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Finally, The California Music Industry Gets Relief Under AB5

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Ari Herstand
Ari Herstand is a Los Angeles based musician, the founder and CEO of Ari’s Take and the author of How to Make It in the New Music Business.

Well ladies and gentlemen, seven months after Governor Newsom signed into law the “gig worker” bill AB5, which sent the California music industry into a complete panic, we finally have some relief.

Today, the music industry, along with Assemblywoman Lorena Gonzalez and Assembly Majority Leader Ian Calderon agreed upon language for the “clean up bill” AB 2257 (formerly AB 1850) – that essentially exempts the vast majority of music professionals from AB5. We did it!

Update 9/4/2020 – The Governor has signed the bill into law. Because this was an urgency measure, it is now the law of the land!

What does this mean and what’s next?

Well, first off, I’ve been a part of every step of this insane process since December and have been in the trenches working this thing out with all invested parties – and someday I’ll tell the full story of what went down. But for now, what you need to know, is that this language has been agreed upon by a shit ton of organizations: Recording Industry Association of America® (RIAA), American Association of Independent Music (A2IM), Music Artists Coalition (MAC), Independent Music Professionals United (IMPU), Songwriters of North America (SONA), American Federation of Musicians (AFM), the Recording Academy®, International Allegiance of Theatrical Stage Employees (IATSE), Screen Actors Guild (SAG-AFTRA) and Teamsters.

Ari Herstand at the Grammy Entertainment Law Initiative

Ari Herstand at the Grammy Entertainment Law Initiative

Speaking at the Recording Academy’s Entertainment Law Initiative with Jordan Bromley

And let me tell you, this was no easy feat.

Many sleepless nights getting in Twitter battles with California politicians, countless phone calls with attorneys, redline after redline after edit after …how does “track changes” work again?… and trips to various important peoples offices. The newly formed organization, IMPU, that I lead and helped found with Adrianne Duncan, Elmo Lovano, Danica Pinner, Nick Campbell, Karen Garrity, Alicia Spillias, Katisse Buckingham and Ned Menoyo, gave speeches at events and interviews on news programs, took countless meetings with legislators, and put on performances at protest events. And created a petition that received over 185,000 signatures. All of this helped get us to today.

The Bill That Killed Freelance

First the headlines. AB5, which went into effect January 1st, 2020, created a much more narrow test of whether a worker should be classified as a 1099’d independent contractor or a W2’d employee.

Previously, there’s what’s called the “Borello” test, which lays out 11 key factors to determine how to classify a worker. The main takeaway is to see if the worker is under the ‘control’ of the employer. AB5, instead created a 3-point ABC test to determine if the worker should be classified as an employee. Under the ABC test, a worker is considered an employee unless the worker:

(A) Is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and

(B) Performs work that is outside the usual course of the company’s business; and 

(C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.

Point B is what caught up nearly everyone in the music industry. It’s pretty damn hard to say that the band performing music at a music venue is not part of the music venue’s usual course of business of music. And it’s pretty damn hard to say that the drummer that I hire for a wedding is performing work outside the usual course of my business of music. Commence all drummers not being musicians jokes.

Ari Herstand on Cheddar TV:

You can read what I initially wrote about this law, when I first found out about it: California’s Music Economy Is About To Crash

Anyway!

The lawmakers of California believed that AB5 would give more protections to workers.

They believed that this would get all companies to reclassify their independent contractors as employees. If someone is classified as an employee, they can enjoy benefits like overtime, workers compensation if they get injured, unemployment compensation if they get laid off, health care, and other things that are reserved for W2’d employees. Sounds great right?

Well, what ended up happening, was instead, companies began simply restructuring their businesses and laying off their workers. More specifically in the music industry, people stopped hiring California musicians and taking that work out of state, venues stopped having music altogether, community arts organizations that hosted small opera and musical productions began shutting down and cancelling upcoming performances, artists, bandleaders and singer/songwriters stopped hiring backup bands for their gigs, composers stopped contracting musicians to record demos for their new works, contracting agencies which hired arrangers, musicians, librarians, orchestrators, recording studios and recording engineers, had to shut down, artists stopped hiring recording engineers, producers and musicians to make their albums, and schools laid off accompanists for their choirs and musicals – which forced the schools to shut down the upcoming performances.

These are not hypothetical cases. These are documented cases that I received of what actually happened since January 1st.

I had calculated that literally hundreds of music professionals had lost work since January 1st because of AB5. And these are just the stories I heard about personally.

A bunch of industries were able to secure exemptions before AB5 got signed into law (doctors, lawyers, hair stylists, manicurists, accountants, repo men), but the music industry did not.

So my coalition, IMPU, along with the other organizations listed above, lead by attorney Jordan Bromley, worked tirelessly behind the scenes with the unions and legislators on consensus language that protects everyone.

This consensus came together just before the Coronavirus shut down the entire world.

The thing is, this virus will pass and the music industry will have a live concert business once again. But the laws will last for a very long time.

Assemblywoman Gonzalez has said that she would like to get this new ‘clean up bill’ AB 2257 (previously AB 1850) passed as an urgency measure – which means, if it gets a 2/3 majority vote in both the Assembly and Senate, it will go into effect the moment the Governor signs it – as opposed to January 1st the following year. And it will be retroactive – meaning everyone who is currently ‘breaking the law’ now can not be held responsible for it in the future.

