I've been following this closely too. A classic example of a poorly written law with lots of unintended consequences in it. I found one article written by a CA business attorney who said on the one hand it depends on how the various venues choose to interpret it, they could say this is not a problem for them and do it as normal which means if it's one of your country club gigs in Palm Springs they still give you your checks and a 1099 at the end of the year but on the other hand their advisers could say the law is too vague, they don't want to be the test dummy for a court case and live music is cancelled until something changes.

If the gig is for a private party who are only using the clubs facilities then it becomes the private parties problem. If it's a wedding or something then no issue but if it's a corporate function using the clubs facilities then it's the same problem. I know as live musicians we may not care but this affects all the gazillions of DJ's too that we've complained about for years. Same principle.

That attorneys opinion as if he was speaking to a client in that situation is right now the law is the law so his advice is to cancel the entertainment. Or put you on the payroll and issue a W2. Unlikely for lots of reasons. He also said that the lady who wrote and sponsored the law is very willing to talk to people about an exception or suggestions for amending the law. The problem with that is the earliest that could happen is next October due to standard legislative scheduling. It could easily go into next year too.

That leaves us in the dark until then. IF it actually happens.

For folks outside CA this is about many companies who illegally classify workers as independent contractors when they should be regular W2 employees. By not doing that they save tons of money in payroll taxes, workers comp, health and unemployment insurance. Being an IC puts all that onto the worker. That's a legit point and the IRS publishes a 30 point fact sheet listing all the things that either make you an IC or not. As a tax pro, I can say for a fact the IRS is going after companies for doing that on the federal level. However, IRS rules are much, much more liberal about that than this new CA law is.

CA as usual, took that concept much further to the point it's impacting weekend warriors just doing some casuals for fun and extra spending money and all the thousands of one day studio gigs or music producer gigs or whatever. I did one studio gig in the last five years I think. Plus lots of other occupations way to numerous to list here. I do some yacht club and hotel gigs every year too and since those are corporate entities with professional advisors I'm also waiting to see how this shakes out.

If an act is big enough to be their own corporate entity then it's no problem, it's a B2B contract. But for anybody doing that there are a ton of expenses in CA like the annual $800 fee plus business licenses, filing corp or partnership tax returns and more.

I really have no idea right now how this is going to work out but it could get ugly.

Bob

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