March 30th, 2020
  1. Navigating CARES Act Unemployment Assistance
  2. PHILADELPHIA INQUIRER REPORTS
  3. MPS CHALLENGES THE TRUSTEES
  4. GLENDALE NOON CONCERT STREAM THIS WEDNESDAY

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician

==============================================

  1. Navigating CARES Act Unemployment Assistance

As you know, the entertainment industry is experiencing an unprecedented increase in unemployment as a result of the COVID-19 pandemic. Fortunately, the CARES Act passed by congress last week will provide $260 billion in enhanced and expanded unemployment insurance (UI) to thousands of entertainment workers throughout the country who are being furloughed, laid off, or finding themselves without work through no fault of their own.

There are a number of resources (listed below) that can help you navigate UI or the benefits provided by the CARES Act, but the first and foremost should be your state’s unemployment office website, as most of the COVID-19 economic relief funding will be distributed through state UI programs. 

Links to each state’s unemployment office website(s)

National Employment Law Project fact sheet on who qualifies for CARES Act aid


Helpful graphic provided by the AFL-CIO’s Department for Professional Employees on navigating COVID-19 UI

Please keep in mind that as the unemployment rate continues to increase, many state unemployment offices may be overwhelmed by the influx in applications. This makes it even more crucial that individuals start the process as early as possible and be persistent even if phone lines and online forms are malfunctioning. 

In solidarity, 

IATSE Communications

FROM MUSICIANS FOR PENSION SECURITY

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II. Philadelphia Inquirer Reports

Philadelphia Inquirer Reports on
AFM-EPF Class Action Settlement
While Trustees’ Risky Bets Continue to This Day   First and foremost, we at MPS hope that all of our subscribers and their loved ones are staying safe and healthy during this time of crisis. This is a difficult time to be thinking of anything other than the health and well being of our friends and family, but there continues to be news surrounding the Pension Fund and MPS will not waiver in our commitment to keep Plan Participants informed.

Here’s the latest:

As many of you know, Local 802 members Paul Livant and Andrew Snitzer filed a class action lawsuit against the AFM-EPF trustees in 2017. That lawsuit is in the process of being settled on financial terms MPS predicted shortly after the lawsuit was filed. For those interested in more details on the class action settlement right now, click here to see a feature article in today’s Philadelphia Inquirer. The proposed settlement also contains some interesting governance reforms, which we will be writing about in an upcoming post.
Trustees’ Risky Bets Continue to This Day 
In the meantime, we thought we would call to your attention certain disclosures that are made in the court documents filed in support of the settlement. Those court documents can be accessed here and here.
 
Plaintiff attorneys reviewed over 64,000 documents, took 24 depositions and hired multiple experts to assist them in the case.
 
Our main takeaway from the court papers is not that the trustees were reckless in their investment decisions. We already knew that, and the Federal Judge supervising the case has said so on multiple occasions.
 
The real news is that the overly risky investment strategy persists to this day and remains out of pattern with the way comparable multiemployer plans are run. (See our previous article here.)
 
Here are the critical conclusions in the court papers:
  Currently, AFM-EPF’s investment allocations are way out of pattern with other multiemployer pension plans with assets over $1 billion. AFM-EPF continues to bet heavily on foreign stocks (16% of the portfolio compared to the average of 4.4% for other plans) and also has a heavy bet of 8.1% to emerging market stocks compared to the average of 6.3%. AFM-EPF also is currently betting heavily on private equity (22.9% of the portfolio compared to the median of other plans of 8.7%) and an allocation of 16.6% to hedge funds compared to the median of other plans of 5.9%. The trustees’ own full analysis of their current investment allocations, compared to the allocations of other multiemployer plans, can be found here. The trustees have no intention to alter these allocations. Their long-term target allocations are essentially the same as today’s allocation.   
That’s alarming.
 
Here are some other disclosures we found in the court documents:
 
Beginning 2010, the trustees made a series of increasingly risky asset allocation investment bets, including outsized bets on Emerging Markets Equities (EMEs) and Private Equity while reducing its investment in domestic equities below 20%.
 
Given the bull market in U.S. stocks beginning in 2010, the reduction of the Plan’s U.S. equities investment resulted in huge opportunity losses for the Plan.
 
These asset allocations were way out of pattern with other large multiemployer plans.
 
By December 2011, Plan actuary Milliman was projecting that the Plan would likely not emerge from the red zone.  At their depositions, the primary reason the trustees gave for doubling and tripling down on their increasingly risky asset allocation bets was to attempt to “shoot for the fences” in the hope that outsized investment returns would improve the projections. 
 
It’s one thing to make mistakes in the past. It’s another to keep making them. The trustees’ overly risky asset allocation persists to this day and their refusal to change only provides further evidence that they are not up to the task of governing a large pension fund.

======================================  
III. MPS Challenges the Trustees

MPS Challenges the Trustees to Release Court Evidence   We understand the trustees’ distress about the mounting evidence of their continuing recklessness in their handling of the Plan’s investments. Perhaps that is why in their recent post about the class action settlement the trustees have thrown more heat than light on the subject matter at hand. We offer a simple suggestion: unseal the court record so we can all see the evidence for ourselves.
 
It’s easy to selectively quote from the court record when that record has been sealed.
 
Even without access to all the evidence in the case, the evidence that has emerged is disturbing to say the least: In their own sworn testimony, the trustees’ investment strategy was to “shoot for the fences.” The Federal Judge supervising the case, Valerie Caproni, called the trustees’ investment strategy “an exceedingly risky strategy” and stated that they invested in “very risky illiquid investments which just doesn’t seem like what a pension fund should be invested in.” The exceedingly risky investment strategy persists to this day even though it is completely out of alignment with other large multiemployer pension funds. (The trustees’ attempt to obfuscate this plain fact – shown in their own analysis – notwithstanding.)  
In the case, the trustees hired expert witnesses to bolster their defense. In their recent post, the trustees quote these experts’ conclusion that the trustees did a great job. If indeed these experts said that, let’s see those reports. But let’s also see the expert reports of the plaintiff experts who said the trustees did a terrible job. And let’s see the depositions of those experts so we can see how they held up under cross-examination.
 
The trustees say their investment returns over the past decade were excellent. But the plaintiff experts say the trustees’ reckless decisions caused the Plan grave financial harm. Again, let’s see the reports and we can all judge for ourselves.
 
What better way to get to the truth than to release these documents?
 
Otherwise, we will have to bear the trustees issuing self-serving, selectively quoted and at best half true statements all saying the same depressing thing: We did nothing wrong; anyone who criticizes us has impure motives; and we will never change.  
Please share on social media or forward to your colleagues.     www.musiciansforpensionsecurity.com

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IV. GLENDALE NOON CONCERT

GLENDALE NOON CONCERT STREAMING THIS WEDNESDAY

During the Covid-19 “Safer at Home” period in Los Angeles County,

Glendale Noon Concerts will bring our programs to you

via streaming on Facebook Live and Youtube:

The APRIL 1, 2020 program can be viewed at this link

beginning at 12:10 pm PST: 

Violist-Composer Jonah Sirota & Oboist Regina Brady will perform

 Benjamin Britten, J.S. Bach, and Jonah Sirota (a premiere!)

http://glendalenoonconcerts.blogspot.com/2020/03/on-facebook-live-stream-glendale-noon.html

The concert will also be available for viewing at Jonah Sirota’s Youtube Channel:

https://www.youtube.com/channel/UCyiKPxIQ8EaZHBQd2pDC_jA/

RELAX DURING YOUR LUNCH HOUR WITH LIVE MUSIC

Facebook LIVE stream: GLENDALE NOON CONCERTS

Every FIRST & THIRD WEDNESDAY at 12:10-12:40 pm

Presented by Glendale City Church

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Until Next Time, be safe

The COMMITTEE

I. 26.85 Million Settlement against AFM II. ANOTHER INCOME DRAIN FOR THE AFM. III. COMMENTS

March 28th, 2020

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


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I. 26.85 Million Settlement Against AFM for Gross Trustee Mistakes

[Similar to Trump, and as expected, trustees did not acknowledge they did anything wrong.]

The musicians pension lost big time on risky bets; then a Cheltenham-born saxophonist led a suit that won a $27 million settlement

Who pays when the people who oversee retirement plans bet on risky investments and end up losing big time?

