California Governor Signs Law on Gig Economy That Could 'Gut the Music Industry'

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Governor of California Gavin Newsom at Golden 1 Center on March 17, 2019 in Sacramento, Calif. 

California's governor on Wednesday signed sweeping labor legislation that aims to give wage and benefit protections to rideshare drivers at companies like Uber and Lyft and to workers across other industries.

The closely watched proposal could have national implications as lawmakers, businesses and unions confront the changing nature of work and the rise of the so-called gig economy.

"California is now setting the global standard for worker protections for other states and countries to follow," Democratic Assemblywoman Lorena Gonzalez, the bill's author, said in a statement.

The legislation signed by Gov. Gavin Newsom makes it harder for companies to classify workers as independent contractors instead of employees, who are entitled to minimum wage and benefits like workers compensation.

While effect on ridesharing and meal delivery companies has seized the spotlight, according to Gonzalez, it affects up to a million workers. That includes those working in the state's music industry and executives have warned the law would specifically crush the independent sector. Under the new law, producers, engineers, publicists, managers, dancers, background vocalists and others hired by artists could be defined as employees and subject to stringent employment regulations. 

"Unless there is an exemption for the music industry, it will make every studio engineer, employees for whoever is hiring them," American Association of Independent Music (A2IM) president and CEO Richard J. Burgess told Billboard earlier this month. "On a practical level, I don't see how it can work."

Gonzalez told Billboard she had been meeting and discussing all year with artist unions and the recording industry on how this bill would impact the work of musicians, but that in the end the music industry could not come to a consensus on language. Instead, the groups preferred no amendment in AB5 at all.

Burgess echoed this difficulty, saying industry groups had been "running into a brick wall" trying to get this exemption included. He added, the now-previous system had been working fine and the law passing would "gut the music industry." 

"Our coalition is disappointed we could not come to a consensus with our colleagues in labor in order to protect and support Californian independent artists, producers, engineers, and musicians," said Burgess Wednesday in a joint statement with the Recording Industry Association of America chairman and CEO Mitch Glazier and attorney Jordan Bromley of the Music Artists Coalition. "Rest assured that we will not stop until we have a solution that works for all of us in the music business. In the meantime, recording artists, producers, musicians and everyone else in our music ecosystem in California will have to be very careful when they enter into or initiate a recording or writing session. It will be hard to make music in California until this crucial exemption is won."

Meanwhile, Uber, Lyft and DoorDash are pushing Newsom to come up with a third option for gig companies and have threatened to spend $90 million on a 2020 ballot measure if they are not successful.

Newsom, for his part, said he wants to keep negotiating with labor and business leaders to ensure that gig workers can collectively bargain.

There's been dispute over whether giving them employee status in California would allow them to form a union, because the National Labor Relations Board still considers gig workers to be independent contractors.

"I will convene leaders from the Legislature, the labor movement and the business community to support innovation and a more inclusive economy by stepping in where the federal government has fallen short," Newsom wrote in his signing statement.

Uber general counsel Tony West has suggested Uber will not automatically start treating its drivers as employees come Jan. 1 and defend its current model if it faces legal challenges.

Uber and Lyft have offered to give employees a base hourly wage, access to benefits and a right to bargain across the industry.

"We've engaged in good faith with the Legislature, the Newsom administration and labor leaders for nearly a year on this issue, and we believe California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work," Uber spokesman Davis White said in a statement.

UPDATE: This article was updated at 7 p.m. EST to include a joint statement from A2IM, the RIAA and MAC.


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