Business of VO: The ABC’s of AB-5

If you live in California, you’ve probably heard and felt much of the fear and uncertainty around California’s labor legislation AB5. What is it? Are you an employee? Or, are you an independent consultant? Well…it depends. Anne’s encouraging and informative interview with 3 x special guest Rob Sciglimpaglia, a lawyer with deep knowledge of employment and compensation issues, voice artist, Amazon bestselling author, award-winning producer and actor gives assurance to California-based talent to stay their course. Find out if this law is really as easy as ABC.

And since similar legislation is turning up in other states such as NJ, NY, ILL and even at the national level (HR2474), this discussion is worthwhile for talent throughout all our 50 states. 


Takeaways

Quick Concepts from Today’s Episode:

  1. AB-5 defines who is an employee vs who is an independent contractor

  2. Employees have more rights

  3. The ABC test answers who is an employee under the law

  4. ABC Test: A- Is the worker free from control and direction? B- The worker performs work that is outside of the usual work of the hiring entity and C- the worker is regularly engaged in this work

  5. The “B” part of this test is the most important

  6. Employers in California MUST use the ABC test

  7. Here’s how the ABC test applies to voiceovers (in Rob’s opinion): A VO is being hired by a recording studio, or animation studio, or an agent, and these are in a different profession, so a VO is not an employee

  8. It’s arbitrary and this could be intepreted different ways

  9. Union voice artists are already employees

  10. Loan out companies are also a murky issue

  11. Is VO Exempt as a “fine art?”: There’s no definition, so we don’t know

  12. The fines that companies have to pay are making people afraid and only willing to hire “employees”, this damaging the gig economy

  13. You will not be fined if you work as an independent contractor, when you should have been an employee. The company hiring you would face fines

  14. To pay as an employee, you have to pay half of the taxes and then have the other half taken out of their paycheck

  15. You can hire an editor, that’s a different profession

  16. You can hire a personal assistant, if they have a certain degree of freedom

  17. Each state has their own version of this law. The ABC test is a federal test

  18. If you’re an independent contractor, you pay all the taxes, vs as an employee, the hiring company pays half of the taxes

  19. The court is going to have to interpret this law before we have any concrete answers

  20. When you use an paymaster you’re being payed as an employee

  21. The potential hirer might make you fill out a lot more forms!

  22. Anything we should have in our contracts to protect us from violating AB5? Burden is on person hiring the VO to do the ABC test.

  23. It should be as simple as you have to pass the ABC test. It may not be that simple for the hiring entity, they may require additional paperwork to determine you are IC.

  24. AB5 will spur litigation of many other cases which will define the legal effect. It’s impossible to codify every situation for IC versus employee.  

  25. If you’re paid as an employee, or through a paymaster, there is no worry.

  26. If you’re hiring a VO to do something not in your profession, they are ICs. If you are hiring them in same profession, pay through a paymaster.

  27. Just keep doing what we’re doing. Unless you’re being hired by another voice talent, you are not an employee

  28. We’ll have more understanding once the first big case is litigated

Tweet This

Share ideas with your own network ++

I feel so relieved to know I'm still an independent contractor! #VOBOSS

Keep Calm and Independent Contract On! #VOBOSS

Now I know my ABC's, now who wants to hire me? #VOBOSS C


Referenced in this Episode

Direct links to things we brought up ++

  1. Read the text of AB-5

  2. Read more about AB-5

  3. Check out Vocal Booth To Go and get 5% off with code: VOTech-Guru-5

  4. Find out about Rob and his book Voice Over Legal

  5. Learn more about Castvoices.com 

  6. Recorded on ipDTL

  7. Awesome editing by Carl Bahner

AB-5 Specific Resources:

Facebook Groups:

Freelancers Against AB5

Fight AB5

Freelancers & Gigging Musicians Fighting AB5

Twitter:

Faces of AB5 @Ab5Of  (also ref ab5facts.com)

@KevinKileyCA –  CA Assemblyman, will be initiating a vote on #AB1928 (Repeal of #AB5) by the whole Assembly.

