What do you think of AB-5 ?

[WayOffBase]

Yesterday, California Governor Newsom signed AB-5 into law. Some occupations are exempted but musicians are not exempt. In order to be considered a contractor, the musicians has to pass the ABC test.

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in work of some independently established trade or other similar business.

Maybe musicians can pass the first and third conditions but not the second condition since the whole point of hiring a musician is to have him or her play/sing the part they're given. A contractor would be someone who drives the musician or caters lunch, etc.

What are your thoughts and, California band leaders, how are you going to handle it?

Thanks,
WayOffBass

 

[Downunderwonder]

So a building contractor can't bang in nails? I don't think so.

 

[buldog5151bass]

The law was intended to drive the abuse of "contractors" who should properly be classified as employees. A homeowner can hire a carpenter as contractor to fix his roof, but if a building contractor hires one, he/she is likely an employee. A bar serves food and drink, can hire an entertainer as a contractor. The intent of these laws is to go after the companies, not individuals.

 

[turf3]

I think this is addressed at Uber/Lyft drivers, actually.

As far as musicians, I think the only impact would be on whether one receives a W-2 or 1099 form at the end of the year (for those who aren't just paid under the table). My guess would be that 99.999% of musicians will be OK with continuing to receive 1099s, and that no one will ever challenge that status, thus musicians will remain 1099 employees. In other words, the only way this would become an actual issue rather than a theoretical one, would be for a musician to legally challenge his 1099 status, claim to be a W-2 employee, and make a legal case of it. If such a thing was actually done (and this is California, where nothing's too screwy to contemplate) I think the resolution of it would be tied up in the courts for decades. Anyway, the musician in question would have to show that he suffered damages from being a 1099 rather than W-2 employee.

Well, I am not a tax attorney specializing in independent contractors who are paid very little (and given how much most musicians are paid, hiring the services of such a specialist to challenge one's 1099 status seems unlikely) but that's how it seems to me; that there's no case law so probably no one will do anything till some court cases are brought and resolved.

 

[buldog5151bass]

Not just drivers. Over 8.5% of the US workforce is classified as contractors. Especially in the new "gig economy", this kind of abuse is rampant. It goes from minimum wage landscapers, to large companies using IT professionals, earning six figures. Companies do this to avoid worker's compensation, benefits, etc.

I do think the law goes a little far, depending on how it is enforced. Can a contractor use a small painting company to pair a bunch of rooms, working totally without supervision, as contractors, or do they become employees?

Most states use the "same business" issue as one of the factors in making the determination - you can look up the US Department of Labor ABC test. The main issue is degree of control by the "employer".

Likely there will be class action suits in court. But workers likely can just file complaints with the state labor department (I don't know California law specifically, but that can be done in New York and Connecticut, and other states)

 

[Downunderwonder]

I do think the law goes a little far, depending on how it is enforced. Can a contractor use a small painting company to pair a bunch of rooms, working totally without supervision, as contractors, or do they become employees?

I was wondering the same thing. The acid test would be hiring in just one painter. It's not like the main contractor couldn't swing a paintbrush if he had to.

If a contract is let to a subcontractor then he would have to have employees or else multiple individual labour only contracts would be needed.

Those labour only contracts are the bane of low wage NZ. Labour hire has become a huge industry of itself. The employees end up with no way to exert their rights like a normal employee would. First sign of ''not fitting in'' the hiring company phones up the labour hire outfit and ''fires'' them, asks for someone else next day. New govt here has done something about it but not sure how well it is working out.

 

[buldog5151bass]

I was wondering the same thing. The acid test would be hiring in just one painter. It's not like the main contractor couldn't swing a paintbrush if he had to.

If a contract is let to a subcontractor then he would have to have employees or else multiple individual labour only contracts would be needed.

Those labour only contracts are the bane of low wage NZ. Labour hire has become a huge industry of itself. The employees end up with no way to exert their rights like a normal employee would. First sign of ''not fitting in'' the hiring company phones up the labour hire outfit and ''fires'' them, asks for someone else next day. New govt here has done something about it but not sure how well it is working out.

