California AB-5 Assembly Bill Affecting Regional Theatre

macsound · Mar 6, 2020

Just saw this article even though it went into effect Jan 1 2020 I believe.

The law is supposed to be for gig workers like Uber, Lyft and Door Dash, forcing their employers to treat them as employees.
The consequence is other "gig" based jobs like theatre and trucking are affected negatively, because they don't want to be employees.
This is especially concerning as a local company that I worked with for many years is closing its doors after 59 years, Contra Costa Musical Theatre, because they "pay" their cast a stipend and send them 1099s.
Seems like there are other companies closing their doors like music festivals, that even local police, contracted for the day to cover the festival, would be required to become employees for the 1 day.

Any other states have bills like this or California theatres being affected?

AB5’s drafters tried to fix some of the problems for freelance workers that the state Supreme Court’s decision caused by exempting more than 50 professions and types of businesses from the bill. Theater companies were not among those exemptions.

“I’m very concerned about the effects of the Dynamex court decision on small community theaters,” said state Sen. Steve Glazer, D-Orinda. “It’s possible to protect people from workplace exploitation without preventing people from working independently if that is what they want to do. Community theater actors and crew often fit that description, and they should be free to work as independent contractors if that’s how they prefer to practice their craft.”

While some theater companies were able to make adjustments to their seasons and budgets, AB5 was the last straw for others in a never-ending struggle to make ends meet. Such was the case for Contra Costa Musical Theater (CCMT). Managing Director Danny Boyle announced in a Feb. 26 email that the 59-year-old community theater group would go dark at the end of February.

Some links:

East Bay theater community struggling under new ‘gig-economy’ law

State Sen. Steve Glazer, D-Orinda, looking for a way to save area stages from the harmful effects of California Assembly Bill 5 while still protecting workers.

www.eastbaytimes.com

The Coast News Group

Your community. Your newspaper. Covers Camp Pendleton, Oceanside, Carlsbad, Encinitas, Solana Beach, Del Mar, Carmel Valley, Rancho Santa Fe, Escondido, San Marcos & Vista.

www.thecoastnews.com

The AB5 backlash: Singers, actors, dancers, theaters sound off on freelance law

To learn more about AB5’s effect on California's arts community, The Times asked readers to write in. More than 100 of you did.

www.latimes.com

Executive Director's Note - Feb. 12: Emergency Funding for AB5 - Theatre Bay Area

Your one-stop shop for auditions, job listings, grants, discount tickets, and professional training opportunities in the San Francisco Bay Area.

www.theatrebayarea.org

danTt · Mar 9, 2020

We all know small community and regional theaters would never exploit their workers in any way...

Darin · Mar 9, 2020

There was a bill here in Ohio (that didn't actually pass) that was meant to make not-for-profit workers eligible for overtime benefits and wage minimums. It would have meant that NFP theatres who had technical directors, master electricians, etc. on salary would have had to pay time and a half for over 40 hours, which would have made tech week VERY expensive.

macsound · Mar 9, 2020

For many of us, theatre is fun and the money is a nice bonus.
When rules are put in place that make it nearly impossible to be a paid volunteer, that ruins all the fun for both the theatre and the people who enjoy spending their free time there.

MNicolai · Mar 9, 2020

I'm unfamiliar with this particular bill. From what I've gathered it has implications for accounting overhead (lots of W2's) and probably a mish mash of benefits issues for people who are transient between multiple groups.

There should be exemptions for our kinds of arts organizations, but they should be carefully articulated so as to not promote exploiting people. Many organizations deliberately use 1099's as a way to dodge responsibility for overtime, liability, benefits, and insurance. Just because you enjoy what you do and that it's art doesn't mean you shouldn't make overtime for 80 hr weeks. Whether you're hourly and that's tallied up as-needed or you're salary and it's baked into the overall compensation. Of course, to make salary fair you basically have to put limits in place where if you make less than $xx,xxx/yr, you are eligible for overtime regardless. Otherwise a low salary rate ends up being a way to dodge the system and exploit people.

