AB5’s Impact On Musicians – Problems and Solutions
Much Ado About AB5
There have been many articles about the recently passed AB5 in California, which will dramatically limit who can be an independent contractor, rather than an employee, in California. Due to being a heavy-handed, overbroad attempt to “protect” all independent contractors in California, rather than the more nuanced approach that the courts had been attempting to craft since the Dynamex decision, it is becoming increasingly apparent that, rather than protect independent contractors, AB5 will instead make many of their lives much more difficult – including musicians.
Several of the attorneys here at Baker, Keener & Nahra are musicians in addition to being trial lawyers, so AB5’s effect on musicians is something that we are not only keenly aware of but affects us personally. So, for our fellow musicians, this post is intended to not just highlight the problem, but provide some possible solutions going forward (assuming that we are not granted an exemption which, fingers crossed, hopefully we will be).
(One caveat before getting started – as AB5 is a brand new law that has yet to be tested in the court system, unfortunately no one knows for sure what will and won’t work or it’s actual impact on the gig economy. So at this early juncture, all we can offer is the start of the conversation about some potential solutions that could work).
AB5 and the Gigging Musician
Consider this familiar situation: You get a call from a local restaurant asking if you can get a group together to provide background music on Saturday night. So you call around to your musician friends to see who is free, get a group together, and tell them what time the gig is and the pay for the night. Then you all play the gig and at the end of the night, you pay them, divide up the tips, and everyone loads out and goes their separate ways. Pretty standard so far, right?
Post-AB5, however, not so much. The reason is two-fold. First, under AB5, if a musician is under “the control and direction of the hiring entity in connection with the performance of the work,” then he is an employee of the hiring entity, not an independent contractor. And second, if the musician performs work that is in the “usual course of the hiring entity’s business,” she is also an employee, not an independent contractor. So let’s take a look at the gig situation post-AB5.
The problem is that, as the band leader, you are the “hiring entity” when you call up your friends and offer to pay them in exchange for playing the gig, which means they are now your employees because you (1) “control and direct” how the gig goes (e.g., what songs to play, when to take breaks, etc.) and (2) you are in the music business, the same as your friends.
And if they’re your employees, that means you have to provide them with all of the many things that an employer is required to provide – worker’s compensation, meal and rest breaks, overtime, and the list goes on. Obviously, no musician wants to do all of that just to get a group together for a dinner gig paying everyone $75-100 for a few hours of work.
It’s All About the Hiring Entity
So what’s a gigging musician to do? Let’s go back to the example above. In that example, importantly the restaurant hiring you doesn’t make you an employee because (1) other than perhaps telling you the type of music it wants (or to play more quietly), the restaurant is not going to control or direct how you perform and (2) the restaurant is in the food business, not the music business.
That means that if the restaurant also hires your friends, rather than you hiring your friends to play a dinner set, then you should be in the clear (emphasis on “should” because AB5 will be a new, untested law, so, unfortunately, there are no guarantees as to what will or won’t work and it will likely be situation-specific).
In other words, rather than hire musicians directly, try to do so indirectly through an intermediary – whether that is through the client (e.g., the restaurant) or through a booking agency This lets you change the “hiring entity” from you, the lead musician, to a third-party who will have nothing to do with controlling the performance. Contracted to play at a wedding? Have the bride and groom hire all of the band and not just you. Want to get together some musicians to record your demo? Find a talent agency to hire the musicians for you. Essentially, try and put a (legitimate) middleman between yourself and the other musicians.
Musician Looking for Work, Not Employment
What about if you’re an independent musician looking to be hired? The same idea applies, but the twist is that because you are trying to be hired (rather than doing the hiring) you can help out by having a middleman to legally separate you from the person wanting to hire you.
For example, let’s say I want to hire you, Jane Smith, to play guitar in my band. I’m a musician, so if I hire you directly then you are now my employee, so now I decide not to hire you because it’s too much trouble. But if you have your own company, Jane Smith’s Music LLC, then I can hire Jane Smith’s Music LLC to provide a guitar player and Jane Smith’s Music can then provide you.
Bring on the Paperwork
The bottom line is that although AB5 may not necessarily eliminate an independent musician’s ability to hire other musicians, or to be hired as a musician, it will nonetheless require adjustments. The biggest adjustment, in addition to finding creative ways to avoid being the “hiring entity,” will be the need to formally document the arrangement to prove that you are not the “hiring entity” – e.g., that the restaurant hired all of the musicians and not just you. It is this latter part that some musicians may struggle with, so if we can be of any assistance (to musicians or any other people who are concerned about maintaining their status as independent contractors) please don’t hesitate to contact us!
TLDR: AB5 may significantly impact the way independent musicians hire each other but creative options may exist to reduce this impact – provided musicians are willing to jump through more hoops than usual in setting up gigs and create the paperwork to prove the hoops were jumped through.