“If this had been something that we just caught wind of with six months or three months to spare, we would have gone under for sure.”
Just over a month and a half after Assembly Bill 5 (AB 5) went into effect in California on Jan. 1, Liz Lisle, managing director of Berkeley, Calif.’s Shotgun Players, considers her company lucky. AB 5, California’s new bill aimed at reining in employers who incorrectly or wrongfully classify workers as independent contractors, has sent shockwaves through the California theatre community, especially small, non-Equity companies.
The law stipulates that except in cases where employers can meet a certain set of requirements, everyone who works with them must be classified as employees, entitling them all minimum wage under California’s labor laws, as well as healthcare and workers compensation. The bill is mostly aimed at tech companies who take advantage of workers making a living in the “gig economy,” in particular Uber and Lyft drivers, for example, who may put in part- or full-time hours (or more) but are paid only by the drive, since they’re technically independent contractors. This deprives them of the same compensation and protections as someone who may work the same number of hours as an employee.
How to determine whether someone should be considered an employee? Legislators created what they call an ABC test. All of the following conditions need to be met for a worker to remain an independent contractor: A. The worker “is free from the control and direction of the hiring entity in connection with the performance of the work”; B. The worker “performs work that is outside the usual course of the hiring entity’s business”; and C., the worker “is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
Looking at these three stipulations, it’s easy to see why theatres had concerns. As theatre jobs inherently dictate the work being performed, the schedule, and the location, the law’s condition A is definitely not met. B and C would seem similarly hard for theatres to argue don’t apply to their workers, except that the bill outlines exemptions for certain “professional services,” including for graphic designers, photographers, freelance writers (who are waging their own battle against the law), and “fine artists.”
And here’s where confusion sets in. “Fine artist” is not defined at all by AB 5. The federal Bureau of Labor Statistics defines “craft and fine artists” as artists who “use a variety of materials and techniques to create art for sale and exhibition.” That doesn’t sound like it includes performing or other creative artists involved in theatre. Except the bill’s author, Assemblywoman Lorena Gonzalez, has furthered muddied the waters in her public statements.
“A musician is a fine artist,” Gonzalez said, according to Chloe Veltman in a report from NPR affiliate KQED. “I think as our world changes, the definition of a fine artist changes. This is going to be an ongoing discussion.”
That discussion has understandably left a lot of California theatres and theatre artists confused and concerned. Guides have been created, like the one prepared by Victoria Plettner-Suanders (nonprofit consultant and principal with WolfBrown) and Arlene Yang (partner at Brown Law Group in San Diego) and available online. But even they suggest reaching out to a lawyer for each individual circumstance to ensure compliance. Some theatres have been able to find lawyers willing to help pro bono, and some larger theatres have been able to pay for their own legal advice. But further down the ladder, smaller theatres are left grappling with the reality of a sudden increase in costs and little guidance on how to comply.
“It’s very difficult to get a clear view of what the right way forward is,” said Shotgun’s Lisle, whose company started to pay attention back in 2018 after the California Supreme Court issued its ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. That Dynamex ruling initially introduced the ABC test, which AB 5 then formalized into law, in theory clarifying its application and exemptions.
“The fact that we had some extra time to plan was really helpful,” Lisle said, “but I feel so terrible for all the organizations that didn’t realize until a few months ago. They’re just not producing. They’re just not doing shows. They’re canceling their seasons or they’re doing one show instead of four shows.”
Lisle explained that, for smaller theatres with only a small core staff of employees, there’s a huge difference between managing payroll and compliance for 10 people versus the 40 or 50 now on payroll under AB 5. Many companies don’t have the administrative structure in place to handle this shift, on top of the additional payroll taxes. Even Shotgun Players, she admitted, was having to put on smaller shows and hire fewer people.
“I don’t know who’s going to make that connection when they’re looking at our cast list,” Lisle said, “but there are definitely smaller shows this year. Which is really sad, right? That tax law has directly impacted the kind of programming that theatres are making.”
No one is arguing that theatre artists don’t deserve to be paid or shouldn’t be treated well. As Susie Medak, managing director at Berkeley Repertory Theatre, pointed out, there’s simply a fundamental disconnect between the law and the creative process of theatre.
“What concerns me the most is that this law doesn’t take into consideration at all the way creative artists work,” Medak said. “It has a desire to codify everyone’s work. The impulse behind AB 5, in making everyone an employee, is that everyone will work according to standard work conditions.”
