THE AB5 EDITION

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.

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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]

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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.

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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

One Response to “THE AB5 EDITION”

  1. 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!

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