AB5 impacts Video Production

Written by Mike

San Diego

Business Owner, Independent Contractor, or Both?

Business Owner

California

February 17, 2020

How AB5 is having an impact on your business?

I have yet to be heavily affected by AB5 as the vast majority of IC’s I hire appear to fall under the B2B exemption. However I am not 100% sure of that based on the vagueness of some of the 12 guidelines. The B2B exemption is a level of risk we find acceptable for now. We have however implemented a vetting process that all of our IC’s must now go through before we hire them. This ensures they fall into the B2B requirements as much as possible.
On my end who this will affect the most are the young students who I used to bring onto shoots as IC’s for a day here and a day there. This was a paying gig for them and a chance to work with professionals in the local production industry. They got some money and learned from working professionals. That opportunity for them is now 100% gone. They will not meet the qualifications of a B2B exemption so I can not have them on set. And this really is a shame, and a lost opportunity for them.

What are businesses like yours saying or doing in response to AB5?

I am also hearing stories of event companies here in San Diego that are putting their IC’s on staff as W2 employees, but deducting a percentage of their day rate to cover the additional expense to the employer. So in actuality instead of helping the worker this law has reduced their pay.

Despite feeling like you’re ok for now, is there a fear in the back of your head about what might happen if you’re wrong? Or are you just putting that fear aside and 🤷‍♀️ “que será, será”?

There is definitely fear that this will all come back to bite us in the end. Much of that is due to the vagueness of the B2B exemptions. For example, the IC must be free from direction. Well, how much direction can I give? If I hire a DP I might tell her I want the shot to feel like this, or look like that. I don’t tell them what lights to use, but I do tell them what I want it to look like. Is that too much control? Am I now out of the B2B exemption? What if I am hiring a camera operator but they are shooting with my camera? Am I now outside of the B2B exemption because I am providing a tool?

Another thing we are doing to mitigate risk is not hiring people we don’t know and haven’t worked with in the past. The assumption here is that the vast majority of policing will be done from people reporting employers. I can trust my usual IC’s to not report as we are all happy with our working arrangement. This again is cutting out the opportunity for a young person to get started. And speaking of young people trying to break in, the B2B exemption says they have to have multiple clients. That is an insurmountable catch 22 for those kids. How can you have multiple clients if the only way you can land your first client is to have multiple clients.

Is your vetting process documented? If so, are you willing to share to further illustrate the due diligence you’re doing?

It is documented in the sense that we took a boiler plate IC agreement and adjusted it to fit the 12 requirements for the B2B exemption. I probably would not share as it has not been vetted by an employment attorney so there is risk involved in using it.

Do you have any students who were prospects for future gig work who might be willing to extend on the loss of opportunity? Or anyone in the past who has become successful that could speak to the benefit of having worked with you this way?

Unfortunately no. These are normally one of things that happen after I speak to students somewhere. I would offer them the opportunity, and the ones that were serious about production would take it.

If there is one thing you could tell lawmakers directly about AB5... what would it be?

Well funny you should ask, I actually did meet with Lorena Gonzalez about AB5 with a group of San Diego production folks. Basically the point that I wanted to get across to her is this… I understand the spirit of the law. You are trying to protect minimum wage workers that are being taken advantage of by large corporations. However that is not the case with me and my colleagues in the production industry. We are not hiring minimum wage workers. I am hiring workers that are making from $550 a day to over 1K a day. These are good wages that allow them to operate as legit businesses.

In addition to that I explained the issue of new people breaking into the industry and how this hurts them. And I also explained how I feel this will impact those that depend on out of state producers that hire them for work. San Diego is a convention town, and many times producers will hire local crews to film at those conventions. However now I suspect that will end. The producers will not open themselves up to the risk of lawsuits, fines and penalties from hiring a California crew. They will simply fly a crew in with them to do the work. This means loss of revenue for the California production crews, as well as loss of tax revenue for the state.

One issue we brought up that she had no answer for was as follows… The B2B exemption states that the IC can not work directly with the client. Well if I have 2 shoots in one day and I want to hire a freelance producer to handle one of them, while I handle the other, that freelance producer is now working directly with the client and won’t pass the test for the B2B exemption. So basically you have created a situation where I can only do one job, for one client, on any given day. That effectively takes away the ability for me to build my business.

I will say that the meeting with Lorena was very cordial. She gave us about 35 minutes of her time despite her aids coning into the room multiple times to speed up the meeting. She promised that relief will come in the future with bills that clarify AB5 more. She also stated that she feels we are all fine operating under the B2B exemption but that of course she is not a lawyer. I will say that this is not the first time I have been in the room with politicians and of course they always say the right thing. But actions speak louder and so far the actions tell me she is more interested in making organized labor happy than anything else, which would stand to reason as labor unions are abut 70% of her campaign funding.

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