By Patricia Frischer
Conversations
about AB5 put on by Californians for the Arts was held on Oct 7 and these
notes are my attempt to report on that zoom meeting. Before I begin, here is a
brief summary of the issues, many of which were referenced during the
discussion. As we all know now, this has huge implications for the arts
industry. Many of us have had to change our business plans and many of us were
not compliant without even knowing we were not obeying the letter of the law.
The “ABC” test adopted by the California Supreme
Court in Dynamex Operations West, Inc. v. Superior Court is
for determining whether workers in California should be classified as employees
or as independent contractors. A
worker can only be classified as an independent contractor if:
A. the
worker is free from control and direction in the performance of services; and
B. the
worker is performing work outside the usual course of the business of the
hiring company; and
C. the
worker is customarily engaged in an independently established trade,
occupation, or business.
This definition of an independent contractor is much
narrower than that of the multi-factor Borello test—the standard
previously used in California, which made it far easier to classify workers as
independent contractors. AB5 makes the ABC Test the law in California, but it
also expands its application beyond wage-order claims to all provisions under
the state Labor and Unemployment Insurance codes.
AB 2257 signed by Governor Newsom on September 1, 2020 is effective
immediately and includes additional exemptions and clarifications to AB 5
for arts sector from the Dynamex decision. These definitions include this one
for Fine Artists: “For the purposes of this subparagraph, “fine artist” means
an individual who creates works of art to be appreciated primarily or solely
for their imaginative, aesthetic, or intellectual content, including drawings,
paintings, sculptures, mosaics, works of calligraphy, works of graphic art, crafts,
or mixed media.” You will also find info about musicians in many circumstances,
performing artists for single engagements, specialized performers teaching
master classes, modification to business to business exemption, and clarification
to the relationship of individuals acting as sole proprietors.
Comments were made throughout the 75-minute zoom discussion
by the participants.
Julie Baker Executive Director,
California Arts Advocates/Californians for the Arts was the moderator of this
meeting and has been very involved with the new bill.
The arts currently face a triple problem: AB5, the pandemic
and systemically underfunded in California. She noted that our priorities are
safe re-opening and being second responders who are rebuilding a life worth
living. She commented that being able to see the people on this panel helps to
humanize this whole process of working our way through these laws. The arts
appreciate the support to get more funding so that we can survive the triple threat
to the health of the arts.
Assemblywomen Lorena Gonzalez, 80th
District, Author AB 5 and AB 2257;
Her staff really care and they are progressive and want to
do their best. They want to protect workers rights to have fair pay and
insurance. But there are tough decisions
for those who want to remain independent contractors. People have not been
complying to the law in the past and that is hard to face now and complicates
the dialogue. If you can’t pass Borello then you have no case for being an
independent contractor instead of employee. However, an individual who is a Sole
Proprietor who uses 1099 to file and can be exempt. Also exempt is the workshop
presenter with a special master class, or a judge for a competition. An
instructor who rents a space in a facility is not employee unless the space controls
what is being taught.
We can look at the Business to business and Sole
Proprietors exemptions first to see if can be applied. If you have your own
business you can be an independent contractor. But if neither of these apply,
you can look into your specific skill for examples to help you figure out what
applies to you. For example, Motion picture independent video makers could be a
hard category to figure out. If you have a good case, gather similar colleagues
together to fight to be independent if you are not. Also, they know that groups
come together and no one is in charge and they all want to contribute and share
profits or Intimate Theater shows are tricky. But if you own your own work and
are performing it, you are exempt. That includes clowns, mimes, magician anyone
that can pass Borello.
Working with unions and getting paid sick leaves and
insurance could be a bonus that comes out of these discussions. Now could be a good time to restructure and
ask for money from the state to get the arts back to work. For example, we need
a payroll system for small groups to use and help them bring down the cost of their
businesses. Can the government supplement
the creation of that payroll system? We should ask Governor to put some money
in place for the arts?
There will be a webinar in the next few weeks to talk us
through the entire bill and how to figure it out. They will try to make check
lists to help, but they realize it is overwhelming. Many groups have not yet
been considered and could be included in future definitions.
She is often asked about 1099s. If you are getting the
1099, you are not breaking the law. If you are issuing the 1199, then make sure
you have control and direction over the person.
You can review the specific
details of each section of the bill on a fact sheet by Assemblywoman
Gonzalez.
Majority Leader Ian Calderon, 57th
District, Principal Co-author AB 2257
Arts Funding and Arts Education were his priorities as well
as social safety nets programs. As co-author of this bill, they will continue
to look at the exceptions that can be made for the arts. There are lots of compromises and lots of
diverse opinions in this bill. But whenever they were able to humanize the
problems and cases, they were able to make progress. The Arts as a priority was
raised from dead last to the #5 spot at the top of the second column. We went
from $1 million to $26 million in funding in the last years. We have 40 million
people in California so this is still less than a $1 per person. We should not
be 20th in rank of funding the arts. But care has to be taken as everything is
about precedent, so making the bill less complicated is important. These laws
will affect the future. They can’t make changes unless they know what the problems
are. This will continue to be developed for years ahead.
John Acosta President, AFM Local 47
Music Exemptions: AB 5 there is a difference between amateur
and professionals. If you are professional musician, you are an employee. If
you are a community-based org with no compensation to your artists, they are
not employees. There is a single engagement
rule that you are still an employee if you are being directed to do a specific
job. He warned that California is a magnet for talent, but as we are shut down,
we start to see the cracks. This talent will move into other fields unless we
can rebuild ASAP.
Sara B. Boyns, employment
Attorney, Fenton & Keller.
Dynamex, then AB 5 and then Borello has made
this area so confusing. She has
devises check list to see how the business model is designed. Sometimes they
have to redesign their business model. This new situation is most challenging
for small non-profits. For example, the
orgs that send art teachers into schools. The non-profits are paying them, not the
school district but they are employees and the small non-profits cannot cover
their sick days or health insurance. She suggests using California Lawyers for
the Art for advice. And remember that more than one exemption might apply. If
the teacher is a registers sole proprietor with their own business, they can be
independent contractors.
Understanding
AB 2257: A Toolkit to Understanding the Follow Up Legislation to AB 5