This is part of what I do for a living (but not in California). The state has valid goals, but as Calie often does, it goes overboard.

But I think bar bands are safe.

 

[charlie monroe]

the abuse of "contractors" who should properly be classified as employees

This is unclear to me. What form of abuse is taking place? Tax code loop holes?

 

[buldog5151bass]

This is unclear to me. What form of abuse is taking place? Tax code loop holes?

Employers don't pay social security, no worker's compensation, no unemployment if they are terminated, no health benefits that the employees may get, no overtime, no Medicare, etc.

 

[charlie monroe]

Employers don't pay social security, no worker's compensation, no unemployment if they are terminated, no health benefits that the employees may get, no overtime, no Medicare, etc.

Are these contractors generally remunerated at a higher rate than employees?

 

[buldog5151bass]

Are these contractors generally remunerated at a higher rate than employees?

Generally, in the cases where the employer is doing an end run on the law, no. The employer is doing it to save money. Same way some employers get unpaid "interns", and have them replacing an employee.

When they are legitimate independent contractors, it varies.

 

[charlie monroe]

Generally, in the cases where the employer is doing an end run on the law, no. The employer is doing it to save money. Same way some employers get unpaid "interns", and have them replacing an employee.

When they are legitimate independent contractors, it varies.

Thank you for the additional details.

When I think of a contractor, I think of a registered business entity. An individual or a firm that fulfills its reporting and financial burdens.

Sounds to me like you are describing a “cash” labor pool.

 

[buldog5151bass]

Thank you for the additional details.

When I think of a contractor, I think of a registered business entity. An individual or a firm that fulfills its reporting and financial burdens.

Sounds to me like you are describing a “cash” labor pool.

Nope. It goes far beyond that. According to a recent survey, about 8.5% of the workforce is classified as contractors. Even big companies have been getting whacked for this. IT professionals, CNAs, limo drivers. The list goes on.

I have no issue with legitimate contractors. There are times when the individuals prefer it. I don't like when people are taken advantage of.

 

[charlie monroe]

That’s a big number, about 1/7.

What percentage are considered to be operating in the “abuse” category?

 

[Downunderwonder]

That’s a big number, about 1/7.

What percentage are considered to be operating in the “abuse” category?

What got something done here was 100% of permanent part ( full ) time ''contractors'' in some fast food chains having no guaranteed hours, no paid holidays, but unable to claim working poor benefits because technically they didn't have a full time job.

 

[Nephilymbass]

Yesterday, California Governor Newsom signed AB-5 into law. Some occupations are exempted but musicians are not exempt. In order to be considered a contractor, the musicians has to pass the ABC test.

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in work of some independently established trade or other similar business.

Maybe musicians can pass the first and third conditions but not the second condition since the whole point of hiring a musician is to have him or her play/sing the part they're given. A contractor would be someone who drives the musician or caters lunch, etc.

What are your thoughts and, California band leaders, how are you going to handle it?