Other:

https://rolls.bublup.com/Anderson/AB5-Personal-Stories  (includes VO stories)

Freelancers Against “Pro Act” (the national version of AB5)

Peter J. Marx, an attorney and voice actor:

  1. VoiceOverXtra – 01/20  https://www.voiceoverxtra.com/article.htm?id=00PSOPDK states: “In reality, AB 5 is of less concern for voice actors than for those who hire them. Misclassification can have substantial negative consequences for the hiring entity, as was already the case prior to the enactment of AB 5, which simply made it more difficult to classify a worker as an independent contractor.”

  2. Courvo.com 01/20: https://courvo.com/2020/01/cas-ab-5-a-legal-expert-and-voice-actor-responds.html

Forbes 02/27/20: “Will California’s AB5 Law Gag Your Gig Retirement?”

“In terms of consequences (whether intended or unintended), AB5 might more descriptively be called the “Gig Gag Law.” “California-based companies/employers are responsible for making sure all of their contractors are properly classified,” say Emily D. Baker, an attorney and podcast host based in Los Angeles. “However, for contractors that live in California and work with out of state businesses the contractor and the business must both be aware of California’s employment law and if the contractor is a misclassified employee. This is why you see companies like Vox Media severing ties with all California freelance writers.”

Dynamex Decision

Other legislation of interest:

  1. HR2474 – national version of AB5, passed in House, not likely to make it to Senate (according to my CA senator)

  2. SB806 (CA Senator Shannon Groves) – repeal AB5 and replace

  3. AB2075 (CA Assemblyman Kevin Kiley) grace period through next year of AB5

Full Episode Transcript

>> It’s time to take your business to the next level, the BOSS level! These are the premier business owner strategies and successes being utilized by the industry’s top talent today. Rock your business like a BOSS, a VO BOSS. Now let’s welcome your host Anne Ganguzza.

Anne: Hey everyone. Welcome to the VO BOSS podcast. I’m your host, Anne Ganguzza, and I’m coming to you live from a brand spanking new Vocal Booth To Go, a four by six, one of the biggest that I’ve stood in to date. It is amazing, I want to give a big shout-out and thank you to my good friend and booth builder Tim Tippets for bringing this to me and setting it up for me, and also a big shout-out to Jeff, owner of Vocal Booth To Go. You guys can sound like a BOSS like I do [laughs] in this Vocal Booth To Go. And you can save 5% on any product by using the code votechguru-5. Thanks so much to Tim Tippets for that and Jeff. Thanks, guys. You are amazing and thanks for helping to sponsor this episode. Okay, on with the episode! Super excited, guys, to be here with third time VO BOSS special guest, more than a lawyer, Mr. Rob Sciglimpaglia. Thank you so much for joining us again for this very special podcast on something that I think the voiceover community has had a multitude of questions on. We really just need to get someone’s expert advice, and who better than Rob Sciglimpaglia? Who is more than just a lawyer. [laughs] Rob is a certified Worker’s Compensation specialist, a national top 100 trial lawyer, gosh, a national top 10 personal injury lawyer, a super lawyer, well, we all knew that, right, since 2009 and a superb 10.0 – is that 10 point O – rated AVVO lawyer. And not only that, he is a voice artist, actor and director. Rob, I think you’re in Super Bowl commercial that is, is that not in a contest now?

Rob: It was.

Anne: For being one of the best?

Rob: It was on CBS greatest commercials. It’s been on like a bunch of times. It was number seven this year.

Anne: Ahh. And last but not least, the Amazon number one best selling author of Voiceover Legal – guys, if you have not taken a look at that book, it’s an amazing resource. I’ll give you some more information on that at the end of the show. Rob, thank you so much for being here with me today and answering all of these important questions that I know a lot of bosses out there want to know the answer to.

Rob: My pleasure.

Anne: Yeah. So today, we’re going to talk about California’s new AB5 law. I think probably one of the biggest questions that I get over and over in the forums is “can you just explain it to us in layman’s terms?” Like, “what is AB5 and how is it going to affect me and my voiceover business?” How is that for a small question to begin with?