I've known a lot of younger people who have taken on projects and ultimately ended up earning less than 1/2 of minimum wage after all their time was tallied up. If you're a designer and control your own schedule, workflow, and level of detail, that's one thing. If you're the guy who was hired as a scenic designer who ended up having to be a technical director managing crews or else the show wouldn't open because an actual technical director wasn't in place -- that's another issue that's more abusive of the 1099 process. If you're a technical director on salary paid $34k a year in a position that requires an MFA, that's an abuse of the salary process. Theaters are some of the best groups at having a culture of expecting you to work 80 hours and only get paid for 40, or get paid $400/wk or some flat fee that doesn't realistically correspond to the actual workload it entails.

The first roadhouse I worked at out of high school moved everyone's hours around to keep weekly hours under 40 and avoid paying overtime for any of the non-professional overhires. That's probably outside of the scope of this bill because we were W2 employees, but that kind of abuse is prevalent. Which was compounded by a workplace safety mentality of standing on the rails of the Genie to focus lights.

I was treated by my professors in college like getting into consulting wasn't a legitimate role to play in the theater business just because I didn't want to shlepp across the country until my mid 30's and live paycheck to paycheck like they did. None of my professors would speak candidly about the process of negotiating design fees or contracts, and the scenic professor had no concept of budget. He'd blow a season's scenic budget on every shade of Rosco paint and the last 2 shows of the season would be improvised from scrap material in the shop or in storage because managing a season-long budget was too hard for him. Separately he bragged about the biggest show he tried to design and then lamented that it ended up being cut to 1/3 of its glory because it was over budget. It's no wonder we have groups who can't afford to fairly compensate people for their time commitment and skill level.

Our industry suffers from a lot of people who got into it for the art and have no business sense. There's a culture that you must suffer for their art because they suffered for their art. And that's bullshit reason for arts groups to treat people like they're supposed to be a starving artist. The bill in question is probably overly broad and misses the nuances of how arts groups operate, but there are legitimate problems in pockets of our industry that need to be addressed.

RonHebbard · Mar 9, 2020

MNicolai said:
I'm unfamiliar with this particular bill. From what I've gathered it has implications for accounting overhead (lots of W2's) and probably a mish mash of benefits issues for people who are transient between multiple groups.

There should be exemptions for our kinds of arts organizations, but they should be carefully articulated so as to not promote exploiting people. Many organizations deliberately use 1099's as a way to dodge responsibility for overtime, liability, benefits, and insurance. Just because you enjoy what you do and that it's art doesn't mean you shouldn't make overtime for 80 hr weeks. Whether you're hourly and that's tallied up as-needed or you're salary and it's baked into the overall compensation. Of course, to make salary fair you basically have to put limits in place where if you make less than $xx,xxx/yr, you are eligible for overtime regardless. Otherwise a low salary rate ends up being a way to dodge the system and exploit people.

I've known a lot of younger people who have taken on projects and ultimately ended up earning less than 1/2 of minimum wage after all their time was tallied up. If you're a designer and control your own schedule, workflow, and level of detail, that's one thing. If you're the guy who was hired as a scenic designer who ended up having to be a technical director managing crews or else the show wouldn't open because an actual technical director wasn't in place -- that's another issue that's more abusive of the 1099 process. If you're a technical director on salary paid $34k a year in a position that requires an MFA, that's an abuse of the salary process. Theaters are some of the best groups at having a culture of expecting you to work 80 hours and only get paid for 40, or get paid $400/wk or some flat fee that doesn't realistically correspond to the actual workload it entails.

The first roadhouse I worked at out of high school moved everyone's hours around to keep weekly hours under 40 and avoid paying overtime for any of the non-professional overhires. That's probably outside of the scope of this bill because we were W2 employees, but that kind of abuse is prevalent. Which was compounded by a workplace safety mentality of standing on the rails of the Genie to focus lights.

I was treated by my professors in college like getting into consulting wasn't a legitimate role to play in the theater business just because I didn't want to shlepp across the country until my mid 30's and live paycheck to paycheck like they did. None of my professors would speak candidly about the process of negotiating design fees or contracts, and the scenic professor had no concept of budget. He'd blow a season's scenic budget on every shade of Rosco paint the last 2 shows of the season would be improvised from scrap material in the shop or in storage because managing a season-long budget was too hard for him. Separately he bragged about the biggest show he tried to design and then lamented that it ended up being cut to 1/3 of its glory because it was over budget. It's no wonder we have groups who can't afford to fairly compensate people for their time commitment and skill level.

