Photograph by Anastasya Photography

Mathew Rakers, who runs San Diego Music and Art Company, made former independent contractors employees after AB5. But, “Everyone took a pay cut.”

When California enacted Assembly Bill 5 (AB5) at the beginning of 2020, the music industry braced for a heavy shake-up.

The law created a new standard (the ABC test) that employers would have to meet to hire workers as independent contractors. If they failed to meet these standards and misclassified their employees, they would be liable for the error.

The bill was primarily marketed as a means to get gig economy companies, such as Uber and Lyft, to offer better pay and protections to their workers. It cast a much wider net, though, as the law pertains to all independent contractors.

Many professions with lobbying power received exemptions from the start. These included doctors, lawyers, real-estate agents, commercial fishermen and architects. Not included on this list: musicians.

Mathew Rakers falls into this category. He runs a Mira Mesa-based business called The San Diego Music And Art Company that provides “comprehensive and high quality music and arts education to students of all ages while supporting a growing network of skilled professional musicians, artists, photographers, and writers.” Originally all the instructors were hired as independent contractors but due to the uncertainty of how future AB5 enforcement would affect his business model, Rakers took a large, precautionary step to make sure that his operation didn’t run afoul of the new law.

“I had to hire on everyone as employees,” Rakers explained. “Everyone took a pay cut. It’s pretty common that people are either hiring on the teachers as employees with pay cuts or they’re just basically operating under the table now or possibly illegally and opening themselves up to fines.”

“That’s really frightening because none of these people are wealthy,” he added. “It’s a whole class of the economy that’s like lower-middle-class at best.”

On April 17, it was announced that new exemptions for musicians would be enacted when the State Assembly reconvened in May. A press release from District 80 Assemblywoman Lorena Gonzalez states that “the amendments will preserve the ability for the following industry professionals to collaborate and contract with one another to produce sound recordings and musical compositions without application of the ABC test to determine an employer.” These professionals included (amongst others) musicians, vocalists, producers and engineers.

The amendments will also specify that unless a musical group is “the main featured act headlining at a concert venue with more than 1,500 attendees” or a “musical group performing at a large festival with more than 18,000 attendees per day,” they will be exempt from the law as well.

The press release also listed specific music-related work that would continue to have employment protections under AB5. This included musicians performing in symphony orchestras, musical productions and a “musical group regularly performing in a theme park setting.”

Not included on either list was music instructors. These and many other musicians will continue to work, albeit with increased uncertainty as they learn to navigate the world of AB5 compliance, exemptions and potential punishments.

“I’ve been following it really closely now for about half a year,” Rakers explained. “I would venture to say that some of my friends who are business owners have no clue how to deal with it and are taking the ‘I’m gonna bury my head in the sand’ method with dealing with this problem because they don’t want to think about it. Those are the people I’m most worried about.”