Thursday’s settlement deal in a case brought by a onetime Philadelphia area saxophonist against a $2 billion musicians’ pension fund shows that the trustees who ratify advisers’ and outside managers’ investment picks can be held responsible for their mistakes.

Management and labor trustees who oversaw the American Federation of Musicians and Employers’ Pension Plan for 50,000 working and retired entertainers will have to pay the fund $26.85 million — minus up to $10 million in legal costs– to settle a civil complaint that they gambled tens of millions away on poorly performing private equity and foreign investments. They did all that while avoiding U.S. stocks even as their value soared in the early and middle 2010s.

That’s according to the agreement between lawyers for trustees for the joint plan, co-managed by the American Federation of Musicians labor union, a group of employers including Time-Warner, Disney and Broadway theater owners, and the musicians who brought the suit, including Andy Snitzer, a Cheltenham High graduate known for his work with Paul Simon, Sting, and the Rolling Stones.

Pending approval from a federal judge in New York, the money will be paid by trustees’ board insurance — which, though adequate in this case, is rarely called on to cover claims this expensive, said the musicians’ lawyers Steven A. Schwartz and Robert J. Kriner Jr. of Haverford-based Chimicles Schwartz Kriner & Donaldson-Smith.

Lawyers for the industry trustees, at the big New York corporate law defense firm Proskauer Rose, confirmed the settlement, which avoids “a needless and disruptive court battle” but does not result in trustees acknowledging they did anything wrong, according to a statement by James Chase, for the trustees.

“We have always taken our fiduciary responsibility seriously and acted prudently in the best interests of all Plan participants,” he added, speaking for the trustees. He noted that the trustees took other steps to cope with the funding deficit, including sharp cuts to benefits and early retirements, and boosted employer contributions, which rose from $54 million in 2009 to $76 million last year.

Besides paying cash, Chase noted the plan has agreed to reforms. Those include the appointment of veteran pension lawyer Andrew Irving as Neutral Independent Fiduciary Trustee for the musicians’ plan, which Schwartz said would make it less likely that the trustees will make high-risk investments.

The pension could certainly use additional cash. It had $1.8 billion in assets and $3 billion in liabilities as of early 2019, making it about 60 percent funded. It has only 21,000 working members paying in, compared with 15,000 retirees or survivors who are collecting and 14,000 others who no longer work but are eligible to collect.

What went wrong? The plan “got clobbered” in the stock market collapse of 2008. The trustees realized that, with a high proportion of retirees to paying members and fewer musicians making a living in the digital era, “the pension plan would run out of money” in 30 to 40 years, said Schwartz, the musicians’ lawyer.

What to do? By 2010, the U.S. stock market had fallen by nearly half from its pre-mortgage-crisis high. Plan leaders — including union heads elected by members, as well as employer representatives (the Philadelphia Orchestra was part of the plan before its 2011 bankruptcy) — should have broadcast the fund’s dim future and pushed for more pension contributions or reduced benefits.

But instead of braving those unpopular steps, trustees “made a decision: ‘Let’s gamble our way out of this,’” said Schwartz.

Among other steps, they doubled investments in two categories — “emerging” stock markets in developing economies , and private equity, typically buyouts of troubled U.S. companies. Those bets came to comprise 9 percent of the fund, and reduced investment in U.S. stocks, which were beginning their longest sustained price increase since World War II.

Over the next year, “emerging markets,” instead of rising, fell so sharply that market wags called them “submerging markets.” Many private investments also floundered.

That didn’t scare the board. “They doubled down,” said Schwartz, boosting emerging markets to 11 percent and private equity to 15 percent — totaling more than a quarter of the fund, from less than 5 percent two years earlier. At the same time, they continued to reduce U.S. stocks to around 20 percent at a time when the Philadelphia city pension system and many other large plans were closer to 40 percent.

U.S. stocks continued to beat the private and foreign investments that the trustees favored. No matter: In 2015 the board approved boosting emerging markets yet again, to 15% of the fund, and private equity to 18 percent — totaling one-third of plan assets.

Many of those investments proved a drag on plan returns. They reduced profits when other long term investors, including the Montgomery County pension fund, were switching to Vanguard Group-style index funds, which, they noted, tended to do as well as or better than professional stock-pickers, at lower fees.

According to the complaint, the fund didn’t make clear enough to the members that it was in trouble, as required under the federal ERISA law. “It’s easy to play ‘hide the ball’ in reports to pension plan participants,” said lawyer Kriner. The trustees’ lawyers said their clients complied with the law.

Growing worries about the pension plan and the prospect that benefits might have to be cut led to the formation of a dissident union group, Musicians for Pension Security. In 2018, Tino Gagliardi, a pension trustee, and career trumpeter, was defeated in his bid for re-election as president of musicians’ Local 802 in New York. (He remains on the pension board.)

Will the fat legal settlement clear the way for other pension complaints against trustees? “I bet, when you see some of these pension plans tanking and losing value in the future, if you look at their prior disclosures, you’ll see similar problems,” said Kriner.

Still, the musicians’ case has unusual features, said Schwartz. “No other plan took quite this kind of allocation plan,” he said. The trustees had effectively “pulled the goalie,” he said, referring to the hockey move where the losing team replaces its goalie for an attacker in hopes of coming from behind — but risks losing more decisively.

From January 2010 – November 2017 the Plan had average annual returns of about 7.56%, according to the plaintiffs; Vanguard’s Index Balanced Fund returned 9.79% in that period, a significant difference underlining the shortfall from the trustees’ unusual, aggressive approach, said Schwartz.

“The message here is, if you are going to take out-of-the-box risks as a pension plan trustee, you better disclose that you are doing that, and make very sure about understanding, not just the potential upside of the risk, but also the downside.”

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II. ANOTHER INCOME DRAIN FOR THE AFM

For years, the AFM was charging $50 per musician for foreign orchestras who wanted to tour in the US. Some years ago, those fees were raised to $250 per player. Apparently the AFM has become quite dependent on these fees.

With the Covid-19 Pandemic, that income has vanished and it was reported by a New York member that the AFM might wind up having trouble paying their Time Square rent if it lasts more than a few months.

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III. COMMENTS

I heard this idea floated by a few people and it’s worth repeating here:

With work now disappearing at a rate (I’m in NYC and never seen it so bad) never seen before because of the Corona Virus, we all need to write the Film Musicians Secondary Markets Fund and DEMAND they release our residuals payments NOW rather than wait til July 1st.

please email: Kim Roberts at that office at

[email protected]

and cc your local president esp NY and LA

feel free to share and good luck to all out there

————————————————————–

We are a quartet and sometimes work as a string trio. We cannot pull extra money out of wedding clients to pay for the associated taxes for AB5. We will have to stop working if this law persists.

—————————————————–

Thank you for taking the time to post this Brian! If you haven’t already done so, please consider posting this (in it’s entirety) on all of the AB5 Facebook groups such as California Independent Music Professionals United, Freelancers Against AB5, etc. You are in a unique position to effectively illustrate how many different freelance positions are filled by both union and nonunion INDEPENDENT CONTRACTORS. AB5 will destroy these peoples’ livelihoods.

Thank you for posting!

———————————————————-

It really is all hands on deck to get this earnings killer repealed! It doesn’t matter your political bent if your government is responsible for you not being able to make a legitimate living. AB5 is an equal opportunity destroyer.

Until Next Time, be safe,

THE COMMITTEE

CARROTS AND STICKS / COMMENTS

February 14th, 2020
  1. CARROTS AND STICKS
  2. COMMENTS

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


================================================

  1. AB5 Carrots and Sticks 

Hello All,


The author of AB5, California’s new gig-work law, said Thursday that she’ll seek amendments that remove some restrictions on freelance journalists and photographers, and is eyeing further changes for musicians, small businesses and others, as well as an assistance fund to help small nonprofit arts groups comply.

Gonzalez said she’s calling for $20 million in the state budget to supply grants to small community nonprofit arts organizations “that make a good-faith effort to comply” with the new law. Many small theater, dance and music companies have said they operate on shoestring budgets and simply could not afford to hire all their performers and backstage crews as employees.

————-

In a decision issued on Monday, (2/10/20) Judge Dolly Gee of the Central Court of California wrote that that the court “cannot second guess the Legislature’s choice to enact a law that seeks to uplift the conditions of the majority of non-exempt low-income workers rather than preserve the status quo for the smaller subset of workers who enjoy independent contractor status,” adding that “the balance of equities and the public interest weight in favor of permitting the State to enforce this legislation.”