This can include, she continued, an assumed eight-hour work day, the need to request permission to work overtime, and an obligation to participate in company-wide trainings required by laws and the Occupational Safety and Health Administration. But there may also be unforeseen impact on some of the creative freedom that freelance artists now enjoy.
“I think about the fact that when I go into our tech rehearsals now, and I look at all the monitors that are set up across the room, and how many of those people are working on other projects than our own,” Medak said. “One could argue the reason that they’re doing that, and I would agree, is because none of us individually pay enough to support them. But if they start working as employees, we absolutely have the right and we should be saying, ‘While you are working for us, you may not be working for anyone else. We’re paying for that hour.’”
Whether that would definitely happen is hard to say. It is indeed possible that increased cost in employing additional theatremakers would lead to greater pressure to get the most out of that investment, especially since additional workforce onstage would mean more administrative hires. Some small theatres, for instance, might find themselves needing full-time accountants, bookkeepers, or human resources representatives—positions that may not have existed in companies with only a handful of employees to begin with.
“Everybody is busy calculating what they think the cost of this increase is in terms of employee expenses,” Medak explained. “But what they’re not taking into account is the infrastructure—infrastructural costs that these companies are ill prepared to handle and that no one is talking about covering. When, for instance, the California Arts Council advocates for $20 million to offset this cost, it is a drop in the bucket in terms of what the real costs are to these arts organizations.”
State arts funding may be the place to look for this support. Indeed, earlier this year, Actors’ Equity Association (AEA) released a statement from president Kate Shindle noting that, despite progress made under Gov. Gavin Newsom’s leadership, California still ranked 26th in the nation for arts funding (according to 2019 figures from the National Assembly of State Arts Agencies). As AEA stands in support of AB 5, it calls for commensurate arts funding increases from state coffers.
“California has become a leader when it comes to employment protections,” said Brandon Lorenz, AEA director of communications. “So our focus is working with anyone that we can who is interested in making California a leader when it comes to arts funding. That 26th in the nation is not good enough. California must do better.”
A presumption of future support worries Medak. While asking the government to step up is fine and well, she said, funding trends are all in the opposite direction.
“One of the huge crimes we have in the field is the economic model on which we were built,” Medak explained, “which is assumed continued growth in the philanthropic community’s support for culture. That has not been the case. There has been, over the years, the steady drip, drip, drip of attrition in the philanthropic community for culture.”
To be clear, AEA’s pressure on California to step up their arts funding—which includes support for assemblywoman Gonzalez and fellow assemblywoman Christy Smith’s attempts to secure an additional $20 million in public arts funding for small nonprofits in the state’s next budget—may be an ultimate goal now that the law is in place. But it’s not the biggest benefit the union sees for non-Equity actors and stage managers.
“Theatre can be an incredibly dangerous profession,” Lorenz explained, noting that AEA has two full-time staff members dedicated to helping members navigate worker’s compensation claims. “AB 5 raises the standard so that there’s a basic minimum floor if you’re going to work in California as an actor or stage manager. Now you’ve got some basic protections. You’re going to be protected with worker’s compensation. There’s going to be unemployment insurance, wage protections. The same basic workplace protections that are commonplace in many other industries is going to make for a healthier and more sustainable arts economy.”
But in taking a long, hard look at how AB 5 will affect the smaller non-Equity theatres in California, Medak fears what will happen to smaller theatres on the way to an ideally healthier and more sustainable arts economy.
“There will be many fewer small companies and therefore fewer opportunities for people to hone their craft at the early stages of their career,” Medak said. “I think initially, many artists will move out of California and into states that have less restrictive regulations. But over time, what we’re already seeing is that this law, if unchallenged, will expand to the rest of the country.”
The response from Lorenz is reasonably simple: “For the young, up-and-coming non-Equity performers who are trying to start their career, what does it say to them if they’re not able to start their careers earning a living wage, not able to start their careers being protected with worker’s compensation? That locks a lot of people out of the business.”
It’s a familiar debate in the arts, and it’s behind similar battles over the showcase code in New York City, the Equity 99-Seat Plan in Los Angeles, and non-Equity theatre in Chicago. Would a basement theatre like Steppenwolf, to give just one famous example, have even been able to start if Jeff Perry and Gary Sinise had been required to classify themselves and their peers as hourly employees from the start?
“How do those companies start?” Medak wondered. “What happens to young people who come out of an undergraduate or graduate program and go, ‘We’re going to make theatre together’? You can’t start on a nickel any longer.” Finally, Medak admitted, “There is no ideal outcome. I think the likely outcome is that we will all be working in a very different way in a few years.”
