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AB5 LINKS & DEFINITION

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Hollywood Fringe Festival Concierge
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The Hollywood Fringe has heard our community’s calls for information about AB5, a bill that we ourselves are still learning how to navigate and understand. 

We believe in a world where the arts are fully funded, and hiring practices are simple to manage as small theatre practices/organizations, but we know that our community is not there yet due to the lack of funding for the arts. 

 

If your company/organization is regularly hiring theatre practitioners, we expect that you might have other resources beyond what is listed below. Please feel free to email support@hollywoodfringe.org with any additional resources.

 

Because the staff at the Hollywood Fringe is still learning to navigate these new waters we want to be clear: we’re not experts in the labor field, lawyers, or policy makers. We don’t feel comfortable making explicit recommendations to individual producers, as we would not be the legal representatives of your organization if there was any question to our advice.

 

However, at the Fringe, we’ve learned that easy access to information can be just as powerful as a one-size-fits-all approach to education on new subjects. The Hollywood Fringe has compiled the following resources and information, as a way for our producers to find the information and make an informed decision for you/your production.

 

Navigating AB5 and Hiring Practices for the Hollywood Fringe Community

The Hollywood Fringe recognizes the complexity of AB5 and its impact on hiring practices within the arts community. We understand that this is a challenging issue, and while we are not experts in labor law or policy, we aim to provide valuable resources to help our community navigate these changes.

 

Resources and Information

  1. AB5 Overview
    • California Legislative Information: For the full text of AB5 and its amendments, visit California Legislative Information.
    • California Department of Industrial Relations: For official guidelines and FAQs on AB5, check out the California DIR website.
  2. Guides and Articles
    • The Actors Fund: Offers guidance and resources on navigating AB5 for performing artists. Visit The Actors Fund.
    • American Guild of Variety Artists: Provides insights and advice on how AB5 affects live performance professionals. See AGVA’s resources.
  3. Legal Advice
    • Legal Aid Organizations: For free or low-cost legal advice, consider reaching out to local legal aid organizations or bar associations.
    • Employment Lawyers: Consult with an employment lawyer for specific legal advice tailored to your situation.
  4. Workshops and Seminars
    • Local Theatre Associations: Many theatre associations offer workshops and seminars on labor laws and hiring practices. Check with local groups like LA Stage Alliance for upcoming events.
  5. Contact Us
    • Support: If you have questions or need further guidance, you can email us at support@hollywoodfringe.org. While we cannot provide legal advice, we are happy to connect you with resources or point you in the right direction.

Key Points to Consider

  • Understand the Impact: AB5 primarily impacts freelance workers by setting stricter criteria for classifying them as independent contractors. Ensure you understand how this affects your hiring practices.
  • Stay Informed: Keep up-to-date with any changes or updates related to AB5 to ensure compliance.
  • Consult Professionals: Seek advice from legal and financial professionals to tailor solutions to your specific needs and circumstances.

While the Hollywood Fringe is committed to supporting our community, it’s essential to rely on specialized resources and professionals to navigate the legal aspects of AB5 effectively.

Some beginning resources:

Who needs to care about AB5?

Any person who is paying employees or contractors as a part of their Fringe show.

 

What is AB5?

California Assembly Bill 5 (AB5), popularly known as the “gig worker bill,” is a piece of legislation that went into effect on Jan. 1, 2020, and required companies that hire independent contractors to reclassify them as employees, with some exceptions.

Links to the bill & other legal info:

How do I determine whether or not I need to hire someone as an employee or an independent contractor?

This is complicated, and we are not lawyers, nor can we speak to whether or not your production’s team would fit under these categories, but there are two tests that are used to determine the independent contractor’s status:

 

ABC Test

Assembly Bill 5 codifies a widely used legal standard known as the “ABC test” to determine employment status for the purposes of the California Labor and Unemployment Insurance Codes and clarifies the test’s application. In doing so, this bill seeks to end the harmful practice of worker misclassification.

  • In April 2018, the California Supreme Court issued the landmark decision Dynamex Operations West, Inc. v. Superior Court of Los Angeles which unanimously ruled in favor of the drivers and based its ruling on a three part “ABC” test used to determine employment status in other states. The court found workers can only be classified as independent contractors if a hiring business can prove the following three conditions: 
    • (A): The worker is “free from the control and direction” of the company that hired them while they perform their work. 
    • (B): The worker is performing work that falls “outside the hiring entity’s usual course or type of business.” 
    • (C): The worker has their own independent business or trade beyond the job for which they were hired.