————-

Comment

The above does not change the fact that AB5 is the government telling citizens just under what terms they will be allowed to earn a living.

Gavin Newsom has included 20 million dollars in the budget for enforcement of AB5. Lorena Gonzalez now wants to add another 20 million to entice compliance. Lots of taxpayer dollars going toward a deeply flawed law. 

The ability to earn a legitimate living under one’s own terms should be protected as a fundamental civil right. Too bad Judge Dolly Gee doesn’t agree.

—————————–

2. COMMENTS

As supervising manager and/or conductor of Opera San Luis Obispo and the Lompoc Pops Orchestra, and, as Principal Conductor for State Street Ballet Santa Barbara and Civic Ballet San Luis Obispo, and, as Principal Guest Conductor of several other entities, every year, I am responsible for the hiring of more than 400 instrumental musicians, 200 choral singers, 60 vocal soloist positions, 40 dancer roles, and lastly, 40 non-performing roles; such as directors, choreographers, stage managers, costume designers, stage assistants, costume assistants, assistant conductors, assistant directors, etc.

ALL OF THESE POSITIONS ARE INDEPENDENT CONTRACTORS!!! They take my jobs then move on to the next. Approximately 9% of those jobs are filled by union instrumental musicians – ALL OTHER POSITIONS are held by non-union member HUMAN BEINGS!

This information illustrates several important facts:

1. Union musicians take non-union work all the time.
2. The vast majority of work in classical performing non-profit world is produced by non-union people.
3. Union member musicians MUST take non-union work to survive.

Local 47 has never spoken for musicians. Local 47 is 100% ONLY concerned about collecting dues to fill the pockets of its executive leadership. AB5 will be overthrown and this entire negative experience suffered by artists throughout California will be remembered, recanted, and used to inspire individual union cessation, encouragement for companies to cut union ties, and finally to inform board members, patrons, and donors all around California how critical it is that they understand how utterly useless musical unionism is in today’s classical performing arts business model. AB5 will forever justify how UNNECESSARY it’s is for an orchestra to consider union membership or ANY collective bargaining negotiation.

—————-

Thank you for taking the time to post this! If you haven’t already done so, please consider posting this (in it’s entirety) on all of the AB5 Facebook groups such as California Independent Music Professionals United, Freelancers Against AB5, etc. You are in a unique position to effectively illustrate how many different freelance positions are filled by both union and nonunion INDEPENDENT CONTRACTORS. AB5 will destroy these peoples’ livelihoods.

—————-

It really is all hands on deck to get this earnings killer repealed! It doesn’t matter your political bent if your government is responsible for you not being able to make a legitimate living. AB5 is an equal opportunity destroyer.

UNTIL NEXT TIME

The Committee

AGENDA / NATIONAL AB5? / FREELANCER / COMMENTS / COLLEAGUES MESSAGE

February 10th, 2020
  1. HIDDEN AGENDA
  2. NATIONAL VERSION OF AB5 (HR2747)
  3. FREELANCER MESSAGE
  4. MEMBER COMMENTS
  5. COLLEAGUES MESSAGE

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician

===================================================

1. HIDDEN AGENDA

AB-5’s hidden agenda.

AB-5, CMG News, Industry Updates

As we all scramble to understand how AB-5 works and what it will mean to our own livelihood, it is important to understand the hidden agenda behind the law.  It is a well-planned and heavily financed campaign to drive people back to labor unions. The AFL-CIO and individual labor unions like the American Federation of Musicians (AFM) all want “a sea change” in union participation across the board.  While this may be the best option for janitors, construction workers, taxi drivers, etc., it is NOT the best option for independent music professionals. The unions have deep pockets, a deep bench, and they feel that if some nonunion musicians, contractors, orchestras, or opera companies go out of business because of AB-5, that is acceptable collateral damage to them.  It strengthens the unions’ stance in the long run. 

Music professionals successfully figured out long ago how to make a great living as Independent Contractors.  They set their own schedules, determined their own rates, paid taxes, bought their own health insurance, etc.   This business model works for us! We were never part of the disenfranchised, misclassified worker pool. If we didn’t like the pay scale for a particular project, we simply turned it down and moved on to the next project. No harm, no foul.  In light of the January 29, 2020 article in the LA Times, “How AB5 has instilled fear and confusion in California’s arts community“,  it is important to point out that independent music professionals have negotiated pay rates that far exceed the minimum wage, and often exceed AFM’s rates.  We worked hard for this!  

Supporters of AB5 suggest that misclassified workers account for billions of dollars of unpaid tax revenue and place an unacceptable drain on social services such as healthcare (Lorena Gonzalez mentioned this in her first interview with KUSI.).  In the case of music professionals, this is simply not true. We carry our own health insurance and pay self-employment taxes in lieu of payroll taxes. Self-employment taxes combine the employee and employer portions of the Social Security and Medicare payroll taxes that employers withhold from their employees’ pay.  

The bottom line is AB-5 does not work for music professionals.  Further, compliance with a law that does not fit the industry is ludicrous.  An exemption or repeal is not likely to happen quickly as both solutions will need to go through the legislative process and calendar.  We need to commit to staying the course. We urge you to continue to write and call your state legislators! They keep track of the number of letters and calls in order to gauge the importance/impact of an issue, so be sure to call them daily!  

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2. HR2747 – NATIONAL VERSION OF AB5

ALERT: Please note that there is a Congressional bill HR2747 recently introduced that would impose AB5 on a national level!

If you thought you could just move out of California to escape this…?  Act now or forever look back on the day when you were in charge of your own life. 

The following was copied from the Internet…


Subject: ACTION NEEDED: Pass AB1928 to IMMEDIATELY Repeal AB5!

  Yesterday Asm. Kevin Kiley and Asm. Melissa Melendez circulated AB1928, an urgency bill that would immediately repeal AB5, to their colleagues in the Capitol and asked them to co-sponsor this vital legislation. It’s time for all of us to TAKE ACTION. Please contact your Assemblymember and Senator by phone and email and ask them to co-sponsor AB1928 and pressure leadership to bring it to a vote as soon as possible. Here’s a script if you need it: “Hello, my name is ____________________ and I am a constituent. I’m calling to tell Mr/Mrs Assemblyman Whoever that AB5 is hurting me and my ability to earn a living and pay taxes. As it stands now, AB5 is unworkable and unfixable. I hope Assemblyman Whoever will co-sponsor AB1928, a full repeal, and work to bring it to a vote ASAP so I can get back to work. Thank you. Have a wonderful day.” FIND MY CA REP Also, HR 2474, the federal version of AB5, is up for a floor vote in the House of Representatives. It’s crucial that you CALL YOUR REPRESENTATIVE and ask them to vote NO. Here’s a script: “Hello, my name is ____________________ and I am a constituent. I’m calling to tell Mr/Ms Congressperson Whoever that I hope they will vote NO on HR 2474. It is a copy of California’s AB5, which is hurting me and my ability to earn a living and pay taxes. It’s destroying the arts, independent journalism, youth sports, and after-school tutoring programs. HR 2474 will take a failed policy nationwide and hurt millions of Americans. Thank you. Have a wonderful day.” If you feel comfortable telling your story before Congress, you can even mention that you’d be willing to testify in Congressional hearings on the matter. To find your Congressmember’s contact information, click here. FIND MY CONGRESSPERSON And, please SHARE this information far and wide. You can forward this email or post a link to it on your social media accounts. 

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3. MESSAGE FROM A FULL TIME FREELANCER

The following was sent to ABC7, KTLA and Fox11. So far there has been no response…the media silence on this issue is deafening. 

Dear Media Entity, 

AB5 is having a devastating effect on the ability of the freelance/independent contractor to earn a living.  Literally hundreds of thousands of freelancers are finding themselves scrambling to cover the loss of personal and economic liberty. 

It has become apparent that this bill promoted as ‘worker protection’ is really just a power grab by unions dangling the prospect of more state revenue in the faces of our elected representatives.  The California legislature has been commandeered by the unions.  

This law forces freelancers into an employer-employee relationship making that relationship ripe for union organizing.  The unions want no competition in the marketplace. 

The ability to earn an honest living under one’s own terms should be a fundamental civil right. 

The media has remained aloof as this assault on the freelance worker plays out. The law which took effect on January 1, 2020 is having a real and palpable impact on the economic and social fabric of California. 

I am asking that the media cover this important issue…or maybe you can’t.

