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Musicians say AB5 strikes sour note with gig-driven profession



Most musicians make their livings through gigs — a word coined by jazz musicians in the 1920s to describe their freelance engagements.

Now that California is clamping down on gig work through AB5, the new law that took effect Jan. 1, musicians have assembled to say that it could have “a devastating and catastrophic impact” on them, in the words of a petition signed by more than 180,000.

“We are the originators of the gig economy,” said Jordan Bromley, a music industry lawyer who is a board member of the new Music Artists Coalition, backed by industry figures Dave Matthews, Don Henley, Anderson .Paak, Maren Morris, Meghan Trainor, Shane McAnally and others. The group has joined with the Recording Industry Association of America, American Association of Independent Music, the Recording Academy, Independent Music Professionals United and others to negotiate with labor on a way to make AB5 work for the industry.

“We’ve built an industry based on everyone figuring out a way to work independently and entrepreneurially,” Bromley said. “AB5 attempts to define the roles of employer versus employees where frankly sometimes it’s impossible.”

California is the acknowledged center of music creation. With the industry still recovering from digital disruption, many fear that business could migrate to Nashville or New York if the climate here becomes too inhospitable.

“This law could single-handedly end the music industry in California,” Ari Herstand, a singer-songwriter and organizer of Independent Music Professionals United, wrote in a viral blog post.

“Our whole industry is in a panic right now,” Herstand said in an interview. “I don’t know any independent musician who can afford the additional costs” of hiring others as employees. “Not to mention that if I become an employee for the gigs I play at music venues, I can no longer itemize my expenses under the Trump tax code. I had $50,000 in business expenses last year — equipment purchases and rentals, software and hardware, recording studio rentals, travel to/from gigs, lodging.”

Maurice Tani of Berkeley, who makes his living as a bandleader, singer, songwriter and instrumentalist: “I have serious concerns regarding how AB5 is going to affect my ability to hire individual musicians on a one-off basis, as well as my own ability to be hired by venues.”

Behind the scenes, intense negotiations are occurring among music unions, major labels, indie labels and consortiums representing artists both famous and obscure. The parties say they are within days of hammering out language to clarify musicians’ treatment under the new law — and hope to maintain much of the status quo. AB5 author Lorena Gonzalez, D-San Diego, hopes to include that language in a cleanup bill in March once a consensus is reached.

AB5 sets stricter standards for claiming that someone is an independent contractor rather than an employee. The problem, musicians say, is that their work is so fluid that they continually switch roles, working as performers by themselves or backing up others, doing live gigs and recording sessions, teaching, producing, composing and booking acts, for instance.

“Musicians rely on a wide variety of income sources,” said Berkeley’s Maurice Tani, who makes his living as a bandleader, singer, songwriter and instrumentalist. “I have serious concerns regarding how AB5 is going to affect my ability to hire individual musicians on a one-off basis, as well as my own ability to be hired by venues.”

Each gig requires a different arrangement, he said. He might contribute to a recording session in a studio, headline a live performance at a club, or play in a band at a corporate party. He might organize other musicians to join him or he might play in someone else’s group.

“If I pay someone $180 for two gigs and have to make them an employee and go through all the paperwork and bookkeeping involved, the whole thing becomes immediately untenable,” he said. “These people don’t work for me; I split the money with them.”

John Acosta, president of Local 47 of the American Federation of Musicians, which represents 7,000 musicians in Southern Cailfornia, says he sympathizes with musicians’ pain over the issue — but also thinks that many could benefit from the protections and benefits of being employees, such as workers’ compensation and unemployment coverage.

Even among his members, only a minority have full-time salaried music jobs, while most piece together part-time music jobs, freelance gigs, teaching and other day jobs.

Music insiders and press reports say that the federation of musicians blocked the industry from getting an exemption when AB5 was written, but Acosta, who’s heavily involved in the ongoing negotiations, says he wants to take everyone’s concerns into account and reach a compromise.

“Our ultimate goal is to ensure a healthy ecosystem for musicians throughout the state whether they’re in the union or not,” he said. “We’re trying to make sure we can maintain whatever improvement AB5 gives our industry while addressing concerns that are legitimate.”

For instance, two musicians who collaborate on a recording or a band performance should not have to form an employment relationship, he said. Nor should a garage band or struggling indie artists.

Where he thinks the law should require musicians to be classified as employees is in orchestras and theaters, as well as in some clubs and established labels. He wants to end exploitative practices like “pay to play,” where clubs require musicians to sell a certain number of tickets to land a gig. And for steady engagements at the same venue, “maybe there’s an argument to be made that (the venue is) an employer,” he said.

But many small theaters say they operate on a shoestring and simply can’t afford the increased costs of turning freelancers into employees. Small theater and opera companies in the Bay Area and Los Angeles already have had to cancel or postpone productions as they grapple with AB5. Gonzalez proposed $20 million in the 2020-21 state budget to help nonprofit arts organizations comply, but it’s unknown if that funding will be approved.

Some musicians who have already become employees fear that they could lose business.