Our industry suffers from a lot of people who got into it for the art and have no business sense. There's a culture that you must suffer for their art because they suffered for their art. And that's bullshit reason for arts groups to treat people like they're supposed to be a starving artist. The bill in question is probably overly broad and misses the nuances of how arts groups operate, but there are legitimate problems in pockets of our industry that need to be addressed.

@MNicolai THANK YOU! You're preaching to the choir; too late for the elder members who've stood too close to the organ pipes for too many years, we're already near deaf due to abuses suffered.
Perhaps, if they've still sufficient functional cells in their skulls, it's not too late to save a few of our younger readers.
Toodleoo!
Ron Hebbard

macsound · Mar 9, 2020

Yes, totally disallow the possibility of exploitation but lots of community theatre that I did, it was technically voulenteer. But you got a stipend. That's how all of the cast and crew was.
It was a flat $800 for a 6 week run. Thursday - Sunday. So absolutely less than minimum wage.
And when I started in 1997, you got $150 for the same 6 week run. So it's truly just a thank you, not a payment.
When it was $150 they didn't 1099 you because if you worked the 4 shows a year that they produced, you couldn't hit the $800 IRS requirement. But at 800 per show, they had to report the payment.
Also, to be clear, designers and carps and electricians and other positions got paid. If there was a lead who was pro, they'd also get paid.

In any case, legislation is preventing the art for those who didn't even want to get paid in the first place, but always appreciated their expenses being covered.

But what should these non profits do? How can you get around legislation for volunteers? I also heard the same issue happens for interns being denied because of union rules.

TimMc · Mar 10, 2020

In this instance I'd call it "volunteer's housing/commuting/avocado toast allowance". It still might be subject to reporting but it's closer to the truth, mostly, sort of...

egilson1 · Mar 10, 2020

Let me start my comment by stating I am all for small community theatre and arts programs.

The issue is there is already existing law that defines what a Stipend is. "To receive a stipend, the job must focus on training rather than employment... " In order to be complying with current IRS law/code the organization producing the work must either be using absolute volunteers who receive no payment what so over, or if they are paying a stipend the workers must be receiving on the job training/internship/etc. where their primary roll is to learn vs complete the work task.

The IRS already defines IC vs Employee with a series of tests. One is who controls the work? Are you being told when to show up, take lunch, finish, how to build the flat? You're not an IC, you're an employee. Another is if you are paid by the hour for actual hours worked (this is not the same as using an hourly rate to determine an overall payment)? you're an employee.

The point is if you are doing work for someone else and expect to receive any compensation for your time, how is that not earning income?

And then there is the issue of if your not an employee are you insured for the work you are performing? do you have workers compensation insurance?

TimMc · Mar 10, 2020

"Starving artist" is sooo 1790...

macsound · Mar 10, 2020

My understanding based on the very rare accidents is that there is workers comp that covers all of the cast and crew and they're specified in both the theatre company and the theatre building's insurance.

I'm not arguing that workers should be paid an honest wage. I'm arguing that it's seemingly impossible to be a paid/reimbursed volunteer. Not sure about being a completely free volunteer, but still be on the books, whatever books those are.

Ancient Engineer · Mar 10, 2020

"Starving artist" is so "Unpaid intern"...

What Rigger? · Mar 10, 2020

Here's my take on the "I'm not an employee/I don't want to be an employee" angle. It's probably an unpopular opinion, and I'm willing to admit I don't know the whole picture on the Californa bill. But when has that ever shut me up?

If you tell me I must show up at a time chosen by The Organization, and The Organization tells me when to go to lunch and for how long, when and how long I can take my break, what I have to wear, when I can go home, and The Organization is paying me (to whatever degree) without even pretending to negotiate a rate, and I can't be anywhere else (online, on the phone, etc...) making money while on site at The Organization's function- then I'm an employee. Pay me like one, cover me for injury/illness like one, and contribute to my insurance like I'm one.

Stipends are of almost no use, even to brand new trainees (because to make rent you still have to have a real job that you're gonna have to be at for 6-8 hours a day, the heck with sleep), and if you're working for that kind of "money" when you're a journeyman, or mid-career, I don't even know what to say.

But all this is easy for me to say, because I'm fairly far removed from that stage of my work life.

