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VOICE OVER INCOME
Are You An Independent Contractor Or Employee?
California AB 5: Basic Info For Voice Actors
January 14, 2020

By Peter J. Marx
Voice Actor & Attorney

New California legislation, known as AB 5, revises the factors to be applied in determining whether a worker is to be classified as an independent contractor or an employee, and in effect tends to limit use of the independent contractor classification.

AB 5 has given rise to considerable discussion as well as a fair amount of controversy, and some concern has been expressed in the voice over community.

What follows is offered to clarify what the statute provides and hopefully eliminate any misunderstanding.

By way of background, I am an LA-based voice actor, and though I've been around for awhile, as a practical matter I'm relatively new to the field. I have also been a member of the California Bar for over 50 years, and while now pretty much retired, one area of focus in my practice was employment law.

I still serve as a mediator, and over the years have mediated countless cases where the primary issue was misclassification, i.e., did management misclassify a worker as an independent contractor rather than as an employee.

AB 5: CLASSIFYING WORKERS

In 2018 the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court, which substantially affected the ability of employers to classify workers as independent contractors.
(Pursuant to the court's opinion, Dynamex appears to have a business model similar if not identical to Uber, the main difference being that Dynamex transports packages rather than people.)
The Dynamex opinion is somewhat limited in its application, but in adopting AB 5 the legislature stated its intent to "codify Dynamex and clarify the decision's application in state law." 

The legislature further stated:
"It is also the intent of the Legislature in enacting this act to ensure workers who are currently exploited by being misclassified as independent contractors instead of recognized as employees have the basic rights and protections they deserve under the law, including a minimum wage, workers' compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family leave. By codifying the California Supreme Court's landmark, unanimous Dynamex decision, this act restores these important protections to potentially several million workers who have been denied these basic workplace rights that all employees are entitled to under the law."
THREE-PART TEST

Accordingly, the legislature adopted the three-part test set forth in the Dynamex opinion to determine whether a worker is to be considered an employee or an independent contractor.

Thus, AB 5 provides that a worker "shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:
(A) "The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) "The person performs work that is outside the usual course of the hiring entity's business.

(C) "The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed."
AS A PRACTICAL MATTER ...

Note that while all three elements of the test must be satisfied if the worker is lawfully to be classified as an independent contractor, as a practical matter (with possible exceptions see below) the second element of the test ("The person performs work that is outside the usual course of the hiring entity's business") is often likely to be the most determinative.

For example, if an auto repair shop engages a plumber to repair the sink in the customer restroom, the plumber is not engaged to repair automobiles but rather to repair plumbing, and thus "performs work [plumbing repair] that is outside the usual course of the hiring entity's business [auto repair]."

As such, assuming that the other two elements of the test are met, the plumber may properly be classified as an independent contractor.

That being said, with a new standard such as the three-part test set forth in AB 5, it is more or less inevitable that some uncertainty may arise, and at least in certain respects it may be awhile before clarity develops.

HOW IT AFFECTS VOICE ACTORS

Litigation has already been initiated challenging this legislation, and voice actors should of course be attentive to this and other developments. But in my view for the moment, they should not make any changes, and indeed should not be overly concerned.

Leaving aside the not insignificant question of whether it would be preferable to be classified as employees, I believe a valid argument can be made that pursuant to the three-part test, voice actors may properly be classified as independent contractors.

With respect to the second prong of the test, voice actors are not in the business of producing films, commercials, audiobooks, promos, etc. As such, it can reasonably be asserted that a voice actor "performs work that is outside the usual course of the hiring entity's business," thus satisfying the second prong.

The voice actor provides one element of the production, and as such is in the same position as an outside fuel pump specialist who is engaged to repair a vehicle's fuel pump in conjunction with an auto repair shop's overhaul of the entire engine.

Both the voice actor and the outside fuel pump specialist simply provide one element the hiring entity needs, but in and of themselves perform work "that is outside the usual course of the hiring entity's business."

WHO'S IN CONTROL?

In fact, it may be more difficult in the case of voice actors to satisfy the first prong of the three-part test: Is the voice actor "free from the control and direction of the hiring entity in connection with the performance of the work," or does the booth director in fact exercise such control?

I believe the voice actor still controls his or her performance e.g., in determining pitch, volume, pace, inflection, emphasis, and the many other choices voice actors make in reading copy. Yes, often if not always there will be input from the booth director, but the voice actor still makes his or her own choices in response to what the director requests.

EXCEPTIONS TO THE RULE

Furthermore, AB 5 contains a number of exceptions to application of the Dynamex three-part test, in which case a previously applied, somewhat less rigorous test will continue to be used.

Among the exceptions which may apply to voice actors are those concerning people who provide "professional services." Included in the definition of those who provide "professional services" is a "Fine artist," which presumably would include a voice actor.

Note: Among other requirements, the person providing professional services more than six months after the effective date of AB 5 must have a business license, in addition to any required professional licenses or permits.

In summary, though it's too soon to know how this will all evolve, my sense is that AB 5 will not significantly affect voice actors who wish to retain their status as independent contractors.

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.

SOMETHING TO THINK ABOUT

As noted above, not discussed here is the fundamental question of whether, in fact, it is preferable to be classified as an independent contractor.

Different work circumstances may lead to different conclusions in this regard, though the California legislature has obviously concluded that in many situations the independent contractor classification deprives workers of significant rights to which they would otherwise be entitled.

Parenthetically, this new legislation may be an appropriate stimulus for voice actors in California and perhaps elsewhere to review how they conduct business.

Consult with an accountant re tax aspects, but in assessing the suitability of your business entity or whether you should have one (not only with respect to AB 5, but generally), consult with legal counsel.

Hopefully, all the foregoing is useful. Questions, comments and suggestions are welcome.

Please note that this article is not intended as legal advice as such, but rather simply reflects my thoughts concerning this significant development in California law.
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ABOUT PETER
Peter J. Marx is a Los Angeles based voice actor who focuses on narration and commercials, and who also has voiced such diverse characters as a Mossad agent and a talking dog. Having lived and worked in France, he is fluent in French and enjoys recording in that language. He has also appeared in stage productions in the Los Angeles area for approximately 25 years. Additionally, Peter has been a member of the California Bar for over 50 years, focusing on business, employment and entertainment matters. Though now mostly retired from practice, he continues to serve as a mediator, finding it particularly gratifying to participate in resolution of disputes by bringing the parties to agreement.


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