The Coast News Group
Peter Kalivas of PGK Dance in San Diego sees Assembly Bill 5 as a grave threat to professional theaters and artists. Those independent contractors in the industry must now be classified as employees, but he said the law is negatively affecting those people. Courtesy photo

Assembly Bill 5 threatens performing artists, theatres

REGION — Draconian, an abuse of power, arrogant and out of touch are how several local actors are describing the newest labor law enacted Jan. 1 and its author.

Assembly Bill 5, authored by Lorena Gonzalez (D-San Diego), has hundreds of thousands of working professionals and businesses frantically trying to align with the new law. The controversial bill expanded the Dynamex decision, and forces businesses to prove a worker is an independent contractor.

Yet for professional performers such as Tim West, 59, and Peter Kalivas, 55, both of San Diego, AB 5 is threatening their careers, businesses and the future of performing arts.

But for West, an independent actor and who also works at Cygnet Theatre, and Kalivas, a dancer and singer who once performed in “Cats” on Broadway and owns PGK Dance in San Diego, AB 5 is nothing short of a nightmare and is already having the opposite impact of Gonzalez’s publicly stated intentions to prevent misclassification.

Gonzalez has said the bill was to target app companies such as Uber, Lyft and Doordash, to name a few, but the bill covers nearly all professions that were not granted exemptions. Numerous lawsuits have been filed, and one filed by the California Trucking Association was granted an injunction on Dec. 30, 2019, allowing independent truckers to remain as such for now.

Both pointed to their frustrations with “obvious” shortcomings of Gonzalez’s bill, which was written by her and special interests, according to a The Coast News story.

“I don’t like to see legislation coming up that affects major sectors of my life and our local labor ecology,” West said. “We have to make sure we have a healthy labor ecology. You’ve just given the punji stick of death to the arts. I don’t think a lot of the small theaters … are really prepared for this and that’s egregious. What happened in this country to the respect for process?”

AB 5 is one of the most controversial bills, and perhaps a seminal moment in the state, and perhaps the country, regarding workers’ rights, Kalivas said. New York and New Jersey are proposing bills similar to AB 5 and Massachusetts passed its version, a less restrictive one, in the 2000s.

The chilling effect, Kalivas said, is already in play, even months before it was enacted, with broad and vague definitions and specific exemptions sweeping up thousands of independent contractors and freelancers across hundreds of professions, including performing artists who are losing clients and income.

“I’m not against the concept of it,” he said of AB 5. “People are exploited. But we are going to be negatively affected for what other people are doing, and that’s not fair. I’m not really convinced or understand if she has the legal authority to prevent someone from being from self-employed. This goes, ironically, against labor.”

West, of San Diego and a lifelong Democrat whose brother was in a labor union for years, said he feels betrayed by Gonzalez and the Democratic “machine” pushing through the bill without any foresight into the warnings espoused by critics of the bill.

And although he is employed with Cygnet Theater in San Diego working as the educational outreach engagement director, he earns about 10% of his modest yearly income (about $40,000 per year) through acting at various theaters across the county, including several in North County. West said it will severely impact not only his income but threaten the existence of other up-and-coming performers and smaller professional theaters and their operations.

He said Gonzalez doesn’t understand the “labor ecology” of his industry and also has taken offense with Gonzalez’s claims AB 5 will allow workers access to “real jobs.”

“This is a cruel, draconian law with no process behind it,” West said. “It’s going to take retooling it backwards to do it. It just kills my future as an artist. She’s a Democrat and she should be our ally. Shame on her, shame on her. It’s so offensive to use real job.”

Theaters on edge

Small professional theaters, such as the nonprofit New Village Arts in Carlsbad, are already feeling the financial squeeze from AB 5, said Alex Goodman, managing director of NVA.

AB 5 requires companies to classify workers as employees unless an employer can satisfy the ABC test. The “B” part requires a worker performs work outside the usual course of the hiring entity’s business, which is the biggest hurdle for many, Goodman said.

For the theaters, they’ve traditionally worked with independent contractors such as actors, directors, set designers and musicians, to name a few, he added. Now, he said since the theater is required to classify those workers as W2 employees, the operational cost estimates are projecting an increase of 15% to 30%, although the performers’ pay is expected to remain about the same, Goodman said.

And since NVA ticket prices are around $25 for its 100-seat theater, it means productions may be scaled back or, potentially, fewer shows will be produced. Goodman said there is a realistic chance NVA may have to scale down its productions to less than a handful of performers per show as the additional cost of payroll, unemployment, social security, Medicare and other taxes inflate costs.

He said about 70% of the theater’s revenue is from ticket sales and 30% from donations.

“We’re currently estimating $30,000 to $40,000 in extra expense,” Goodman said. “At the end of the day, we have to raise that much more money to stay open. One of our peers in San Diego went from an eight-person show to a three-person show as a direct result of this.”