MNicolai · Mar 10, 2020

In the state of Florida, employers are not required to provide worker's comp for 1099's. It may happen that they choose to pay a premium for additional coverage to that effect, but there is no requirement under the law that the 1099 is entitled to that benefit unless a subsequent review deems that the person was misclassified and should've been considered a W2 employee all along.

Aside from worker's comp, let us not forget about liability. If you're an independent contractor, you have a target painted on your back if something happens at an event of yours -- even if completely unrelated to work you performed. Litigation will cast a wide net over any entity that isn't judgement proof (i.e. has so little assets, piles of debt, and ultimately no pot of gold at the end of their rainbow that it's not even worth trying).

Taking a look at a different angle of this though, aside from dodging payroll taxes, a lot of this has to do with health and disability insurance and the impracticality of providing that to short term employees. If not for those benefits being tied to employers, it wouldn't be nearly as big a deal to be a transient employee between multiple employers. I personally don't think we're anywhere near getting Medicare For All, but something like that helps assuage the impact of this type of legislation.

On the subject of volunteers with stipends. I'm not aware of any mechanism for these people being considered volunteers if they are compensated. Some states even have fair labor laws that require stipends only apply to very specific instances where educational opportunities are involved. My guess is that for the vast majority, they would prefer to have a living wage over a stipend but our industry has done a good job at making those positions harder to come by right out of college. The only instance where I can think of where it's more appropriate to treat someone like a volunteer is ushers, who at some venues get a free show out of the gig. Like Walmart greeters though, many are older and on fixed incomes. They deserve and would appreciate some compensation for their time, and i's only fair considering that the venue has to train and rely on these people to be prepared for crowd control in an emergency -- and providing at least a certain number of them is required under life safety code as crowd managers. Ushers are not optional.

I have a hard time imagining a good reason that people should be paid less because they enjoy what they do, unless it is their choice to not be paid at all because they are in fact choosing to donate their time to an organization they care about.

Aaron Clarke · Mar 11, 2020

MNicolai said:
Of course, to make salary fair you basically have to put limits in place where if you make less than $xx,xxx/yr, you are eligible for overtime regardless. Otherwise a low salary rate ends up being a way to dodge the system and exploit people.

This law actually exists and went into effect this year. See https://www.dol.gov/newsroom/releases/whd/whd20190924. The organization I volunteer at and serve on the board, stepped up and moved the appropriate positions to the exempt level at the start of the year. Now, where we are, that minimum is real livable wage, but then we are one of the lowest cost of living areas around, so there is still a need for employers to analyze and properly compensate its employee. I have a friend who is a paid TD at a nearby theatre and despite a staff of 8+ that has yet to take action on this. As a former HR manager I've been pushing that friend to bring it up. Luckily for his employer, the law allows them to make up the difference at the end of the year... that will be a nice bonus check knowing how far under this requirement that person is.

In short, if you don't make over $35,658 your employer is required by federal law to pay overtime. If you do make over that, you must meet the exemption test (https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime#footnoteOvertime) in order for you to still not be paid overtime.

I encourage you to take a look at the exemption test. In my opinion, most of those on here that are paid fall under the "creative professional exemption" and can be considered exempt and so if that is the case make sure you are properly compensated for your region or fight for overtime.

Sorry that was a small digression from the other issues but something I'm sure some will find useful.

macsound · Mar 11, 2020

I don't think the insurance was a requirement of the type of payment, but a requirement of the theatre buildings that all the theatre companies realized was super important to cover their own butts anyway.
Most of these theatre companies owned their own rehearsal buildings and needed insurance for the same actors etc weather they were rehearsing or performing.

There were even notes in the articles about single day music festivals (like downtown, not coachella) shutting down because they can't legally pay anyone the usual stipend without going through the rigamarole of hiring them as an employee. They even couldn't figure out how to pay the police that they're required to have, but have to pay separately than the city in order to get their exclusive attention.

So circling back to the original side affect of the bill, how would or how are community theatre companies dealing with this?

Allana · Mar 11, 2020

There is some misinformation above about what constitutes and employee, volunteer, and independent contractor (1099). My collective (Technicians for Change) are pretty adamant amount the misclassification of workers so we write about it a lot. AB5 altered/clarified the definition in California but elsewhere (and often still in California), the following is true: