OWC Radio Host, Cirina Catania tackles AB5 issues head on in an in-depth interview with entertainment and tech lawyer Jonathan Handel. of counsel with the law firm of TroyGould and a contributing editor at The Hollywood Reporter. Jonathan covers labor, workplace and legal matters and is a reliable and informed source when we need to know the latest on what is happening in the legal side of the entertainment and tech industries.

Do you qualify as an employee or are you a contractor? The answer isn’t so simple, and it may be even more complicated as it applies to those in the music, film, and TV industries. In California, new legislation called AB5 changed the rules effective January 1, 2020.

So how do this impact you? Listen in as we answer those questions.

Transcript

This is Cirina Catania with OWC Radio. I have Jonathan Handel on the line. He's an entertainment technology attorney at TroyGould, and also a frequent contributing editor at The Hollywood Reporter. Jonathan and I have spoken over the years about many issues involving unions and trade and things. Jonathan, you're always the go-to smart guy when I need to know the legal implications of anything that's current, that's happening in the industry. And recently, there's a lot of hullabaloo about this new AB5. So can you explain to our listeners what that is?

Sure, it's a pleasure to be back with you. AB5 changes the legal analysis, the legal criteria in California, for whether someone is considered an independent contractor or an employee when they're doing work for someone else. It's called AB5 because it was Assembly Bill 5, the state assembly, the state representatives. And it passed and was signed by the governor last month or several months ago, and it will take effect January 1st of this year and is now part of the laws of the state of California, the Labor Code. Perhaps the first thing to explain is, why do we care? What's the difference between for a worker and for an employer, the difference between someone being an employee versus being an independent contractor?

That would be awesome. Let's explain that.

Great. Okay. And it turns out that there are some pros and some cons on either side, on the one hand, employees are entitled to a variety of protections, protections regarding minimum wage, so-called Wage and Hour laws. The number of hours they can work, if they're not highly paid the number of hours, they can work before being given a rest break and a break for lunch and things of that sort. When people talk about being paid overtime, that's protection from in wage and hour laws, workers compensation and unemployment insurance when they lose their job, discrimination laws in many cases only apply if someone's an employee, not if they're an independent contractor. Social Security payments, when you're an employee, they deduct money for Social Security from your paycheck, but the employer also has to pay a share and additional share towards social security.

So those are advantages of being an employee. Now, the advantages of being an independent contractor are, first of all, that you're not tied to a single employer, whereas often an employee only has one job well, that's not necessarily the case. And the key thing is that if you make use of your home office, make use of your car, and certain other expenses, these things are deductible, for independent contractors are not deductible for employees. In fact, because of the Trump tax reforms, even something like a large expense like a commission to an agent, 10% of your wages going to an agent are not deductible for employees but are deductible if someone is an independent contractor. So I guess I think maybe the next thing to think about is, who falls into what kind of a bucket and can you simply say, "I'm an independent contractor," or "I'm an employee." Even before AB5 assumed that if you were treated as an employee if you were paid wages,