Full Time Freelancer
Los Angeles

=================================================

4. MEMBER COMMENTS

These are the words of the President of Local 47.

President Acosta made it very clear…”AB5 will not be repealed”…”..we are looking out for the music ecosystem”…”the musicians union sets the standard for non-union workers”…”we want to organize musicians”…”we might have openness to amendments”… (Implicit in that last statement is that the unions are in control).

G. Lasley, Sec-Treas was sent to Sacramento on 2/3/20 to lobby in favor of AB5. 
The AFM is part of the AFL-CIO.  Their shield will be they had no choice… Sure…

———————–

AB5
Well, I just had two chamber performances canceled because the presenter does not want to change from a 1099. I completely understand. A COMPLETELY ridiculous law.
I am actually now moving some of my recording projects to Nashville. It will just be a lot more comfortable. Our union is living with contract language designed for the ’80s.
A friend of mine (string player) in London just finished recording his 8th film since January 1st. They could have ALL been here without residual payments.
Sad

———————–

By the time September comes around for a vote on any exemption for musicians…it will be too late. The landscape will have changed and the work will not be coming back.

———————–

I firmly believe that the unions (not just AFM) will be in control of which exemptions are allowed or rejected. AB5 was sponsored by unions. It was written by the unions, for the unions. The little guy isn’t being heard. The pessimist in me says he doesn’t even have a seat at the table. The optimist in me says “YET!”

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5. COLLEAGUES

As has already been pointed out by this blog and many others, the President / Board of Local 47 and the AFM are totally in the bag for AB5. Many groups, opera companies, orchestras and other entities (musical or not) have had to close or leave the state.

Now they’re trying to take the law nationwide in the hopes of forcing everyone to rejoin or join a union. The committee fully supports honest unions and its members have had decades of membership in such organizations, but the Los Angeles Local 47 and the AFM in general has proven again and again that they are not worthy of your support, unless you’re “part of the club”. In LA that means part of the 1 percent or so of membership who get steady union work. The rest? They just want your money and to have you sit down and shut up as the 1 percent do most or all of the recording work.

Don’t kid yourself, virtually all musicians do non-union work. Musicians at the highest levels of our industry do non-union work. We all know who they are, but we choose not to out them. After all, if they’re “in the club” they’ll get a pass anyway and the person who reported them will be the “bad guy”. Hypocrisy at the highest level.

In 1983, Local 47 in Los Angeles had over 13,000 members. Today? 2020? About 6,200 members. The drastic loss in membership is not because of politics, or because people have been undermining the union. The union has brought it upon itself. It is because more and more people have realized the union does nothing for them but take their money, then try to fine them if they work to pay their bills with the only work available to them… nonunion work.

So now the biggest labor entities are joining together for their own version of  “Animal Farm.”

Don’t let them do it.

Fight AB5 and the nationwide version HR2747!

Call your representatives. Fight for our right to work on our own terms.

Until next time,

The Committee

NEWSOM / 1850 / COMMENT

January 28th, 2020

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NEWSOM / BILL 1850 and LOCAL 47 / COMMENT

…Absolutely guaranteed anonymity – Former Musician’s Union officer

…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring
musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic
musician

…Reporting issues the Musicians Union doesn’t dare to mention – National
touring musician

1.     CONTACT GOV. NEWSOM

Now is the time to contact Gov. Newsom and your State Assembly and
State Senate representatives to support immediate repeal of AB 5 via AB-1928
introduced by Assembly Member Kevin Kiley.  A rally is taking place at the
State Capitol tomorrow.

Freelance workers cannot wait for AB-1850 (a placeholder bill currently without
language and a timeline) introduced by Assembly Member Lorena Gonzalez as a
“clean-up” bill for her AB 5. We cannot place our lives on hold and
hope for a possible vote in September that will end this nightmare!

———————————————–


2. BILL 1850

Dear Editor,

State Assembly Member Lorena Gonzales has thrown a bone to our
industry…maybe.  An Amendment Bill AB-1850 (with no timeline and no
actual language) is being offered for consideration.

Local 47 AFM President John Acosta (a proponent of this earnings killer for the
vast majority of union members who do not solely earn a living in their chosen
profession reflected on W2s) told his Local 47 Board of Directors… He had
received a call from IASTE and was asked what plans the Local might have
…”openness to amendments”…as “they are also having issues
with their membership.” The Executive Board went into private (Executive
Session) for over an hour on this issue.

Is it going to be up to unions just what exemptions IF ANY will be allowed?!

Local 47 Member

———————————————–


3. Member Comment

Says bucketloads of what our union is doing to protect
working musicians!! This union has been going backwards for a long time now.
Very sad, especially for the young freelancers out there.

—————————————–

Until next time,

THE COMMITTEE

AB5 WORK LOSS – Comments

January 18th, 2020

AB5 WORK LOSS – COMMENTS

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


Dear Editor, 

Just received a call from an enraged fellow musician…an opera that was scheduled for all next week has been cancelled due to AB5!  Here is a musician that relies on this type of community gig to pay the bills!  How will this musician cover this loss? So sad and will not be the only one….so many other persons in other fields are already feeling the pain of jobs lost and a mad scramble to get anything to keep money coming in.  As one person wrote re: Repeal AB5 ….in answer to Assembly Member Lorena Gonzalez’s (who introduced the bill) comment, “People shouldn’t need to have two or three jobs…” “Thanks, now I have no jobs!”

Dark Dates will go Black Market and musicians will be relegated to the same status as the day laborers at Home Depot…illegal and working for cash! Sickening!

47 Member

————————-

It is pathetic that the musician union that suppose to defend the interest of musician is doing nothing to oppose this law that the only thing it will do is damage the entire music business.

————————-

Many musicians woke up on January 1, 2020 without a clue that their way of life was going to be in jeopardy. AB5 is a drastic game changer for people who are used to owning their own lives and livelihoods. This bill is a power grab by big labor and a money grab by an out of control legislature. Don’t whine…get busy and exercise your civic rights! Our government works best when it fears its voters!

————————-

This law is extremely harmful to the entire music community and will cause harmful consequences to the people working in this industry as well as for the general population who will be deprived of music because there just won’t ba any way to produce it any more. Venues will close, people will go broke with all the challenges that insures on the health of a human being.

I urge you to reconsider and amend this law to take our specific industry into consideration and leaving it out of this legislation.

————————-

We’ve also received word from another member who writes text for a publishing company on the side. Turns out the company has decided to leave California, eliminating whatever work was done by folks here.

Nice going AB5 supporters. (You listening John?…. Ray?)

————————-

There was a recent interview with one of the legislators who had to hear complaints from constituents whose work has disappeared directly because of AB5.

Her Response? “They’re lying.”

With friends like these….

Till next time.

THE COMMITTEE

UPDATE ON AB5

January 15th, 2020

Freelancers Angry Over Assemblywoman Gonzalez’ False Claims About Benefits

“The terms of AB 5 are so murky that many companies are choosing to not work with anyone living in California.”

Newsom Budgets Millions to Hunt Down AB-5 Violators

By Michelle Mears, January 14, 2020 6:51 am

“Like the old Soviet Union you will be allowed to work only if government allows it—under their conditions, not yours.” ~Stephen Frank

Part ll of those hurt by AB 5.

Part l is here: Democrat Assemblywoman Gonzalez Says There Is No Data Proving Thousands of Freelancers Are Losing Work Due to AB-5

Assemblywoman Lorena Gonzalez (D-San Diego) and Governor Gavin Newsom (D)  are digging in as freelancers fight back against AB 5. On Friday, Jan. 10 Gonzalez appeared on KUSI in San Diego and made numerous false claims about workers in the gig economy not paying taxes or having benefits. The same day,  Gov. Gavin Newsom allocated $20-million to target and investigate contractors, not in compliance with the law that took effect New Year’s Day.

California is estimated to have nearly two million residents who choose to work as an independent contractor, according to the  2018 U.S. Bureau of Labor Statistics Economic Release. Two million however is a conservative estimate because the report did not include the number of individuals who supplement their income with online platforms.

Gonzalez has angered not just thousands but possibly millions of voters. Self-proclaimed hard core Democrats have said this is the straw that broke the camels back.

A group of contractors met with Assemblyman David Chui (D) in San Francisco on Monday. Chui told contractor Emily Price and others that a repeal of AB-5 is unlikely but he is keeping a binder of people’s stories on how the bill is affecting them.