Helping theatre navigate this uncertain future is something advocacy organizations like Californians for the Arts are trying to do. Brad Erickson, treasurer on the board of CFA and executive director for Theatre Bay Area, has been talking with theatres, lawmakers, and theatrical unions to try to find the best way forward.
“There’s just a lot of information, and some of it is disinformation, that’s out there,” Erickson said. “While people are trying to be helpful by saying, ‘Oh, I saw something on this website,’ often it’s wrong or it’s partly wrong, and may not be appropriate for one company when it might work for another.”
Erickson acknowledged the fear and anxiety facing smaller companies in California, who worry they might have to go out of business, while also noting that there may be instances where non-Equity actors will see benefits at theatres that have the resources and may decide they’re able to move them to full employee status. The outcome may vary widely depending on each specific business. This is a point Erickson and a Theatre Bay Area company member attempted to get across last summer to a staff person for the state’s Senate labor committee. Erickson recalled spending an hour on the phone explaining the business side of small-budget theatres: what it means for an actor to be Equity and how they get there; why some companies use Equity actors, some non-Equity, and some both. By the end, he said, he and his colleague were able to convey the daunting complications of the business end of theatre.
For lawmakers who don’t understand the intricacies of the theatre business, it can be extremely helpful to have the weight of unions like AEA behind a movement. For example, Erickson noted, AEA’s support was crucial to the successful passing of Proposition E in San Francisco, which allocated eight percent of hotel tax revenue to arts-related programming. And the theatrical unions, he said, have been very helpful in acknowledging the increased costs of doing business, and looking for more money to be steered toward the arts community. But Erickson is still talking to many small theatres whose leaders don’t see how they’ll be able to comply with the new law.
“Those are the ones that are looking at closure or doing a pivot and just making all of their artists volunteers officially, becoming, essentially, community theatres,” Erickson said. “For these small-budget theatres that we call ‘professionally oriented,’ which is where many folks coming out of acting schools and young designers and directors cut their teeth, where they invite the critics to come and review their work and put it in the papers, and they hold themselves up to professional standards—they’re the ones having to make a very difficult choice.”
It’s a complicated and confusing time. Despite there being a “clean-up bill” (AB 1850), again from assemblywoman Gonzalez, which attempts to clarify some of the language in AB 5, the new bill is not expected to change much, if anything, for theatre workers. In fact, the current language in AB 1850 still leaves “fine artist” undefined.
Erickson said he shared a story with Gonzalez about how he and five other artists came together 25 years ago to form their own company with little more than their credit cards, helpful mothers, and a grant. They set out to pay their artists as much as they could, paying themselves last. At the start, that amount was $350 per person per show. Like many others, he’s worried that the days of pulling together theatre like that, aiming to pay as much as you can in stipends to independent contractors as you grow, may be gone. And if companies go 100 percent volunteer, who, he asked, is going to be interested in working in that world?
“As an actor or designer or director, where do you work?” Erickson wondered. “You don’t start at Berkeley Rep. You start new small theatre companies with peers and people who are probably your age who are running it. That’s where artists get their start most of the time.”
The small, non-Equity theatre community in San Francisco and elsewhere in California is not dissimilar to other communities around the country. Cities like Chicago are built on the backs of storefront, non-Equity theatre. AB 5’s passing, while receiving a good deal of backlash from musicians and freelance journalists, has already been a talking point in the current presidential campaign, with Elizabeth Warren writing an op-ed in the Sacramento Bee in support of the bill and Bernie Sanders issuing a similar op-ed in the San Francisco Chronicle. Both, like the original bill, put their focus on the gig economy’s largest names, Uber and Lyft.
But are the arts really like huge tech companies? The consensus in the theatre field seems to be that there is a pressing need to talk to lawmakers to make sure they understand the arts and the business behind it. At this moment, AB 5 has become something of a political football in Washington, with supporters of a bill recently passed by the House of Representatives, Protecting the Right to Organize Act, taking pains to distance themselves from the controversial California law, while opponents of the PRO Act seek to highlight similarities. Without clarity about how the arts and artists fit into developing labor laws, lawmakers’ ostensibly admirable effort to rein in corporate excesses may create collateral damage, especially in the short term, for working artists.
“It’s a very difficult paradigm to imagine working in,” Erickson concluded. “The one we have currently is unjust and difficult, but it does actually form small companies that do grow, and it does get artists into the field and moving along in their careers.” On the other hand, he notes, “Artists are inventive. Necessity is the mother of invention, and all of that. So somehow a future will be carved out by people younger than myself, I am sure. Regardless of the paradigms.”
