There are approximately 4,000 performing arts organizations in California, and most of them have annual budgets of less than $1.5 million. It has been the practice of most of these organizations to pay artists as independent contractors.
That was before Gov. Gavin Newsom signed Assembly Bill 5 in 2019, significantly curtailing freelance work in California. The law was intended to force employers to put workers on the payroll and pay all the related taxes, costs and employee benefits. It’s not working out that way for performing artists.
Because small performing arts groups run on small budgets, it’s impossible for these groups to cover the costs of hiring performers as employees. Payroll costs are about 30 percent higher for employees than for contractors. It doesn’t help that COVID-19 has limited live performances and ticket sales along with them.
Under AB5, businesses may not hire contractors unless they can prove that (A) the worker is free from control and direction of the hiring entity, (B) the worker performs work outside the usual course of the hiring entity’s business, and (C) the worker customarily engages, as an independent business, in the work that’s being performed for the hiring entity.
So a theater company with a broken water pipe can hire a plumber as an independent contractor, but the actors have to be on payroll.
If the budget can’t cover payroll costs, the theater company can’t exist. Sadly, some arts groups that can’t pay artists as contractors are asking them to work as volunteers.
AB5 contained a number of exemptions for a variety of types of work, and in September, Assembly Bill 2257 added more exemptions. Some artists in the music industry are now exempt, as are some magicians, comedians and puppeteers. But that still leaves many performing arts groups out in the cold.
Uniquely in the performing arts, many people may be willing to work for free in the hope that the exposure will bring future opportunities. That means AB5, far from protecting these workers, is creating the conditions for them to be exploited.
The author of AB5, Assemblywoman Lorena Gonzalez, says her bill isn’t to blame. “There is a need to professionalize the arts in a way that people can make a real living off of it,” she said, “and we’ve got to come to terms with ways in which that can be done.”
Gonzalez has also suggested that state funding might be one way to help small arts groups stay in compliance with California labor laws.
These are not good solutions to the problems created by Gonzalez’s legislation. To speak of “professionalizing” the arts is an insult to the professional performers who were paid as independent contractors until AB5 made that illegal. To suggest that taxpayers should be tapped to pay the bills for arts groups that were operating successfully before AB5 is an insult to taxpayers.
One problem with government putting its clammy hands on the arts is that content inevitably will be subject to scrutiny by politicians. It’s rarely a good idea to bite the hand that feeds you. What happens if a theater company that is accepting state money to cover its payroll costs produces a thought-provoking play on a controversial subject?
We’ll never know, because controversy may never be welcomed into a theater again.
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