Meanwhile, rally’s are being planned up and down the state, freelancers and independent contractors are writing letters, and making phone calls to state representatives. Gonzalez however remains firm AB 5 and says the new law is best for the state.

AB 5 stems from the  The Dynamex Operations West, Inc. v. Superior Court decision by the California Supreme Court in April 2018 that overturned three decades of California employment law that allowed individuals to work as independent contractors.

According to Imindependent.com, “This decision could upend how millions of Californians earn a living and nearly every industry due to its new restrictive ABC test. The ABC test is the first time in U.S. history that such a test has been imposed by a court, without legislative approval, with three independently disqualifying factors.“

Newsom who is pro-union like Gonzalez, said he will use part of the $20 million for training staff to allocate the ABC test and to allocate funding to investigate and hold hearings on compliance. A reporter from California Political Review compared Newsom’s tactics to the those of a communist regime.

“Like the old Soviet Union you will be allowed to work only if government allows it—under their conditions, not yours,” wrote Stephen Frank.

The terms of AB 5 are so murky that many companies are choosing to not work with anyone living in California.

AB5 / REDUCED BENEFITS / STREAMING / COMMENT

January 8th, 2020
  1. AB5 UPDATE, LOCAL 47
  2. MUSICIANS’ UNION TO TREASURY: LET US REDUCE BENEFITS IN 2021.
  3. UNION FAILS TO WIN STREAMING RESIDUALS
  4. MEMBER COMMENT

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


Editor’s Comment: As anyone who’s followed the AB5 story knows by now, The AFM and Local 47 made no request to exempt freelance musicians from AB5. In fact, they support it. Word is they support it because they think it’ll force those who’ve gone Fi-Core or are non-union to re-join or join the AFM. That’s not going to happen, and as you will read below, the AFM and Local’s conduct is coming home to roost in a big way, affecting us all.

READ ON…….

====================================================

  1. AB5 Update LOCAL 47

Originally posted December 31, 2019 by AFM Local 47 President John Acosta [johncoz2022]:

Many of you may now have heard of California legislation AB5 which was created to ensure that most workers in California are classified as employees, not independent contractors. Introduced by California Assemblymember Lorena Gonzalez, AB5 was created to incorporate the Dynamex ruling, which was a California Supreme Court decision from last year, into state law. That decision limited an employer’s ability to classify certain types of workers as independent contractors. Some members have asked if this new law will negatively impact the practice of using loan out companies as a way of ensuring fair tax treatment for our members. It is our view that AB5 will have no impact on the use of loan outs. AFM Local 47 along with DGA, WGA, IATSE and SAG-AFTRA have done exhaustive due diligence with counsel to come to this conclusion.

Another hot topic with AB5 is the so-called “end of the music business as we know it” tagline that some organizations are touting. Nothing could be farther from the truth! While AFM agreements clearly establish that musicians are employees and not independent contractors, there were many instances where employers attempted to misclassify musicians. Leading up to the bill’s adoption we worked closely with SAG-AFTRA to ensure that musicians and singers were properly covered under this new legislation. With the backing of the California Labor Federation, our Secretary/Treasurer Gary Lasley along with AFM reps all over California reached out to elected officials to seek continued support for this important legislation.  

There are current talks underway with the California legislature and employer partners to clarify AB 5’s impact where necessary, but AFM Local 47 will always do what is in the best interest of its members first and foremost.

Whether it is a community orchestra, small theater, or a live performance, California law requires employers who hire musicians for performances, which meet the AB5 threshold, to pay the appropriate taxes and make the necessary withholdings. This way, musicians can apply for disability, unemployment, Social Security or workers’ comp when necessary and applicable.

This entry was posted in All News, Legislative News (Deadline.com) and tagged AB 5, AB5 on January 2, 2020.

  1. Comment on the site for this story:

January 4, 2020 at 10:12 am

Horrible stupid bill and shame on the “union” for backing it!!!! The union represents less than 5% of the music industry but they don’t give a crap about anyone else. I’m going to-core

  • Additional Local 47 member comment:

Really?  Someone who has been a desk jockey for nearly two decades has the balls to tell the rank-and-file the Union is working for us?!!

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2. Musicians Union’s Pension Plan Asks Treasury Department For Permission To Reduce Benefits In 2021

By David Robb (Deadline.com)

VIEW ALL

January 7, 2020 9:00am

Trustees of the American Federation of Musicians’ troubled Pension Plan have asked the U.S. Treasury Department for permission to reduce thousands of musicians’ monthly pension benefits in order to keep the “critical and declining” Fund from becoming insolvent within the next 20 years.

The Plan is in trouble because as of March, its $3 billion in liabilities exceeded its $1.8 billion in assets, meaning that the Plan is underfunded by about $1.2 billion. Ironically, many musicians facing pension cuts were once employed on films executive produced by Treasury Secretary Steven Mnuchin, who was a prolific movie producer and investor before joining President Donald Trump’s Cabinet in February 2017.

See the trustees’ FAQ here.

U.S. Department of the Treasury

The trusties, who determined that the Plan had entered “critical and declining status” last April, told their participants today that “This means that the Plan is projected to run out of money to pay benefits – or become ‘insolvent’ – within 20 years under the Multiemployer Pension Reform Act (MPRA), a law enacted in December 2014. Under MPRA, if a fund enters critical and declining status, the trustees can apply to the U.S. Department of the Treasury for approval to reduce participants’ benefits by an amount sufficient to avoid insolvency.

“Although reducing earned benefits will be painful, the trustees have submitted an application to do so because the alternative of running out of money would leave participants with a much greater benefit reduction in the future. The trustees have no other viable way to save the Plan for the long term – that is to say, realistic investment returns and contribution increases will not avoid insolvency.”

According to the trustees, nearly half the Plan’s 50,782 participants are expected to see some reduction of benefits beginning early next year, and some will be harder hit than others. Pensioners who are 80 years old and older, for instance, won’t see their pensions reduced at all, nor will those who receive disability pensions. Those who receive relatively small pensions won’t be affected either, or will be affected the least. The reductions will fall mostly on younger retirees – current and future – and on those who receive the largest pensions.

The trustees estimate that 22,753 participants (44.8%) are expected to see reductions of 20% or less, with 930 (1.8%) seeing reductions of 20-40%. They estimate that 27,099 participants (53.4%) won’t see any reductions at all.

If approved by Treasury and by the participants, the benefit reductions, which will kick on Jan. 1, 2021, will affect a broad mix of musicians who work or have worked in the film and television industry under the union’s contract with management’s AMPTP; on sound recordings; at symphonies and operas; on Broadway, and in regional and traveling musical productions.

20,000 Musicians To Receive “Painful” Pension Cuts To Keep Benefit Fund Solvent

The decision to apply to the Treasury Dept. for benefit reductions “was painful, but it is essential that we do everything possible to put the Plan on stronger financial footing,” the trustees told participants today in personalized statements telling each participant how much, if any, their benefits will need to be reduced to keep the Plan solvent.

“Doing nothing also results in benefit reductions,” they said. “This isn’t a choice between reducing benefits and not reducing benefits. It is a choice between reducing benefits now, or reducing benefits later, but to a greater extent. No one wants to reduce benefits. But, if we don’t reduce benefits now, at some point in the future, the Plan won’t have enough money to pay benefits.”

The Pension Benefit Guaranty Corporation (PBGC), which was created by an act of Congress in 1974, is supposed to protect multiemployer pension funds like the AFM’s, but facing a record-breaking deficit of more than $65 billion itself, has said that it could run out of money by 2025.

“The PBGC’s multiemployer program is projected to become insolvent by 2025,” the trustees noted. “If that happens, then there will be little to no PBGC guarantee to fall back on. In this scenario, if the Plan became insolvent, then participants’ benefits would be reduced dramatically. That’s why it’s so important for us to ensure that the Plan avoids insolvency. While there is no doubt that benefit reductions for participants will be difficult, they cannot be worse than the catastrophic reductions that would take place for participants if the Plan and the PBGC both ran out of money.”

And even though the PBGC’s own financial problems make it an unreliable guarantor – with more than 100 multiemployer pension plans across the country currently facing insolvency – they’re required to pay into it, regardless of their funding status. For 2020, multiemployer plan have to pay $30 to the PBGC per plan participant – nearly quadrupling from $8 per plan participant in 2007. For the AFM Plan, that means that its required PBGC premiums increased from approximately $400,000 a year in 2007 to $1,450,000 last year “due to the enormous increases in the per-participant annual premium,” the trustees said.

