The New Law That Is Threatening Live Music in California – And What You Can Do About It

Jack's Cats performing at the Cicada Club
Jack’s Cats performing at the Cicada Club

Guest Post by Jack Malmstrom

I’m very grateful to Brian Shim for inviting me to share information about a new law that prohibits many workers from being independent contractors and may threaten our live music scene.

Musicians invented the “gig”

In an effort to address abuses of worker rights by huge new “gig economy” corporations like Lyft and Uber, our state passed a well-intentioned bill last year known as AB-5. With some exceptions, it forces all employers in the state to treat their workers — formerly classified as independent contractors — as employees.

Musicians have always worked and thrived as independent artists — we’re the true originators of the “gig.” As a bandleader, clubs hire me to provide a night’s entertainment then write a check for our agreed-upon fee. I hire my favorite players to fill out the band and divide the proceeds amongst us all. We all report our earnings and pay our taxes via 1099s at the end of the year. With hundreds of one-night, “casual” appearances and a constantly changing line-up of players, it’s a simple system we know and love. But….

Good intentions gone awry

Under AB-5, which became law on January 1, any club hiring a band — even for one night — must classify the leader as an employee, put them on payroll, compute, deduct, withhold, and report taxes, provide workers comp insurance, pay into unemployment insurance… in effect do the countless bookkeeping chores any company does for a full-time employee. Who will be willing to do that for the hundreds of musicians that cross a stage during a year? As a result, some are already canceling engagements with live performers. But wait, it gets worse….

With AB-5 each musician in the band is now an employee of the bandleader. In a group like mine, that’s six employees for each performance (and our line up changes from night to night). No more checks and a hearty “Thank you, job well done!” at the end of each show. The bandleader must now put everyone on payroll, deduct and withhold state and federal taxes, deduct for and provide various forms of insurance, and adhere to hundreds of workplace regulations and financial reporting designed to protect full-time employees — for everyone, even those playing only one show with the band. Leaders who have recently attempted to hire payroll services to administer this complexity are reporting that no one in the state is willing or able to provide such a service.


Outlaws?

So compliance isn’t just inconvenient and costly, it’s impossible. Some have decided the only way to continue offering live music is to continue as before — violating the new prohibition of independent contractors — and hope for lax enforcement, a retroactive amendment exempting our industry, or outright repeal.

But if that doesn’t come….

Help!

Everyone I know dearly hopes to continue entertaining our fans. You can help by sending a quick on-line note to your California representative. (You can find out who they are here.) If signing petitions is your thing, this one already has nearly 50,000 signatures — but it could use yours! Want more info? A quick google search of “California”+”AB5”+”Musicians” will give you plenty. Finally, if an amendment comes up on a ballot later this year, vote!

Sorry for the interruption, we now return you to SwingDance.LA’s regular programming. Keep swingin’!

Jack Malmstrom of Jack's Cats

Jack Malmstrom
JacksCats.com
www.facebook.com/Jacks.Cats.swing.band

7 thoughts on “The New Law That Is Threatening Live Music in California – And What You Can Do About It

  1. If your band is hired by a restaurant they don’t qualify under the second step in the ABC test:

    1) Part A of the test requires that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

    2) Part B of the test requires that the worker performs work that is outside the usual course of the hiring entity’s business; and

    3) Part C of the test requires that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

    1. Tony, are you suggesting that the restaurant pay the musicians individually in order to avoid the bandleader being an employer?

    2. Yes, Tony, you’re right.
      In even the very few days since this post went live, there is new thinking about AB5. It now seems that venues (which are in the business of selling food and drink) may continue to hire musicians as independent contractors. But… musicians (bandleaders, for example) must classify the other musicians they hire as employees. This mean that Federal and State income tax, Social Security and Medicare contributions must be computed, tracked and accounted for each member of the band for the entire year — even if a musician sits in with a group for only one night. We bandleaders have a LOT of paperwork ahead of us.

  2. I would add that AB5 has no “unintended consequences”. The governor has been quoted as supporting AB5 due to expectations of increased tax revenue and increased union membership. The design is to forcibly convert as many as possible from freelance independent contractors who receive 1099s into “employees” who receive W2s. A certain amount of ambiguity is by design, since it results in even fewer 1099 payments out of fear of noncompliance penalties and lawsuits.

  3. This is outrageous. The dance scene cannot survive without live bands. I don’t believe in begging “representatives” to do the right thing, but this is an exception. Until they write an amendment for musicians, the law must be violated by everyone as a political act of defiance.

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