Rob: Absolutely. I mean, AB5, the issues behind AB5 are not new. They’ve been being litigated, been going on for years and years and years and years. Basically what AB5 deals with is an independent contractor versus an employee. I litigated a case back in 2009 that went to the Connecticut Supreme Court. It’s called Rodriguez v. ED Construction and that was the issue. In Worker’s Comp., it happens a lot where the worker gets injured on the job, and are they an independent contractor or are they an employee and then covered under comp? That issue comes up all the time. That was the issue in that case. Worker was determined to be an independent contractor, not an employee so they weren’t covered under comp., but there’s a couple of tests that are under federal and state law to determine whether or not a worker is to be classified as an independent contractor or an employee. One of the tests is the famous ABC test.

Anne: Yes, that’s what we keep hearing all about.

Rob: Right, and that’s what AB5 did. It made ABC the test that had to be used. The ABC test sometimes can be ambiguous. There’s other tests that evolved under the law, like in Connecticut the case of Hanson v. Transportation General became the test, if ABC didn’t answer the question, you go to this test. And basically it’s under Hanson is whether you had a right of control over the person, over the worker. So if the employer or the hirer had the right to control that person in any way, then they would be considered an employee. That test under California law is the Borello test. So I’m sure you’ve heard people that have been following AB5 know what the Borello test is. It’s the same standard in Connecticut. You have the ABC test first. If you go through those steps and it’s still ambiguous, it’s still up in the air, you’d go to the next test, you know, which in Connecticut was Hanson. And in California it was Borello. So basically what happened was back in 2018, there was a case in California called Dynamex. Dynamex Operations West v. Superior Court. They were trying to figure out was this driver an independent contractor or was the driver an employee of the company? They went through the ABC test, and they couldn’t figure it out, so they went to the Borello test, and they determined that under Borello, there was not control because the person has right of their own schedule, they use their own car, that kind of stuff. They determined that the person was an independent contractor. Right? The Supreme Court overturned it and said no, you have to use ABC. And they determined that he was an employee, so that’s what Dynamex tested. Basically, let me go over the ABC test so that everyone –

Anne: Yeah, that would be great. What are the stipulations in the ABC test?

Rob: If a worker is hired by a company, right, they’re either going to be classified as an employer or an independent contractor. Under the ABC test, there’s three prongs basically. One, is the worker free from control and direction of the hiring entity? So you know, basically do they set their own schedule, do they use their own tools, that kind of thing? Do they figure out how they’re going to do the job, say it’s a carpenter, and the employer is not going to tell them, you need to put a nail there. That kind of thing.

Anne: What about a directed VO session though? I know that that’s on everybody’s minds.

Rob: Well, we’ll get there in a second. That’s the first one. The second one, this is the big one, the worker performs work that’s outside the usual course of the hiring entity’s business. And the worker is customarily engaged in independently established trade, occupation or business of the same nature as that involved in the work performed. So this is the big part of this test. This is where it’s stringent. What that means is, I’m a roofer. Okay? And I get hired by a roofing company to do work on a roof. What this says is because I’m a roofer, and I’m in the same occupation as the roofing company, I’m an employee. That’s what this is, ABC. So it doesn’t matter if I show up, you know, my own tools and on my own time, and I do the roof the way I want to do it without getting any control or any direction, right? As long as I’m a roofer and a roofer company hires me, under ABC, I’m considered an employee. Alright? It’s as simple as that, the ABC test. That’s what California codified. That’s what Dynamex said. Dynamex said you have to use the ABC test under this set of circumstances. So what they did is – every single independent contractor versus employee issue is a question of fact, they’re all different. There’s nothing that’s the same about them.

Anne: Right, right.

Rob: So the legislature did in California stupidly was said everyone has to use the ABC test.

Anne: And that’s it, no other test.

Rob: Forget Borello. You have to use the ABC. So basically what that comes down to, what it boils down to, is if someone is in the same occupation as the hirer, they’re an employee. That’s what it comes down to un