Musicians Union Failed To Win Streaming Residuals – Its Main Goal In Film & TV Contract Negotiations

“Some legislative proposals in Congress have included significant increases to PBGC premiums, including a November 2019 proposal by Senators Charles Grassley and Lamar Alexander,” the trustees said. “If passed, such increases would drain the assets of troubled plans like the AFM Plan even faster, thereby hastening possible insolvency. The trustees oppose these increases.”

“We have a real opportunity to save the Plan,” the trustees said. “There are a number of other financially troubled plans that are too far gone to even apply” to the Treasury Dept. for benefit reductions. “We believe that our proposed reduction will reposition the Plan to be around to pay benefits to current and future retirees for decades to come.”

But that will require the Plan’s participants to approve the reductions if Treasury gives the okay. And if everything goes according to plan, Treasury will post the AFM’s application on its website on Jan. 29, and will have completed its review of the application by Aug. 11, approving or denying it. If the application is approved, the Treasury Dept. will mail ballots to all participants and beneficiaries of deceased participants within 30 days of approval. Voters will then have at least three weeks to cast ballots, with those who don’t vote being counted as “yes” votes to reduce benefits. Treasury must then announce the outcome of the vote within seven days of the voting deadline, and for a plan of benefit reductions to be voted down, a majority of eligible voters must vote against it, meaning that a low-voter turnout will guarantee approval.

It’s also possible that Treasury will identify changes that need to be made in the application before it can be approved. In that case, the Plan may withdraw the application and resubmit it, which would restart the timeline. This has occurred for many other pension funds that ultimately have had their applications approved. “To reduce the likelihood of this scenario,” the trustees said, “we have had numerous communications with Treasury about its expectations.”

“Nobody wants to see benefits reduced,” the trustees stressed. “But unless Congress steps in with a legislative solution, something it has so far refused to do, the options boil down to reduced benefits now or running out of money and having a much higher reduction in benefits later. We understand that participants don’t want to hear that we need to take away a portion of the pension they have been relying on, but that’s the awful choice we face.”

COMMENT ATTACHED TO THE ARTICLE

“Good morning, thanks for calling the AF of M”

Yeah hi, this is runaway scoring calling. I’m here in Seattle, tomorrow I’ll be in London at Abbey Road with all your musicians. We’re scoring all your films non union now. I think you might have a long term problem coming on your hands and I want to give you the heads up”

“I’m sorry, we’re busy at the moment right now with pressing matters”…click.

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3.Musicians Union Failed To Win Streaming Residuals – Its Main Goal In Film & TV Contract Negotiations

The American Federation of Musicians failed to achieve its main goal in its recently concluded negotiations for a new film and TV contract – winning residuals for musicians’ work on episodic TV shows made for streaming services. Even so, the 80,000-member union says it will keep fighting for those payments when the contract comes up for renewal in two years.

The negotiations with management’s AMPTP concluded with a tentative agreement on Friday, but terms of the deal weren’t released until today.

The new two-year contract, which still must be ratified by the union’s members, “includes many substantive improvements and no significant concessions,” the AFM said, “yet still does not include residuals for work on films and episodic TV shows made for streaming.”

The union added: “For the first time in history, musicians will receive screen credits when they perform on theatrical and streamed film scores. Also for the first time, the proposed deal establishes fair wages and conditions for high-budget shows made for streaming platforms.”

Other economic improvements include an increase in musician residual payments for shows rented and purchased online, as well as 3%-a-year wage increases. According to the union, “Musicians successfully resisted attempts by the studios to impose unjustified concessions, including those that would allow studios to score more TV shows and films abroad.”

The AFM added: “While these unprecedented achievements are significant wins for musicians, their biggest demand — residuals for work in new media — was not included in the final offer by the Alliance of Motion Picture and Television Producers. While the studios continue to refuse industry-standard residuals for new media projects, musicians have made it clear that this is still a priority and that they will continue to fight for this basic standard.”

AFM president Ray Hair called the deal a temporary “truce” in its ongoing battle for streaming residuals:

“The campaign for fairness in our contract with the studios, particularly on the issue of compensation and residuals for content made for streaming, has energized not only our film and television musicians in Los Angeles, New York and Nashville, but musicians throughout the country. The tentative agreement, if ratified, will be viewed as a short-term truce. While we’ve made meaningful progress on how we are recognized and treated when we perform scoring sessions for theatrical and long form new media productions, our musicians’ concerted activity will continue as the backdrop to our ongoing efforts to obtain fair residual terms whenever we are engaged to score content made for streaming.”

===========================================

4. MEMBER COMMENT

Great blog! I agree with and support both articles by Ari and the one with the letter. However, I think the most compelling article is the one written by the current AFM member. I’ve spoken with many union members about AB5 and learned that many of them did NOT support this bill. Very little information was shared prior to September 18, 2019 when the bill was signed by Governor Newsom. Even after the law was signed, the majority of music professionals I spoke to knew nothing about the law. If the AFM was truly “representing” the voice of their members and the music community, they should have done a much better job at educating everyone about the impending bill BEFORE it was signed into law. Now we must spend our precious time and resources complying with the law while also fighting for an exemption. Great job AFM!

============================================

Until Next Time,

The Committee

THE AB5 EDITION

December 31st, 2019

HAPPY NEW YEAR FROM THE COMMITTEE!

THREE AB5 VIEWS

  1. THE INDEPENDENT MUSICIANS VIEW
  2. LOCAL 47 MEMBER VIEW
  3. ARI HERSTAND AB5 MEETING ARTICLE

[Firstly, what are the ABC rules?: a new test to determine whether a worker is an independent contractor or an employee.

A worker is an independent contractor ONLY if the company hiring the worker establishes the following:

  1. the worker is free from the control and direction of the hiring company “in connection with the performance of the work, both under the contract for the performance of the work and in fact”;
  2. “the worker performs work that is outside the usual course of the hiring company’s business”; and
  3. 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.]

Below are three views of AB5. Make sure to pay particular attention to the statistics in Ari Herstand’s article. They are quite eye opening.

=========================================

I. THE INDEPENDENT MUSICIANS VIEW

To the esteemed members of the California Assembly and Legislature:

AB5 will have a devastating and catastrophic impact on independent musicians, their livelihoods and the music industry in general in California. Musicians’ businesses operate in a substantially different way than many other types of industries, and the changes brought by AB5 are not sustainable with our business model.

Each year, a musician may be booked by numerous entities or individuals and may also contract numerous individuals. Musicians often wear different hats; as performers on their own and other musicians’ recordings and live performances, as session musicians, as instructors, as producers, as composers and songwriters, as bookers and as bandleaders.

For example, in a given week, a musician might:

-Perform on live gig under their own name and two in other bands.

-Teach eight private lessons.

-Produce three songs for a client, involving booking a studio and session musicians.

-Record their own songs with other musicians.

-Subcontract musicians and play at a wedding.

In just one week, the musician would be both employer and employee .numerous times over in the AB5 model. This is exponentially true over the course of a year. Using the Uber and Lyft model that precipitated AB5, imagine there are thousands of different rideshare companies. A driver might work for multiple companies for only a few hours a week or month. That same driver also owns a rideshare  Californiacompany that uses other drivers. This imagined scenario closely resembles musicians’ situations.

Most professional musicians in California do not have assistants, lawyers, agents or business managers. Most of us make a modest living in order to pursue their craft. The costs associated with AB5 would be crippling. Incorporating or becoming an LLC is prohibitively expensive, and payroll companies do not work with our business model. If one musician is contracted by another to perform on one song on a record, and the booking musician must go through a payroll company, they must pay fees for that one musician for the entire year. Multiplied by the amount of times one musician can contract other musicians throughout the year, the costs and logistics become overwhelming for an individual.

Most musicians in California are not celebrities. We are members of the working class. We have worked diligently to pursue our art, build up clients and nurture professional relationships so that we may continue to create and entertain. We work for and with each other on projects. There is no company or corporate structure. Our work is on a per-project basis and frequently the person booking us is a fellow musician. If a musician is contracted to play one song on an album, they recognize that there is no promise of future employment. They cannot claim unemployment against their colleague that booked them.