Jeff Sherman of Petaluma has played the bass in a 10-piece dance band for 25 years. “The bandleader actually made us all employees to comply with AB5,” Sherman said. “He has had to raise the price of hiring our band by $650 a gig to cover payroll costs, payroll taxes, workers comp, etc. We have a few gigs that were booked prior to Jan. 1, but I anticipate our workload will decrease dramatically due to the increase of price.”

For many musicians, making sure that hiring entities are confident that they won’t be at risk is paramount.

“It’s largely so employers don’t get cold feet,” said Tad Piecka who plays guitar in the Los Angeles RAQIA Acoustic Trio. “If they’re concerned about the possibility (of being found in violation of AB5), they may just not hire anybody.”

Carolyn Said is a San Francisco Chronicle staff writer. Email: Twitter: @csaid

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The extra $600 in weekly unemployment benefits expired — but gig workers and self-employed Americans still qualify for benefits




For the first time during the pandemic, weekly jobless claims dipped below 1 million, but there are likely many more Americans who qualify for unemployment benefits who didn’t apply.

When the $2 trillion CARES Act passed in March, self-employed, independent contractors, gig workers and other nontraditional workers became eligible for unemployment benefits. Even though the federally-funded $600 a week in enhanced unemployment benefits, which was also part of the CARES Act, expired on July 31, these types of workers can still collect state-level unemployment benefits through the end of the year.

‘There is definitely a chance that the loss of the $600 is changing claimant behavior’

— Michele Evermore, a senior policy analyst at the National Employment Law Project

This nuance may have been lost in translation when the $600 benefit expired, said Michele Evermore, a senior policy analyst at the National Employment Law Project, an advocacy organization focused on workers’ rights.

“There is definitely a chance that the loss of the $600 is changing claimant behavior,” she said, meaning that unemployed workers may have wrongly assumed that they would no longer be eligible for unemployment benefits after July 31. A total of 10 million Americans have already been approved for unemployment benefits who otherwise would have been ineligible if not for the CARES Act, Evermore said.

Unemployment benefits are based on how much money a worker earned while they were employed. For traditional salaried workers, that amount gets automatically reported to state workforce agencies. But self-employed and gig workers often lack the ability to provide an exact net earnings amount, Evermore said.

“But if they can prove that they worked and got income or were offered a job and that job offer was rescinded due to COVID-19,” she said, they can collect what amounts to half of the average weekly unemployment benefit in their state.

In all 50 states and Washington D.C., the minimum amount is over $100 a week

In many cases that will enable them to collect more in unemployment benefits than they would if they had a traditional job where their earnings were reported automatically, Evermore told MarketWatch.

At a minimum, gig workers, independent contractors and other self-employed workers can collect the equivalent of the average weekly benefit in their state. In all 50 states and Washington D.C., the minimum amount is over $100 a week, according to the Department of Labor. That’s especially important because it means these types of workers will be eligible for an additional $300 a week under President Donald Trump’s executive order. (Anyone who gets at least $100 in unemployment benefits from their state would qualify for the extra $300.)

However, it could be some time before these workers actually get those benefits. State governors have said that state workforce agencies are not properly equipped to quickly implement the changes Trump’s executive order calls for.

Evermore said she hopes that Congress will consider extending the period of time gig and self-employed workers can collect unemployment benefits, but she is “worried we will reach a deadlock on this in December like we are seeing now with the $600.”

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DoorDash: Injunction In CA Over Gig Worker Status




DoorDash, the San Francisco-based prepared food delivery service, could be the latest gig company to face an injunction to treat its workers as employees, not independent contractors.

The Financial Times reported San Francisco District Attorney Chesa Boudin has filed for a preliminary injunction against the country’s largest food delivery service that would require the company to reclassify its workers as employees.

“We are seeking an immediate end to DoorDash’s illegal behavior of failing to provide delivery workers with basic workplace protections,” Boudin said in a statement. “All three branches of California’s government have already made clear that these workers are employees under California law and entitled to these important safeguards.”

If Boudin’s request is approved by the court, the ruling would apply to DoorDash workers in California. A reclassification of workers would mean gig workers with healthcare benefits, sick pay, paid leave and other benefits not currently available to them.

“In the midst of one of the deepest economic recessions in our nation’s history, today’s action by the district attorney threatens billions of dollars in earnings for California Dashers and revenue for restaurants that rely upon sales from delivery to keep their businesses open,” DoorDash told FT in a statement.

The action against DoorDash comes days after a California judge granted a similar injunction against Uber and Lyft at the request of California Attorney General Xavier Becerra.

On Monday (Aug. 10), California Superior Court Judge Ethan Schulman said the ride-share companies have until August 20 to reclassify their drivers. The companies are expected to appeal. The injunction requires Uber and Lyft to stop classifying their drivers as independent contractors pending further action by the court.

In response, CEO Dara Khosrowshahi told MSNBC this week that it may have to close temporarily.

“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” she told the network.

Like Uber and Lyft, DoorDash said most of its workers prefer to be contractors, arguing that flexibility over working hours and location is impossible under an employee model.