Like New Village Arts, other theaters are experience a rise in costs. Audacity Performing Arts, a Bay Area company, is shutting down 90% of its spring schedule.

Also, San Francisco-based Opera Parallèle’s production of its biography “Harvey Milk” will run $335,000. With AB 5 forcing those independent contractors as W2 employees, the company will see a 30% increase in costs including an additional $75,000 in payroll taxes, according to the San Francisco Chronicle.

As for NVA, this season marks the 20th anniversary and Goodman said in addition to its usual slate of shows, the theater is also conducting a massive fundraising campaign for renovations. The goal is $1 million, but with added costs of employees, it will make reaching the fundraising goal just more challenging.

Another issue, Goodman said, is for the new employees filing taxes. Since actors are hired by dozens of theaters or businesses each year, and some with more than 100 performances per year, the number of W2s is overwhelming.

“We don’t want to have to raise prices,” Goodman said. “The only way to close the gap is through donations. What will the arts look like in Carlsbad? We don’t yet understand the full impacts.”

However, the California Center for the Arts in Escondido will not be affected, said Vanessa Garcia, director of human resources. The reason, she said, is the center does not act as a production company as it rents out its 1,500-seat theater to others for performances.

Many performances are one-day shows, which does not qualify the theater, but those production companies, she said, could see fewer performers. Garcia said other venues such as the Lawrence Welk Theatre in Escondido, the Moonlight Theatre in Vista or the La Jolla Playhouse could be negatively affected.

Gerilyn Brault is an Oceanside actor and instructor at MiraCosta College who said even though artists are underpaid, AB 5 goes too far and will force good companies to cut work and performances, leading to a reduction in options and smaller theaters shutting down.

“And most companies in San Diego that hire local actors can’t afford many, if any, union contracts, so they rely on non-union work,” she said. “The bill may help actors get paid a little more, true. But at what cost to the theater community?”

Right to choose, unemployment

Kalivas, a native of New York City, moved to San Diego in 2002 and owns PGK Dance. He said he believes AB 5 is unconstitutional and infringes on an individual’s right to how they choose to work.

He and West said the overall intention of the law is good, to protect workers from misclassification, but they both wondered why the state doesn’t enforce Senate Bill 459, passed in 2012 making worker misclassification illegal, to ensure companies engaging in misclassification are held responsible.

Kalivas said another insult by Gonzalez comes from her lack of understanding of how the industry operates and has done so since the 19th century. He said Gonzalez assumes that “we’re all so stupid that we don’t know how to operate,” and she doesn’t understand performers have the right to negotiate and dictate terms, among other things.

“It’s crazy to think that she’s protecting us from ourselves,” Kalivas said. “That’s what is really infuriating and insulting.”

Additionally, he said the issue of misclassification must be taken on a case-by-case basis and the bill should going after those who are willingly exploiting workers or independent contractors.

Kalivas also questioned where all the “supposed” jobs are that Gonzalez has said are available. He said smaller theaters may close, thus putting many out of work, and will end up moving out of state.

“The nightmare scenario is all these theaters go away and the only ones left are the Old Globe Theatre in Balboa Park and the La Jolla Playhouse because they can afford to stay open,” Kalivas said. “What happens is they hire a core of like 10 people and those 10 will be the only thing they need programmatically forever. The 700 contractors that the Old Globe had goes down to 10. It’s creating a new issue, unemployment.”

He questioned where all the “new” jobs will come from and where the creatives are supposed to go. Losing the creative capacity will have a negative effect, Kalivas said.

“Now we’ll have less organizations contributing to the state,” he said. “Now it’s only up to a few unionized theatres to maintain the economic flow? The scientific formula is in the opposite direction.”

Other factors

Kalivas said the perception throughout the state is most actors or performers are unionized. They are not, he said. In fact, a vast majority are not under union contracts, but due to the limelight of Hollywood and unions such as the Screen Actors Guild (which supported AB 5), many think performers are covered under unions.

Nearly every labor union, if not all, supported and lobbied for AB 5.

As for performers, Kalivas said it makes little sense for many to join a union since their contract typically runs a few weeks. Even with a long-term contract, the union membership expires with it, and the cost of buying in, about $1,000, may not be worth it to some.

Performers, or other independent contractors, he said, only have union protections when working with a contracted union theater. Once the show is over, the contract ends and those performers or workers are no longer covered, Kalivas said.

“You’re not union for life, only under the terms of employment,” he said.

Kalivas said there are examples of misclassification and whether willingly or unwillingly, they must be addressed. He said many employers and independent contractors don’t understand labor laws, so education or enforcement under SB 459 should be taken.

He said the process of becoming a union shop is expensive and adds other significant costs such as social security and Medicare. Kalivas said independent contractors can contribute to social security, Medicare, workmen’s compensation and retirement, to name a few, on their own.

He said Gonzalez is using those who are not informed to her advantage.