Being a professional musician is, by definition, a freelance occupation. The term “gig” was coined in the 1920’s by Jazz musicians. Musicians cannot stop freelancing and at “Blank Music Company” since it doesn’t exist. Music organizations that do offer secure, full-time employment and benefits, such as symphony orchestras, are blindingly difficult to get into. First-call union session musicians in Los Angeles can enjoy an excellent living and benefits, but the lines for those recording sessions are long and few musicians will ever make the bulk of their living this way. Most of us piece together our living from numerous opportunities throughout the year, which we welcome and want to do.

We are, frankly, terrified of AB5 as it allies to us. The ABC test is so strict and the fines are so high that many entities will simply stop using California musicians altogether. Clubs will switch to recorded music rather than use payroll companies, composers will use sampled instruments rather than live players and much of out business will simply move to Nashville, New York or Atlanta. The Los Angeles jazz scene has, in the last several years, surpassed that of New York in terms of creativity and visibility, but is not a money-making venture and is vulnerable in that aspect. Jazz clubs, with their limited resources, could become so over burdened that they may be forced to close, which would be a great loss to the state of California, both economically, artistically and in terms of its newfound reputation as a hub for creative music.

We are aware that exemptions for musicians were discussed and ultimately negated by the AFM, but the AFM represents only a fraction of musicians in California and does not speak for the majority of us. Most independent musicians were not aware of the existance of AB5 or how it could impact them until after it’s passing. And most are still not. We appreciate your efforts to go after billion-dollar conglomerates such as Uber and Lyft, but the reality is that independent musicians are much closer to the drivers economically. Many of the individuals in the professions that were granted exemptions – doctors, lawyers and architects – make many times over the salaries of average working musicians. Why not grant independent musicians, who need it even more, the same exemption?

We are proud to call ourselves independent California musicians. We want to continue as independent contractors so that we may continue to pursue our craft in the best possible way for us. We would be grateful for an exemption that recognizes the unique nature of our field and allows us to continue to make the best music we possibly can.

Sincerely

A group of independent professional California musicians seeking an AB5 exemption.

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II. A LOCAL 47 MEMBER’S VIEW

Dear Editor,

So the author of AB 5, Assemblywoman Lorena Gonzalez tweeted that “We were very disappointed the music industry and entertainment unions did not get to an agreement.”

The Officers and Executive Board of Local 47 know that support of AB 5 will disenfranchise the majority of the membership that makes their living as independent contractors.  The union sees this legislation as an opportunity. The Union is in the union business. AB 5 will allow the arm of state government to decimate and eliminate the union’s competition in Los Angeles when it comes to recording and production…or so they might hope. They just don’t want to be blamed.

Union support is often the way many of the politicians get elected. President Acosta has even opined that since the law will bring more revenue to the state, perhaps it will be time to ask the state for more money for the arts.

President John Acosta presents himself as representing 6200 members in Local 47 AFM.  However, the overwhelming majority of the Union’s efforts in Sacramento focus on tax credits for media recording that benefit only a small fraction of the membership known as the Recording Musicians of America, a once powerful and controlling players’ conference within the AFM. At last count RMALA = 457 members.

There might be quite a change in the perception of the Local if Sacramento and the LA FED knew that the Officers and the Board got elected with less than 365 votes. That is probably about the number of rank-and-file musicians that actually make a living solely under union contracts.

Local 47 Member

[EDITOR’S COMMENT: We believe the number of those making a full living solely off union work is far smaller than 365]

==============================================

III. ARI HERSTAND AB5 MEETING ARTICLE

I met with AB 5 Author Assemblywoman Gonzalez. Here’s How it Went.

12-18-2019

By Ari Herstand

Yesterday morning 5 musicians and I piled into my car at 7am (!!) and we made the excursion down to San Diego to Assemblywoman Lorena Gonzalez’s office to discuss the effects of California’s new law AB5 on the music community.

If you’ve been living under a rock the past couple weeks, read my piece: California’s Music Economy Is About To Crash

After my article finally got the conversation started about how AB5 will be catastrophic for the music industry in California, I was offered a meeting (via Tweet) by Assemblywoman Gonzalez – who wrote the bill and got it passed. It’s funny how effective Twitter is these days in politics. Ask a musician the last time they logged into Twitter and most will say not since the Obama era, but man, if Twitter ain’t where politics lives and dies. Welp, it got me a meeting.

Now as an update on what went down since my article was posted just about a month ago, the RIAA, A2IM, MAC and AFM finally got back to the table to continue negotiations on coming up with language to exempt music professionals for a potential clean up bill. A petition was started which garnered over 2,500 signatures in 24 hours. (SIGN IT) The A-list working musicians’ app Jammcard ran a survey of its members about AB5 and got some startling results back (more on this in a moment), Assembly members and Senators were FLOODED with letters, calls and tweets from the music community of California (thank you!) and I got a meeting with Assemblywoman Gonzalez.

Also, someone wrote a critical response on Medium to my article entitled, Ari’s (not so good) Take: A Measured Response.

Which he tweeted to Assemblywoman Gonzalez and she retweeted exclaiming “so well written!” In this piece, the author, Nathan York Jr., basically says that no one should fret because this won’t be enforced. And included the letter written by AFM Local 7 Vice President Edmund Velasco back in September when the law was signed – which contained extremely misleading, nay, false information about the effects of AB5 on working musicians. Either Velasco flat out lied to his members to save face and preempt the backlash or was just misinformed and passed along that misinformation. Unfortunately, this is what some musicians in support of AB5 are basing their opinions off of. And 10 different attorneys say that Velasco is flat out wrong and spread misinformation. So there’s that.

Nearly everyone (well all 5 musicians) who are in favor of AB5 (as it relates to music) bring up enforcement.

They say that we don’t need to worry because this will never be enforced. They are basically saying that we should just not comply with it and break the law. And that it’s actually a good thing because it gets us closer to forming a NEW union for musicians. A couple things about this argument: 1) intentionally not complying with the law hoping that no one will come after you is no way to run your business and 2) enforcement comes in many different forms. Will the Attorney General of California be knocking on indie musicians’ doors? Probably not. But the EDD (Employee Development Department) very well could. And do! One of the members in our meeting was recently audited by the EDD where they were checking to see if the people he issued 1099s were properly classified. So enforcement actually does happen. And not only that, if you have a disagreement with someone you hire for a gig and they really want to fuck you, they very well could sue you and bring up your non-compliance with this law. And once they bring this suit against you, you’ll now have a spotlight on you and will be an easy mark for the EDD.


So not complying, is not smart business.

Back to the meeting at hand.

I organized a group of 5 musicians to head down to Assemblywoman Gonzalez’s office in San Diego to plead our case:

Elmo Lovano (drummer and founder of Jammcard), Raquel Rodriguez (singer, songwriter, studio owner), Nick Campbell (bassist), Danica Pinner (cellist, string quartet member), Alicia Spillias (violinist, string quartet owner). My meeting was confirmed just about a week ago and the group and I had a very active email thread going, preparing for this meeting. On the drive down we talked the entire way down (not a single song was played!) prepping for what we were expecting was going to be a contentious meeting.

But let’s backup for a second.

The night before, I was at School Night in LA. Nick Campbell came up to me after he finished playing his set and said “Hey Ari, you know that guy who wrote the response to your article? Well, apparently Assemblywoman Gonzalez invited him to our meeting!” Nick was tipped off by his friend Martin Diller who Nathan York (the writer of the “Measured Response” piece) asked to join him for this. Martin had been similarly critical of my article in my comments section so apparently Nathan saw that and found an ally to join him. Martin called Nick as a courtesy because he figured we were in the dark about this and didn’t want us to be startled. Martin and Nick are friends and they do gigs together.

Assemblywoman Gonzalez did not give me a heads up about them joining our meeting.

I’m not exactly sure why she brought them into our meeting – especially without telling us about it. Maybe she was hoping for an all out brawl in her office. Maybe her Pay-Per-View subscription had expired and she was in need of some head to head entertainment. Regardless, it was a little odd that she surprised us with this. It could have completely derailed the meeting and our agenda. Maybe that was her intention? I’m not sure.

Luckily, we were tipped off. So on the drive down, literally 45 minutes before our meeting, we all got on a call together to attempt to work out our differences over the phone through stop and go traffic on the 5 to attempt to present a unified front going into the meeting. After 45 minutes of discussion, we realized we are actually much more closely aligned than our conflicting articles and comments would make it seem. All we needed was some time to hash it out. Luckily we were able to do that BEFORE walking into her office. Again, though, why she didn’t give us a heads up to have this discussion in advance and help everyone better prepare for the meeting is quite confusing.