In November, voters will be asked to approve Proposition 22, a ballot question that would repeal the gig law.

FT reported DoorDash has contributed $30 million to a joint fund supporting the ballot initiative. Uber and Lyft have each put in the same amount, along with contributions from other gig economy groups. The total backing for the “Yes on 22” campaign now stands at more than $110 million, the newspaper reported.

The opposition has only raised $1.6 million, according to the filings with the state of California.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

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Do Lawsuits in California and Massachusetts Threaten the Gig Economy as We Know It? | Ballard Spahr LLP




The COVID-19 pandemic has underscored the important role that gig workers play in our economy. At the same time, it also has highlighted the working conditions of gig workers, spurring several states to take action on their behalf.

Attorneys General in California and Massachusetts as well as the California Labor Commissioner have filed suit against rideshare companies Uber and Lyft, alleging the companies misclassify drivers as independent contractors instead of employees. Just yesterday (August 10, 2020), a judge in California issued a preliminary injunction in one of those cases, finding that Uber and Lyft must convert their drivers from independent contractors to employees. If the claims ultimately are successful, and gig economy businesses such as Uber and Lyft are forced to permanently make their workers employees, it could create a significant shift in the gig economy business model as we know it.

The first of these suits came May 5, 2020, when the California Attorney General sued Uber and Lyft, alleging that both companies are misclassifying their drivers as independent contractors instead of employees. In doing so, Uber and Lyft deprive their drivers of minimum wage, overtime, rest breaks, paid sick leave, expense reimbursements, workers compensation, unemployment insurance, and paid family leave that would be available to an employee. The California Attorney General seeks an injunction and restitution for unpaid wages, meal and rest break premiums, unpaid sick leave, taxes, and other penalties.

On August 10, 2020, Judge Ethan Schulman of the San Francisco Superior Court issued a preliminary injunction in that case, ordering Uber and Lyft to re-classify their drivers as employees. In issuing the injunction, Judge Schulman found that the Attorney General would likely be able to prove that the drivers are not independent contractors under state labor law because they do not perform work that is “outside the usual course of their business.” Further, in balancing the harms of issuing an injunction, Judge Schulman found that by misclassifying workers as independent contractors, Uber and Lyft are depriving drivers of a “panoply of basics rights and protections,” which has a “ripple effect[] on law-abiding competing businesses, and on the public generally.” By contrast, the harm to the ride-sharing companies is merely the cost it will take to bring their businesses into compliance with state law. The judge stayed the order for 10 days to allow Uber and Lyft to seek an immediate appeal.

The California Labor Commissioner filed separate lawsuits against Uber and Lyft on August 5, 2020. The suits allege, among other things, that Uber and Lyft committed wage theft by misclassifying their drivers as independent contractors, rather than employees. The Labor Commissioner alleges that both companies failed to pay wages in a timely fashion and did not provide accurate itemized wage deduction statements. The Labor Commissioner seeks similar relief to that sought by the Attorney General.

These lawsuits come on the heels of California Assembly Bill 5 (AB-5), which went into effect on January 1, 2020. Under AB-5, workers in California are considered employees unless they are free from control from the hiring entity, perform work outside of the hiring entity’s usual business, and engage in an independently established trade or occupation. Uber and Lyft continue to fight that legislation and are backing a ballot initiative in California that would exempt them from the requirements of AB-5.

Uber and Lyft’s challenges are not limited to California. On July 14, 2020, the Massachusetts Attorney General also sued Uber and Lyft, claiming systematic denial of benefits, like sick leave, paid time off, and unemployment insurance. The suit seeks a ruling that the drivers are employees under state law, as well as an injunction preventing Uber and Lyft from denying the drivers employment protections.

A wide array of companies that rely on gig workers—from food service to child care—could be impacted by court decisions ordering companies to comply with state wage and benefit provisions. This could lead to a fundamental shift of business models in those states, or could drive certain businesses out of those states if they cannot make business profitable using an employee model with the added wage, tax, and benefit costs.

Recent decisions in New York and Pennsylvania have found that Uber and Lyft drivers are employees under state unemployment laws as well. Those decisions are Islam v. Cuomo and Lowman v. Unemployment Comp. Bd. of Review. Similarly, on October 14, 2015, the Oregon Bureau of Labor and Industry issued an Advisory Opinion, stating that Uber drivers are employees for purposes of Oregon state law.

Moreover, in November 2019, the New Jersey Department of Labor and Workforce Development determined that Uber drivers were misclassified as independent contractors and assessed Uber $650 million in past due unemployment and disability insurance taxes. While these decisions and actions in and of themselves do not necessarily have the same impact as the Massachusetts and California enforcement actions, they still could contribute pressure on the gig economy business model.

These cases also serve as an important reminder to companies to review their classification practices. The law dictates whether a worker is an employee or independent contractor. Simply labeling someone an independent contractor is not sufficient if legally inaccurate. The consequences for misclassification can be steep, including liability for unpaid wages, taxes and benefits, as well as civil and criminal penalties.

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