“Self-employed people pay their taxes … and are not out on a ship to nowhere,” Kalivas said. “She wants to protect everybody but I’m like, ‘You’re not, you’re hurting people.’”

The Broadway veteran, though, said he knows many union performers who are “scabbing,” or using an alias to work at non-union theatres because they want to work.

However, Gonzalez sees it another way, according to another statement posted to Twitter.

“It would allow a company to convert 100% of their workforce to IC (independent contractors), would threaten current International Alliance of Theatrical Stage Employees, Screen Actors Guild — American Federation of Television and Radio Artists & Writers Guild of America West jobs,” Gonzalez wrote.

Brault said while actors and performers are underpaid, theaters cannot afford union contracts. Most, she said, are paid through stipends, with a well-paying one between $1,000 to $1,300.

West said the bill is being sold as “labor fairness,” but Gonzalez and the legislature are sweeping up good employers.

The state estimates it loses $7 billion in tax revenue due to employee misclassification.

“If you want to go after Uber, go after Uber. Don’t go after artists,” he said. “For the state of California, it’s not going to be 10% of their income. It’s not going to increase revenue that much on their side. There’s no honest accounting for what it’s going to cost to collect this revenue and how much we are going to get from it.”

As for the tax argument regarding independent contractors evading or not paying, West and Kalivas said it falls short. West said even as a 1099 worker, all wages are reported to the state and federal government.

He questioned why Gonzalez would target the arts with AB 5 when the industry brings in more revenue to the state than professional sports.

“At the end of the day, it’s not like I’m hiding my whole $42,000 income from the government,” West added. “I’m poor and going after me because I have a $500 stipend here and $500 stipend from there, that’s already reported, so what are you trying to do? It’s not understanding the labor ecology. You’re destroying an ecology that will never come back. And she’s burning it.”

The ask

Kalivas said the requests are simple. To exempt professional performing artists, clarify “fine artists,” who are exempted, and understand the historical context of the performance industry.

“AB5 is based on an inaccurate assumption that the Professional Performing Arts field and those who hire professional performing artists do not practice legal, ethical standards and that somehow professional performing artists are complicit or incapable of self-regulating their own legal, ethical standards as a working professional performing artist,” a letter Kalivas will present to Gonzalez at their next meeting reads.

“Due to the already historic, common, time-based constructs of professional performing arts work — working as few as one to several hours on one job or weeks and hours that are in-continuous at one or several companies, where pay scale and conditions are in fact mutually negotiated and negotiable by the artists and where the creative/artistic process literally comes from and therefore determined by the artist already makes the professional performing artist exempt by both the ABC and Borello tests being applied to determine classification for AB5.

“Here, we are defining Professional Performing Artists as creative and co-creative professional occupations including but not limited to: actors, directors, dancers, choreographers, musicians including singers, composers and fine artists including but not limited to: creative painters which includes muralists, sculptors, etc.

“It is our opinion that, the current exemption including fine artist is not necessarily inclusive of Professional Performing Artists dependent upon independent interpretations of the current fine artist exemption and therefore, demands more explicit language that confirms Professional Performing Artists are in fact exempt from AB5 as ASM (sic) Lorena Gonzalez has stated it does publicly.”

Cold reception

Kalivas met with Gonzalez once and her staff four other times. He said his meeting with Gonzalez was “awful” and the pressure from residents railing against her had her angry, disengaged and not receptive to his calls for exemptions and changes to the law.

In short, Kalivas said Gonzalez’s continued stance in support of AB 5 was condescending, patronizing and arrogant, yet he is hopeful she, Sen. Pro Tem Toni Atkins (D-San Diego) or others, will add changes to exempt performers.

Still, Kalivas said Gonzalez’s behavior is worrisome, noting how she is swearing at constituents on social media, and linked her behavior to President Donald Trump. Trump has also come under fire for explicit language during his rallies and social media posts.

“She doesn’t know what she’s doing … and what I mean by that is how dare she monitor a field she knows nothing about,” Kalivas said. “I felt my time was wasted because she was so distracted with the prospect of being sued, which she (the law) is now.”

He also met with Assemblyman Todd Gloria (D-San Diego) prior to Gonzalez and said it was much of the same. Kalivas said legislation such as AB 5 will never affect people like Gloria and Gonzalez and they have no idea what everyday people are dealing with.

“She doesn’t understand the levels of negative impact she’s creating, and that’s the unfortunate part,” he said. “We have to determine who is being intentionally misclassified. I think she’s completely overstepped. I think she realizes that she’s wrong. That’s why she’s cursing on Twitter. If she knew, factually, she was right, she would not be behaving the way she is now.”

Note: Dynamex established the “ABC test” to determine whether a worker should receive contractor classification. The three prongs include: “(A) the worker 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) “that the worker performs work that is outside the usual course of the hiring entity’s business;” and (C) “that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”