The 9 of us (oh, Nathan and Martin brought an attorney with them. Cool.) piled into Assemblywoman Gonzalez’s office and I explained to her that we are all in support of the intentions behind AB5 – to help workers who are being taken advantage of by greedy corporations – but unfortunately this will be absolutely catastrophic to our business. The added costs we will incur to comply with this law will crush us. We went around the room and explained how we each run our business. How most of us are both “workers” and “employers.” Oftentimes on the same gig. Gonzalez asked very pointed questions and genuinely seemed to want to learn more about how we operate our business. She was very engaged and it was actually a really excellent conversation.

Nick mentioned how his accountant told him he could expect a 20% increase in costs for every musician he hires. My accountant estimated that it would cost an additional $6,000 or so a year to get fully setup and comply with this.

Gonzalez pushed back a bit and said that the “costs” are just being transferred – that someone has to pay these taxes and before it was the contractor and now it will be the employer. Which is not accurate. Most of these costs are not taxes, they are additional costs to comply. It’s the $300/mo payroll companies charge (you have to have a payroll company to withhold the proper taxes and issue payment). It’s payroll tax for each ‘employee.’ In any given year, I hire 40 or so music professionals for various gigs and studio sessions. Oftentimes for one-off gigs where they’re paid $100-200 or so. There is an added payroll tax for every single employee. Not to mention that payroll companies are not setup for one-off gigs and charge extra fees for short term ‘employees’ like this – with an additional cost to add a new employee. Previously, it cost me around $550 to file tax returns as a sole proprietorship with my accountant. As a corporation it will cost about $2,500. To register and maintain an LLC or S-Corp costs a minimum of $800/year (to be able to actually put people on payroll and W2 them).

+9 Things Singer/Songwriters Need to Know About Hiring Freelance Musicians

Not to mention that with the new Trump tax law, W2’d employees are no longer able to itemize their expenses like independent contractors are.

Since most musicians will have multiple (oftentimes 20+) “employers” in any given year – none of whom cover our expenses like equipment, rehearsal studios, recording studios, software, hardware, travel, lodging, food, etc. – we need the ability to write off these expenses. But if we are forced to be W2’d employees, we can’t do that anymore.

This is honestly just scratching the surface.

So there are actually quite a lot of added costs (and diminished benefits). What middle class musician can afford an additional $6,000 a year without it putting a serious strain on them? I honestly don’t know any.

Elmo shared the results of the Jammcard survey that was sent to their 4,000 California members (all vetted working music professionals):

Are you a member of the AFM (musicians union)?

64.8% – No I’m not

17.8% – Yes I am

13.2% – I used to be

2.4% – I am but I’d like not to be

1.7% – I don’t know what the AFM is

Do you make the majority of your income from union work or non union work?

97.6% – Non union

2.4% – Union

How do you prefer to be taxed as a music professional?

76.4% – 1099 (freelance/independent contractor)

15.6% – W2 (employee)

8% – I don’t know

Do you support California AB5 for music?

66.7% – I do not support it

8% – I support it

25.3% – I don’t know what it is

All in all, it worked out to be a very healthy discussion and she expressed willingness to create a ‘clean up bill’ and add clarification for the music community – essentially carving out certain music professionals from the law.

She explained that come January 6th when the Assembly is back in session, they can get to work on drafting language for the new Bill and once the language is agreed upon by all interested parties (us, RIAA, A2IM, AFM), they will vote on it. She did say that it will be voted on before September 1st (the deadline), but we shouldn’t expect it much sooner – these things take time.

+22 Musicians Who Made It After 30

But, and this is a huge Kardashian but, if this clean-up bill is passed, it will be retroactive. Meaning, even though nearly every musician in California will be in breach of this law come January 1st, this clean-up bill will essentially wipe away these, uh, crimes. So even though literally thousands of musicians will be breaking the law come January 1st, no one will be able to come after us once this clean-up bill is (hopefully) passed because it will in essence change the law from when it was enacted (January 1, 2020).

It was absolutely wonderful to meet with Assemblywoman Gonzalez with my fellow musicians and exercise our rights a bit. And I’m excited to continue to work with her to get this thing passed so musicians can continue to thrive in the state of California.

It seems like we’re moving in a positive direction, but we need to keep up the momentum to get us over the finish line. So! Please hit up your representatives and let them know that you’d like an exemption for music professionals.

You can find out who your representative is here.

About the Writer

Ari Herstand (pronounced Ar*ee Her*stand) is a Los Angeles based musician and fronts the band Brassroots District. Follow him on Instagram, Twitter and Facebook.

UNTIL NEXT TIME, THE COMMITTEE

I. Recent LA Pension Meeting

October 17th, 2019

II. The Musicians for Pension Security’s Take

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


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I. Recent LA Pension Meeting

A member’s reflection on the meeting:

Personal  thoughts?

Many of the big dollar members…took their pensions early.  Being privy to what was coming down the road …(being the most represented and engaged in THEIR business)…THEY captured any reduction by taking THEIR money up front…mostly the studio players…the orchestra players had to give up their tenure and hope they could still remain “on the list” after the required lapse of time to return to work.  

About the info-meeting itself…It was a just to be expected. Infomercial about the state of the state…just an opportunity to give the rank -and – file the proper lexicon of the situation. 

The pension meeting at the Marriot Convention Center in Burbank was video taped and will be posted on the web.  It was an informational meeting designed to clarify the problems and the process for keeping the pension plan solvent.  

The attached link covers the general information that was presented at the meeting. 

https://www.afm-epf.org/StayInformed/FundStatusFAQs.aspx

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II. The Musicians for Pension Security’s Take

https://www.musiciansforpensionsecurity.com/

RECENT COURT FILING REVEALS RISKY AND IMPRODENT INVESTMENT DECISIONS by TRUSTEES

July 29,2019

New revelations have emerged in the class action lawsuit filed by AFM Local 802 members Andy Snitzer and Paul Livant in Federal District Court, Southern District of New York. A recent court filing by the attorney for the plan participants, Steven Schwartz, details how risky and imprudent investment decisions by our trustees led us to where we are today.

The filing, which you can access here, compares the AFM-EPF investment strategy to that of other large multiemployer pension plans. That comparison showed a “stark departure in terms of asset allocation from other large Taft-Hartley

[multiemployer]

plans.” The filing continues:

“[The AFM-EPF’s] allocations to risky asset classes were so far out of the norm that none of the witnesses, including Defendants’ [trustees’] own experts, have identified any other Taft-Hartley [multiemployer] or other large pension plan with a similarly uber-aggressive asset allocation.”

The attorney for the Plan participants goes on to describe the undisputed evidence showing that AFM-EPF investments were way out of pattern with the other multiemployer plans:

“The undisputed record reflects that our Trustees’ asset allocations were objectively out of the norm. For example, the parties’ experts cite data from the Wiltshire Trust Universe Comparison Service and from the Plan’s former Investment Consultant Meketa showing the Plan’s stark departure in terms of asset allocation from other large Taft-Hartley plans. The data shows the median large Taft-Hartley plan had no less than 45% of assets invested in domestic equities; the Trustees here reduced our Plan’s actual domestic equity allocation from 40% in 2009 to as low as 19%. The reduction in the domestic equity allocation was accompanied by an increase in the allocation to Emerging Markets Equities to as high as 15%, even though the average plan had no more than 4.5%; an increase of the total allocation to international equities of up to 30%, even though the median Taft-Hartley Plan had no more than 12%; and an increase of up to 26% in alternatives including Private Equity and Real Estate, whereas the median plan had no more than 12%.”

These facts shed light on why the Judge in the case, the Honorable Valerie Caproni, previously called the trustees’ investment approach “extraordinarily risky,” and said the following: “I mean they adopted an exceedingly risky strategy and that is part of the gestalt of the facts.”

As our own AFM-EPF plan actuary, Kevin Campe, wrote in a recent Milliman study: “The primary driver of multiemployer health continues to be asset performance.” (Kevin Campe, Milliman Multiemployer Pension Funding Study, 2018.) Unfortunately, that’s precisely where our trustees let us down.

Musicians across the country now face the reality of impending cuts to our hard-earned benefits. And yet we still have the same board of trustees that put us in this position. The AFM-EPF board needs new trustees who have the ability to supervise the investment advisors. Without real reform, we may find that the current round of cuts is just the first in an ongoing series of cuts over the next few decades.

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Next time. Fi-core Rights Recap

Until then,

THE COMMITTEE