Determining whether to hire someone as an employee or an independent contractor can be complex, and the specifics can vary depending on your situation. Here’s a detailed breakdown of the ABC Test, a common legal standard used in California to make this determination:

 

The ABC Test is used to assess whether a worker is an independent contractor or an employee. The test comprises three key conditions:

  1. Control and Direction
    • Condition A: The worker must be "free from the control and direction" of the hiring company in the performance of their work. This means the company cannot control how the work is done, only that the result meets certain expectations.
    • Example: A freelance graphic designer who works from their own office, using their own tools and methods, would generally be considered free from the company’s control.
  2. Work Outside Usual Course of Business
    • Condition B: The work performed by the worker must be "outside the hiring entity’s usual course or type of business." This means that if the work being done is a core part of the business’s operations, the worker is more likely to be classified as an employee.
    • Example: If a theatre company hires a freelance lighting technician to set up lights for a specific production, and lighting setup is a core function of the theatre’s operations, the technician might need to be classified as an employee.
  3. Independent Business or Trade
    • Condition C: The worker must be engaged in an "independent business or trade" beyond the job for which they were hired. This implies that the worker operates their own business or offers their services to multiple clients.
    • Example: A consultant who offers marketing services to various businesses and has their own marketing firm would generally be considered an independent contractor.

Application of the ABC Test

  • To Pass the Test: All three conditions must be met for a worker to be classified as an independent contractor. If any condition is not satisfied, the worker may be classified as an employee.
  • For Employees: If a worker fails to meet one or more of the conditions, they should be classified as an employee, and thus, they will be entitled to employee benefits and protections.

Steps to Take

  1. Assess Each Worker: Review each worker’s role and responsibilities against the three conditions of the ABC Test.
  2. Consult Professionals: Given the complexities of employment law, it’s wise to consult with an employment lawyer or legal advisor to ensure compliance with AB5 and other relevant regulations.
  3. Document Agreements: Clearly document the terms of your agreements with workers, outlining their status as independent contractors or employees.

Additional Resources

  • California Department of Industrial Relations: Offers guidance and resources on AB5 and worker classification.
  • Legal Aid and Consulting Services: Seek advice from legal professionals specializing in employment law to navigate specific situations.

By carefully applying the ABC Test and seeking professional guidance, you can make informed decisions about worker classification and ensure compliance with California labor laws.

 

Borello Test

Except for app-based drivers, real estate salespeople, and repossessors, workers in all the exempt categories must pass the Borello test to be classified as independent contractors. The Borello test (based on the California Supreme Court's decision in Borello vs. Dept. of Industrial Relations) is similar to the right of control test used by the IRS. It's not nearly as strict as the ABC test. Under this test, the most significant factor is whether the hiring firm has control or the right to control the worker both as to the work done and the manner and means in which it is performed. In addition, the following factors are to be considered:

  • whether the worker is engaged in an occupation or business that is distinct from that of the hiring firm
  • whether the work is part of the hiring firm's regular business
  • whether the hiring firm or the worker supplies the equipment, tools, and the place for the person doing the work
  • the worker's financial investment in the equipment or materials required to perform the work
  • the skill required in the particular occupation
  • the kind of occupation—whether, in the locality, the work is usually done under the hiring firm's direction or by a specialist without supervision
  • the worker's opportunity for profit or loss depending on his or her own managerial skill
  • how long the services are to be performed
  • the degree of permanence of the working relationship
  • the payment method, whether by time or by the job, and
  • whether the parties believe they are creating an employer/employee relationship.

While no single factor in the Borello test is determinative, the first one—whether the individual's work is the service or product that is the company's primary business—is given the most weight.

The Borello Test Overview

The Borello Test is used to classify workers as independent contractors for roles not covered by the ABC Test. It evaluates several factors:

  1. Control: The primary factor is whether the hiring firm controls how and what work is done.
  2. Occupation or Business Distinction: Is the worker's business distinct from the hiring firm's regular business?
  3. Work Integration: Is the work part of the hiring firm's usual business?
  4. Tools and Equipment: Who provides the equipment and workspace?
  5. Financial Investment: Does the worker invest in their own tools and materials?
  6. Skill Level: Does the work require specialized skills?
  7. Usual Work Practices: Is the work usually done under the firm's direction or independently?
  8. Profit and Loss Opportunity: Does the worker have a chance to earn more or lose money based on their skills?
  9. Duration and Permanence: How long and permanent is the working relationship?
  10. Payment Method: Is the worker paid by time or by the job?
  11. Intent of Relationship: Do both parties believe they are creating an employer/employee relationship?

Key Consideration

  • Primary Business: The most important factor is whether the worker’s service or product is the core business of the hiring firm.

Steps to Take

  1. Evaluate Control: Determine how much control the firm has over the worker.
  2. Review All Factors: Consider all relevant factors to classify the worker.
  3. Seek Legal Advice: Consult with a legal expert to ensure compliance with labor laws.

Resources

  • California Department of Industrial Relations: For guidance on worker classification.
  • Legal Advisors: To navigate specific legal situations.

More on these types of determination tests:

Other theatre/arts organizations’ resources on how to navigate

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