outs. AFM Local 47 along with DGA, WGA, IATSE and SAG-AFTRA have done exhaustive due diligence with counsel to come to this conclusion.
Another hot topic with AB5 is the so-called “end of the music business as we know it”, tag line that the labels are touting. Nothing could be farther from the truth! While AFM agreements clearly establish that musicians are employees and not independent contractors, there were many instances where employers attempted to misclassify our members. Leading up to the bills adoption we worked closely with SAG-AFTRA to ensure that musicians and singers were properly covered under this new legislation. With the backing of the California Labor Federation, Gary Lasley, our Secretary/Treasurer, along with AFM Reps all over California, reached out to elected officials to seek continued support for this important legislation. During one of the legislative committee hearings it became clear that the RIAA (Recording Industry Association of America) lobbied to include certain exemptions for Royalty Artists. We engaged fully with the RIAA, alongside SAG-AFTRA, to reach a fair compromise and agreed to language that was signed off by all parties. Just when we thought we had a deal, the RIAA tried to slip in another provision that would exclude musicians and singers on indie projects. The RIAA was representing independent labels, at the same time as, representing major labels. In my opinion, it became clear, that the RIAA was using this independent argument as a ruse for their own interests. They want the ability to pick and choose when to treat musicians as employees and when to treat them as independent contractors. Unfortunately, after this last minute play by the RIAA, our compromise fell apart and we rejected their language. In the end, the bill we adopted protects musicians and we are in a better place than we were with RIAA’s original proposal.
Whether it is a recording session or community orchestra, small theater or a one-off live performance or single engagement, California law requires employers who hire musicians for performances, which meet the AB5 threshold, to pay the appropriate taxes and make the necessary withholdings. This way, musicians can apply for disability, unemployment, social security or workers comp when necessary and applicable. For employers in California that hire musicians for dark dates (non-union), this law always did and continues to apply to them. While paying someone in cash (in many cases) was always a violation of employment law, the rules and penalties have been better defined. If you are the victim of misclassification, please do not hesitate in contacting us, so that we can assist you to remedy the situation.