Now that the Coronavirus has decimated the live music industry, we’re not really thinking about proper classification of recording engineers. But someday we will. And when that day comes, we will once again, be able to thrive in California – the entertainment capital of the world – and the state we love and call home.

It’s funny, as a songwriter and book author, I never thought that one of the most impactful things that I’d have a hand in writing would be a law for the state of California. Life is funny sometimes.

I’d like to lay out the specifics of the language that is going into AB 2257 regarding the music industry.

But please understand, that we did not get 100% of what we wanted. This was a long, hard-fought battle and it literally came down to me on the phone with John Acosta, president of Local 47 AFM (musicians union), hashing it out line by line, word by word.

Remember, the AFM (and all unions) were fully in favor of AB5. We, obviously, were not. They were happy with the law as it stood, and we wanted it amended. So that’s where negotiations started.

There was no incentive for the unions to negotiate with us – they got what they wanted. But all of the public pressure we put on them, got them to the negotiating table.

They came a LONG way. We got most of what we wanted, but not everything. We couldn’t get an exemption for small, independent symphony orchestras and musical theater productions. The unions would not budge on that. They also wanted an attendance cap restriction of 250 for concerts. Meaning anyone playing to more than 250 people would be bound by the AB5’s ABC test. This is unworkable, obviously. And they asked for a lot of other things which were non-starters (it’s not worth getting into). This is politics. It was a negotiation and a compromise.

With respect to the recording process:

The amendments will preserve the ability for the following industry professionals to collaborate and contract with one another to produce sound recordings and musical compositions without application of the ABC test to determine an employer:

  • Musicians, vocalists, and other recording artists
  • Composers, Songwriters, Lyricists
  • Managers of recording artists
  • Musical engineers
  • Sound mixers
  • Record producers
  • Others involved in the creating, marketing, promoting or distributing of the sound recording or musical composition

This last bullet point is a very important clarification. Literally, anyone working with you on your recording is exempt. Period. So we’re all clear here.

THIS IS A HUGE WIN! CELEBRATE. PLEASE.

With respect to standalone live performances:

The amendments will also specify that unless a musical group specifically falls into one of groups below, the musicians will be subject to the less strict, Borello test to determine classification. This allows most independent musicians to collaborate with one another in their live performances, without becoming each other’s employees.

  • The main featured act headlining at a concert venue with more than 1,500 attendees or
  • Musical group performing at a large festival with more than 18,000 attendees per day.

Note, it’s the headliner, not the openers. So if you headline the Fonda in LA (1250 cap) or The Fillmore in San Francisco (1315 cap), and sell it out, you’re fine. If you headline the Wiltern and sell it out (1850 cap), you’d be required to W2 your hired guns. If you only sell 1400 tickets to the Wiltern, you’re also fine. Now, most bands who headline the Wiltern are on tour and are at a level where they could afford to W2 their members.

Also, it’s worth noting that any music attorney will tell you that if you go on tour, the Borello test requires that you W2 your touring entourage – because they are ‘under your control’ – you have to get on the bus at this time, show up at this time, etc etc. So, nothing is really changing here. Whether you previously classified your touring entourage as employees (W2) or contractors (1099), makes no difference. The law (for decades) mandated that you W2 your touring entourage and treat them as employees.

If you haven’t, well, let’s hope they don’t file a complaint against you. That’s on you, baby!

Musicians we were not able to get an exemption for include:

  • A musical group regularly performing in a theme park setting,
  • A musician performing in a symphony orchestra,
  • A musician performing in a musical theatre production,
  • A musician performing at the same venue more than once a week

Again, we tried. Fought hard. I know there are small community orchestras out there who cannot afford to W2 every single member. John Acosta of the AFM, however, assured me that they work with many community orchestras and if you run an orchestra, I encourage you to write the AFM and ask them how they can help you stay afloat. The AFM genuinely did not seem to want any community orchestra to go under. So contact them!

As far as musical theater productions go, similarly, we fought hard to get this removed, but the unions would not budge. It was a ‘deal breaker’ for them, so we either could blow up the entire negotiations or give in to these concessions in the spirit of compromise and the greater good.

In the end, we fought on behalf of the music industry.

We couldn’t fight the theater industry’s fight as well. Or other industries for that matter. They should be organizing like we did and working on getting themselves some clarification under AB5. Or they can join the tens of thousands of freelancers who are flat out opposed to AB5. But, again, this is politics, and the politics in California are pretty clear – AB5 ain’t getting overturned anytime soon with the current makeup of congress. So, you can either work within the system you have, with the tools and resources available, or you can move out of state, or you can work to either convince your representatives of your position, or replace them.

I never expected to get into politics. And I honestly don’t have much desire to continue. But I’m proud of our work. And I will always advocate for independent music professionals. That fight is worth it to me.

Ari and Assembly member Gonzalez

About the Author

Ari Herstand is a Los Angeles based musician, the founder and CEO of Ari’s Take and the author of How to Make It in the New Music Business.

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