California workers blame a new labor law for lost jobs. Lawmakers are scrambling to fix it
The Sacramento Jazz Cooperative is a struggling nonprofit, operating on a shoestring budget during its three-year history as it presents Monday night concerts at the Dante Club. Now it has another problem on its hands — a controversial California labor law that requires it to hire musicians as employees.
Since Jan. 1, the jazz co-op has had to contribute to musicians’ Social Security and Medicare, while withholding payroll taxes from their checks. Founder Carolyne Swayze said the law is proving costly to the co-op and threatens its viability, potentially hurting musicians.
“I’m not sure if we can hang in there,” she said. “It might be different if we were in Chicago or LA or New York.”
The new law, Assembly Bill 5, has generated outrage from a wide range of Californians, from musicians to therapists to truckers and freelance journalists.
It requires businesses to classify more workers as employees entitled to benefits like sick leave and overtime pay. But some workers affected by AB 5 say it’s caused them nothing but grief and anxiety. One online media company, Vox, parted ways with 200 freelance journalists rather than hire them as full-fledged employees.
Critics of the law are fighting back. Some have gone to court. Uber has vowed to challenge the law at the ballot box — while also changing its ride-hailing platform in an effort to have its drivers remain classified as independent contractors instead of employees.
Supporters of the law say AB 5 extending benefits to “gig economy” workers means more of them are being treated fairly. But it’s having unintended consequences for organizations such as Swayze’s, leaving lawmakers scrambling this year to change the law.
“Even when we passed the bill, we knew there were outstanding issues,” said Assemblywoman Lorena Gonzalez, the San Diego Democrat who wrote the law. “We’re continuing to take feedback and listen to folks.”
The music industry is one that needs some relief from the new law, but there’s not yet agreement about what that should look like, Gonzalez said. Freelancers are suing over a limit on how many pieces they can write for a publication, which they argue violates the First Amendment.
Even as Gonzalez wants to tweak AB 5, she and fellow Democrat Assemblywoman Christy Smith of Santa Clarita have a plan to spend $20 million in state funding to create grants that would support small arts nonprofits trying to comply with the law. Gov. Gavin Newsom is proposing a separate $21.5 million in the budget to boost compliance and ramp up enforcement of the law through the state’s justice department and labor agency.
Swayze said paying for unemployment insurance, workers’ compensation and other benefits has increased the jazz co-op’s costs by 15 percent — a significant hit for an organization that runs on $85,000 a year in donations and ticket sales. She’s been reluctant to book any shows beyond March.
“It’s kind of a mess. The musicians aren’t happy campers,” she said.
Joe Mazzaferro, leader of a septet that performed for the Jazz Cooperative last month, said the withholding reduced his band’s pay for the night by about $20 per member.
“It was a little frustrating, to say the least. We musicians, we expect we’re going to be making a certain amount,” he said, adding that he’s afraid nightclubs will start cutting back on the musicians they hire to save money — opting for a trio instead of a larger band, for instance.