New California law for freelance musicians...

[Baldwin Funster]

My impression is that big organizations don't give much support to the nonunion local music type gigs. In fact their fixes could make the situation much worse.

[Docbop]

It's a useful thread, at least for Californians. The law is what it is, so it's useful to talk about how to deal with it. People's views on whether the law is a good idea would just be useless venting.

 

 

From a seminar at NAMM last year they said for music stores the only solutions is to rent the teaching spaces like most beauty solans and barber shop rent the chair and the barbers charge the customers. From what they are saying the key is who collects the money from the students the store or the teacher. If the store collects the money then the teacher is a employee by the new rules. One of the local teachers has already prepared with a small handheld device that he accept credit cards and Apple Pay type cards and even email receipts for cash if customer wants one. That way he just pays the music store for use of their teaching room.

 

 

My gut says this is all about discovering income of musicians on small gigs or teaching so it can be taxed. I think this is why musicians are being targeted and people like gardeners, plumbers, and other independent service type people are exempt. Most gardeners and plumber and etc are run as a small business with licenses and reporting income. I guess next they will go after the guy selling watches and stereo speakers in the parking lot.

[MotiDave]

Even CA pols aren"t dumb enough to think they can squeeze anything worthwhile out of our $40/night cut of cover band gig musicians. They think they are protecting us, I"m sure. Poor exploited independents - we know, we"ll protect them!

 

Gee, thanks.

[Adan]

Is there any evidence that legislators were thinking about musicians at all? Absent statements showing they were, my assumption is that musicians are incidental casualties. Other industries had lobbyists in the loop and got exempted. But I don"t what actually went down in Sacramento.

 

[Jazz+]

A worker is an independent contractor under AB5 if:

 

Quote

 

* the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact

* the worker performs work that is outside the usual course of the hiring entity's business

* the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity

 

 

That"s the 'waiver' I am signing.

[zxcvbnm098]

Is there any evidence that legislators were thinking about musicians at all? Absent statements showing they were, my assumption is that musicians are incidental casualties. Other industries had lobbyists in the loop and got exempted. But I don"t what actually went down in Sacramento.

 

Interesting article in the LA Times giving some more context to how this is going down. An interesting read...

 

https://www.latimes.com/business/story/2019-12-19/california-freelancers-gig-economy

 

 

[Adan]

After reading about this a bit more, I'd say there seems to be a lot of uncertainty about how the key language in this law will be interpreted and how it will apply to, for instance, freelancing musicians. I can't even being to figure it out.

 

Given how many folks this potentially affects and how much money is at stake, there's likely to be a lot of litigation, and quickly. I doubt that musicians will be in the forefront of that litigation, but they will be looking at the results in those cases to predict how courts would apply the law to them.

 

You can be exempted if you are part of a "business to business" relationship with the entity hiring you. This basically means setting yourself up as an above-board business, which is going to mean some extra annual expenses.

 

I couldn't find anything about a waiver, and the concept of a waiver doesn't make much sense to me here. But if you're representing yourself as a true "business" that meets the 12-point test in the law for that business-to-business relationship, the entity you're doing contracting with may want to put language in the contract that protects them in case you're not really qualified. That may take the form of an indemnification clause that basically says you'll cover whatever damages they incur if it turns out you're not what you say you are.

[ajstan]

Well, I see why forming an LLC to establish a B2B relationship may be prohibitive in CA - it"s $820 per year with additional reporting requirements! In Ohio it"s only a one-time charge of $99 with no annual fee and you just need to file a Schedule C with your individual taxes to report income.

 

https://www.llcuniversity.com/llc-annual-fees-by-state/

 

As for the LA Times article, it seems like the writer is saying that the intentions of the law were to punish greedy people, so any complainers should shut up because the law is for their own good.

 

[Adan]

Alleged exploitation of workers is only one of the reasons for the law. It"s also to put a stop to the practices of some very big businesses avoiding paying taxes etc into the public coiffer, which shifts that burden to other businesses and creates an uneven business playing field. It"s more about fairness than paternalism, but paternalism is part of it.

 

Again, I don"t see any intent to ensnare little fish like gigging musicians, and the fact that there are exemptions for trades like graphic artists shows the legislature was open to leaving the little fish out, so there"s reason to be optimistic that it will be amended to exclude musicians. But in the mean time it"s going to be a reality. Seems like the ball is in the music venue"s court to start with. If a venue says it won"t hire you except through a B2B, then the ball"s in your court.

[Adan]

A worker is an independent contractor under AB5 if:

 

Quote

 

* the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact

* the worker performs work that is outside the usual course of the hiring entity's business

* the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity

 

 

That"s the 'waiver' I am signing.

 

That"s not a waiver. It"s also not a 'waiver.'

 

[Docbop]

A handful of musician got to meet with the politician behind this bill and present their case and musician survey results. Seems a rewrite may be done in 2020, but it is law for now. The article IMO rambles in the beginning but towards the ends gets into the survey results and politicians comments. I was surprise 8% of musician want to be treated like employees, I wonder was area they work in, my guess is orchestral/studio players.

 

Here is the article if interested....

 

Link to the article.

[Threadslayer]

I wonder was area they work in, my guess is orchestral/studio players.

 

[/url]

Muzak?

 

[Chris Link]

https://www.connect.media/californias-net-out-migration-increases-in-2018/

 

Not trying to be political, just an observation.

[Jazzmammal]

Here's an update about this for those living in other states:

 

https://www.insidernj.com/press-release/fight-freelancers-anti-independent-contractor-law-ab5-not-working-california-states-congress-must-avoid-devastating-mistake/

 

I knew this was going to happen because politicians have no clue how the economy actually works, all they see is "some" "exploited" workers and then draft this kind of one size fits all crap. Helping exploited workers makes a great sound bite though.

 

Now, having said that, haha...

 

https://www.latimes.com/entertainment-arts/story/2020-01-29/ab5-independent-contractor-california-2020-arts

 

This article is also sounding an alarm but it also talks about tons of different workers who really should be classified as employees. Minimum wage, workers comp and other insurances are important. Note how Lorena Gonzalez says the Employment Development Dept (EDD) did not want her to define what fine arts means, it's up to the EDD to define that.

 

It's easy to do what I just did above and joke about politicians and soundbites but to look at this issue closely, if similar legislation did get passed and signed into law by the President (unlikely imho) but say it did well, that means everybody is playing by the same rules. A company is not gaining an unfair advantage over another company by not doing this unless they simply are willing to risk breaking the law. Many workers are totally exploited by their employers contrary to existing tax law on the federal level. If it's brought to the IRS's attention sometimes they will initiate an investigation and force the employer to start putting these people on W2's with payroll taxes which are Social Security and Medicare. That's a good thing and yes, there is a definite tax compliance component of this too which was pointed out earlier. Lots of people do not declare all their income from this sort of thing.

 

When it comes to fine arts including us as performing musicians the fear is OK fine, everyone is playing by the same rules. Great. Nobody but larger corporations hiring performers through agents with a formal contract will use live music. Would that really happen? Who knows, live music as well as small local theater productions are important to some venues and if there's no choice but to comply then they probably will and everybody's happy. Maybe. Then there's always the possibility of carving out exceptions.

 

Without taking sides and being too political for this forum one side says workers are being exploited and these loopholes should be closed while the other side says government is too intrusive already and just leave us alone to do our work however we want.

 

This is a tricky issue.

 

Bob

[Jazz+]

Anybody lost a gig from this new rule yet?

[Docbop]

Anybody lost a gig from this new rule yet?

 

Ran into my friends a husband and wife who gig and teach full time. He's in a big tribute band and plays whatever local gigs when not on the road. His wife teaches piano, voice, and guitar and full schedule, she is also the busiest local musician in multiple groups so always working. On advice from a financial manager they are setting themselves up as a business and are busy getting all the licenses, DBA announcement, bank accounts and health insurance to be compliant with AB5. So I guess it will make it so gigs and teaching are contracting with their business and not be viewed as employees.

 

I think the key is who's in the government is actually going to be monitoring musicians and others? I think someone will have to be pulling in a lot of money to catch the eye of the government.

[Jazz+]

The financial mgr makes a commission on that plan.

[TommyRude]

I was playing in a club and I got thrown in jail.

 

The police said it wasn't because of the new law. They said it was to protect the public because I was playing a really horrible version of Van Halen's I'll Wait. I don't know what was so bad, I got the tab from a thread here on Keyboard Corner.

[pinkfloydcramer]

LOL. You got off easy! In medieval times, according to classicfm.com, musicians who performed poorly were paraded around the town square with a heavy cast iron flute, the "flute of shame", strapped to them. While the townspeople pelted them with rotten fruit. Actually, that's not such a bad deal- a gig's a gig, after all! Assuming it paid $100, of course..

[Baldwin Funster]

Gigs in CA dont pay hardly shtt. So I think were safe from the law.

[Jazzmammal]

It depends on the type of gigs you're doing. I'm retired so I only do one or two gigs a month but more around the big holidays. I had a friend who died some years ago who was making around 4K a month from assisted living gigs as a single. He told me there are 3 big corporations who own the majority of those so he dealt with basically three people to get 4 or 5 gigs a week all over SoCal from LA to San Diego. A deal like that is exactly where this new law could hurt. Maybe those big corps will put people like him on W2's but you know number crunchers. 30% more costs, now as an employee what if they decide they don't like him any more? Now, it's an employee/employer thing so it's dealing with the labor board over wrongfull termination and all that stuff. Is a part time musician going to get a severance package? Two weeks notice? Businesses don't want to take the chance on a $5,000 fine to start, it can go up. It's the same with any corporate type of gig, yacht clubs, country clubs, hotel lounges, that kind of thing. What are all the casino's in CA doing? I don't know. I can see them simply saying form your own entity so it's a B2B.

 

If you're talking about dive bars around Hollywood, yeah they pay crap if they pay at all. It's a tough thing, corporations like that do like live music, it is part of their business especially the casinos and all the country clubs and larger restaurants as well. But putting part time players on W2's with all the extra cost and liability, who knows what they'll do. I've been out of that scene for years so I don't have those contacts any more. Yes, if you're active enough like my friend was it's probably worth it to form an LLC. CA has an $800 per year annual fee plus all the extra accounting and tax filings. If it's really not worth it and they won't put you on a W2 then it's over because their legal counsel are telling them to not mess with this. But having your own entity will act an umbrella that covers all of your gigs regardless of who they're for. That in turn requires you to file an entity tax return which produces a K1 which gets reported to the IRS forcing you to include that income on your 1040 which also flows to the state. No more hiding income which is also a big part of all this. On the one hand this could clean up the whole chaotic and the , somewhat loose accounting musicians are famous for.

 

When people talk about getting exceptions it not as simple as it sounds. I've read some of the details in the bill and there is a ton of fine print in there. Yes, there are exceptions for lots of different things but they all have strings attached. Lots of requirements to qualify for the exception. Right now there are no exceptions for performing artists but if that gets added later this year or next year I'll bet there will still be hoops to jump through.

 

The more I think about this the more I'm beginning to think this isn't as bad as it first appeared. All businesses have costs. For us it's mostly our equipment and traveling. So we now have to add the fees to the state and learn how to prepare and file either an 1065 or an 1120 federal return with K1's. Its really not that hard to figure out yourself or hire someone like me to do it. It may cost you some time and an extra $1,500 a year.but that's just CA because of their $800. Other states don't have that. What this could do is elevate gigging players up to a more serious business level. The principle here is everybody is in the same boat. You can charge more for gigs because of the extra expenses and nobody will undercut you because they're paying those same expenses. We all know how these venues have been getting a free ride for years because there's always somebody's kid with a band or there's a DJ who will play for whatever they can get. No more if everybody has to go through setting themselves up as an entity.

 

Or the whole freelance musician gigging economy just dies. Somehow I doubt that but we'll see.