AB5, California's controversial "gig-work" law takes effect Wednesday among confusion, lawsuits and challenges.
Uber, Lyft, truck drivers and freelance journalists are already suing the state over AB5. A $110 million ballot campaign is underway as companies seek to exempt their workers. A handful of out-of-state corporations have begun to cut ties with California based freelancers as others are instead requiring freelancers to incorporate.
While the law intends to make it more difficult for companies to claim workers are independent contractors, many production music companies could get caught in the cross-fire. The law states workers should be treated as employees unless an arbitrary and subjective set of criteria are met.
1) Is the contractor/employee free from a company's control.
2) Does the contractor/employee do work outside of the company's core business.
3) Does the contractor/employee have independent enterprises performing the same type of work.
Assemblywoman Lorena Gonzales (D-San Diego) is the architect of the bill, saying workers need the benefits and protections of being an employee as opposed to an independent contractor. On the other hand, detractors say AB5 jeopardizes the flexibility afforded to independent contractors and the companies that retain their services.
Experts on both sides of the argument agree that turning independent contractors (paid via 1099) into employees (paid via W2) can add about 30% to a companies labor cost.
Production music companies often retain musicians to produce a body of work for said company. This could run afoul of AB5, as the core business of a production music company is producing music (which is also the core business of a music producer).
The confusion extends to recording studios, music supervisors and live venues, who often have a core group of employees surrounded by independent contractors of various degree.
As it stands now, the ballot initiative only seeks to exempt large companies such as DoorDash and Uber. This law has the capacity (if not the intent) to effect any musician in California who works as an independent contractor.
Stay tuned to ProductionMusicNews for updates on AB5 and its enforcement.