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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. MarxVoice 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.
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:
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:
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. --------------------- 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. Email: peter@peterjmarxvo.com Web: www.peterjmarxvo.com |
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