California AB-5 Law

chris f

chris f

Veteran
I have been hearing rumblings about this new law for the last several months, but finally did a deep dive myself last night reading every article I could find on it and it looks like starting on January 1 there’s no way around not putting all of temporary film crew on payroll as an employee for those of us operating in California. Several months ago when I first started hearing about it I thought if all of my contractors became LLC’s or corporations that would resolve the issue, but it seems like that is now not the case?

I’m looking into payroll options and will probably consult with a lawyer first, but in the meantime I’m probably going to have to go back to my clients that have already booked me and my crew in January to see if all of my crew members can invoice them directly instead of subcontracting through me just to make sure I’m covered in the meantime.

What is everyone else’s plans? Sounds like there are some VERY hefty fines for not complying.

https://topsheet.io/blog/everything-productions-need-to-know-ab5-law
 
Former contractors will now have W2 forms from who knows how many 'employers' and 3-4 dozen full time jobs that lasted only a few days. What a tax filing mess it will be for them.
 
Basically will turn every project into a union gig and additional 15% taxes/fees on labor that the production company/producer will have to pay (or try to pass on to clients). Will also need to have workers comp insurance as well.
 
It's essentially a money grab by the state of Kalifornia in the name of helping the little guy, BUT ultimately it's going to hurt the little guy, probably very significantly.

I have a large client, that has for years used 1,000's of freelancers for 100's of days a year(myself included). The story, as I've been told it, goes something like this: the IRS had been watching them for several years and came to them and said that we are not freelancers, that at those amount of days we are employees. Well that completely changes everything, because now they are responsible for health care and things like that. So what do they do? They institute a cap on days that you can work to keep you below a threshold that allows you to be considered freelance/1099. So, ultimately, what did it do? Did it help "the little guy"? No. It F***ed over a lot of "little guys" making a lot of money, because the company wasn't going to take on the added burden and expense associated with us becoming employees. So not only did it not net anyone anything like healthcare, retirement, etc., it made it if more burdensome on "the little guys", because now they are being paid significantly less. And ironically enough, as far as the IRS is concerned, now they're also paying less in taxes, so the govn't is making less off the individuals, as well.
 
That's nothing new either. I recall that, in the early 80's, if you worked fewer than 32 hours/week, you were considered a part-timer (no medical coverage, etc.) So, it made more sense to hire three part-timers than two full-timers. And most employers wanted to keep the part-timers to under 30 hours, just to be safe.

Of course, from the Hollywood North article, it shows California losing billions in production funding. Now, if you add porn into the mix...
 
Paul F said:
and people don't like lawyers. Who's your friend now?
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If you read the bill, you’ll notice that lawyers are one of the groups specifically not affected by AB5. I wonder why...?

I’ll try to skirt politics as much as possible ; ) Reading the NPPA press release only confirmed my suspicions of the party behind the bill.

I feel for all y’all out in Kalifornia. This is reason 1,739,458 to NOT live there. I don’t think I’ve shot out there in five or six years and really don’t have any desire to come and shoot anything there, now. The greedy, dirty bastards try to tax the income you make while in the state, even though you’re not a resident.
 
The truth about everything that’s been going on has been leaked if you know where to look.

Everyone is responsible to compassionately share the truth when you find it.

Justice is coming- enjoy the show!
 
We have the same situation in the UK as a whole with April as a key date - BUT - only it seems in some work sector areas. Production companies are doing their best but faced with a sea of genuinely self-employed and tax paying folk, some are now deemed to be employees, some not - giving each one more hassle at year end tax time as some of their income has been taxed and some not. Even worse, setting up a Ltd company solely to avoid taking on 'employees' is also not allowed. My current production has some self-employed people invoicing as usual (me included) while others are employees, and with our system here (PAYE) they have tax deducted at basic rate, plus National Insurance - which funds pensions and our NHS. The unions have no input into this. We have a system called IR35 and there is a guide questionnaire - which 'suggests' a status for a particular job - you end up as an 'employee' or 'self-employed' at the end of it, but it holds no real status. The production company can use it and still get a demand for the unpaid tax and NI long after the crew member has gone on to other projects, and they HAVE to pay it. Our tax system being rather ancient, it also means lots of full or part exemptions. Our cameraman friends turn up and operate the TV studio's cameras - all the tests mean this has to be employment, but they are all self-employed? They have to have a special letter from the tax people giving them self-employed status and not everyone can get one!


Glad to see California following in our mess!
 
Sounds like great news for the growing production hubs outside of CA.

For those CA-based freelancers fleeing their current situation, we kindly ask that you leave the politics that fomented the aforementioned situation at your previous residence.
 
mcgeedigital said:
You should probably become more aware of how the makeup of the the 9th Circus is changing.
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It is changing but this is a tax law, which is very difficult to overturn on the constitutional grounds.

mcbob said:
Sounds like great news for the growing production hubs outside of CA...
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California lost over $6B worth of annual production to Canada alone. Obviously, a lot of talent goes with the production for its duration, then returns, but a lot of below-the-title work is performed by the locals. The problem here isn't just the compliance but the fear of running afoul of the new laws.

And the border is three hours away.
 
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