Thanks,
WayOffBass

Yeah I think this is more directed at the “gig economy”. AKA companies hiring temporary contractors instead of hiring full time employees. I don’t think they really had musicians in mind at all in either a good or a bad way. So I wouldn’t worry about it too much. In many areas of the country companies are hiring less full time employees and using more contractor labor as a way to get the work done without providing what could be respectable job full time job with decent pay and benefits. I work as a surgical technologist at a major hospital. Been there for years. Worked as a patient transporter and an EMT basic before I went to school for surgical technology in my late 20s. Contractor work is causing a lot of issues in my field. 70% of our emergency department RNs are contractors not employees of the hospital. 40% of our operating room RNs and Surgical Techs are contractors now as well. It causes a lot of issues. Not only financially to give an example an RN with - hourly rate of say $25-$30hr plus their Benefits cost around 50 hr give or take. But contracted travel workers who work for travel agencies like trinity cost about double that. The contractors are paid more to begin with because they have to individually pay for their own benefits (many choose not to have basic benefits like health insurance which means they are a burden on the rest of us when they get sick/injured and can’t pay) but the agency is making a big cut also. It’s really changing the employee demographics for the worse. It’s becoming more of a field where you’re rewarded for being single with no kids with no roots while penalizing those of us like myself with families and a mortgage because we aren’t getting raises like we used to because the hospital is paying out the butt for contractors in order to stay staffed well enough to keep the hospital open. This also impacts the cost of going to college. For example if we tightened down on contractor work our hospital and many others would have to work with our local colleges to make it easier for people to afford to go to school for these jobs and expand the programs to allow more people to go. It’s almost crazy how things are now. For example when I graduated for surgical technology only 10 people in my program finished and the school I went to has the only nationally accredited program within about 40 miles. We don’t have enough new people coming into the field to replace those retiring at all the hospitals in the area so every year there are less full time employees and more contractors and raises are less and farther apart and our benefits get worse and worse. Personally my pension was frozen, and my health insurance gets worse every single year. And it puts me in a tough position. For example I refuse to be a contracted travel worker and only see my kids one week every 13 weeks and while many of the travel workers are good some of them really don’t give a crap at all because there is no threat of being fired. Even if they are fired from a contract or one agency they just make a phone call to another agency and within a week they can be working at another hospital. If we got rid of the contracted labor people would move to where ever the demand was for those jobs, right now they aren’t. Also I might actually be able to take a vacation. I have hundreds of hours of paid time off saved up but right now I put in a request to use some of it and my request is denied.

 

[Bassamatic]

This is a really BAD Bill. It was a knee-jerk reaction to Uber and Lyft drivers that wanted more but don't want to get a regular job, and it is going to hurt a lot of industries. My friend owns a music store with a school upstairs for music lessons. All the teachers will now become employees. As with Uber and Lyft this is going to GREATLY increase the costs of the school and up prices - perhaps cutting the business significantly as students will drop out. The teachers WANT to be independent and set their own prices and hours, etc. This will now be much more difficult.

For us, I would think that if you played the same club every Friday night and got paid you would now be an employee. We have housekeepers that are semi-retired and only clean our house - they may now be considered employees!

A BAD BAD Bill. If it is not defeated it is going to backfire as the prices of a ride go UP and the numbers go DOWN. For the drivers that wanted it - I say get a job. You can't have your independence AND job security and benefits too. If you don't like the terms, don't take the job!! - Sorry if this offends anyone.

 

[Space Pickle]

This is a really BAD Bill. It was a knee-jerk reaction to Uber and Lyft drivers that wanted more but don't want to get a regular job, and it is going to hurt a lot of industries. My friend owns a music store with a school upstairs for music lessons. All the teachers will now become employees. As with Uber and Lyft this is going to GREATLY increase the costs of the school and up prices - perhaps cutting the business significantly as students will drop out. The teachers WANT to be independent and set their own prices and hours, etc. This will now be much more difficult.

For us, I would think that if you played the same club every Friday night and got paid you would now be an employee. We have housekeepers that are semi-retired and only clean our house - they may now be considered employees!

A BAD BAD Bill. If it is not defeated it is going to backfire as the prices of a ride go UP and the numbers go DOWN. For the drivers that wanted it - I say get a job. You can't have your independence AND job security and benefits too. If you don't like the terms, don't take the job!! - Sorry if this offends anyone.

As someone who taught guitar lessons at a music store for a decade, I can assure you that the teachers do not want to be independent and get paid crap

 

[buldog5151bass]

As someone who taught guitar lessons at a music store for a decade, I can assure you that the teachers do not want to be independent and get paid crap

Doesn't mean you won't get paid carp. California minimum wage is $12/hour. That's all they have to pay, no matter what they charge the student.

 

[Pilgrim]

Employers don't pay social security, no worker's compensation, no unemployment if they are terminated, no health benefits that the employees may get, no overtime, no Medicare, etc.

Exactly. I teach online for an institution back east. They insist that I sign a form agreeing that I am a contractor, not an employee. However, I've been teaching that course for more than 12 years, six months of the year, two three-month quarters. They have it set up so that if you're going to teach, they disclaim all aspects of a relationship that would create financial or legal obligations on their part.