AB5 Answers - Jack's Cats

AB5 Answers

Updated January 22, 2020

At the start of this year, a new law thrust our industry into a period of confusion and concern. I want you to know that you can continue to work with us, and we are in regular consultation with our accountants and payroll accounting specialists to maintain full compliance with California AB5.

This is a fluid and changing environment, and we are monitoring ongoing efforts to amend AB5 to exclude musicians or repeal it in full, and continue to seek better clarification of the law. I’ll frequently update this page, so check back as you wish.

If you’re hiring Jack’s Cats

If you’re a venue, promoter, community or government organization, corporation, individual, or virtually anyone who would hire our band, you may continue to do so unaffected by AB5. So long as you yourself are not a musician, our relationship does not change under the new law. Once a contract is agreed upon and completed, you may pay us via check to Jack Malmstrom. If our cumulative invoices for the year exceed $600, report our earnings via a 1099 just as you always have.

Our rates — which are quoted per appearance — remain unchanged for now. During the coming months, we’ll be learning how best to adapt to the inefficiencies and large amount of additional accounting and payroll activities that AB5 compliance demands. If after several months, the law has not been amended or repealed, we anticipate that a modest increase in our rates will be necessary. Rest assured that you will not be asked to shoulder this burden alone, but that it will be shared by myself and our musicians, as well as our clients.

If you’re hired by Jack’s Cats

Together, we’ve created something too swell to give up. Please know that I’m fighting to secure an AB5 exclusion for our profession and until that comes, I’ve created — in consultation with my accounting advisors — a system by which we can all continue to work. It’s an onerous, complex solution, but the best available under the law. Here are the changes you can expect:

Until the end of February, working for the Cats will continue as it has. There are numerous efforts underway to allow you to continue as an independent contractor, and I’m holding off till then to see if they come to pass.

If there’s no change in the law by March 1st, every musician playing with us must be classified as an employee — even if it’s for only one performance during the year. Your base rate of pay per performance will be very slightly less to compensate for the full employer/employee share of Social Security and Medicare you previously paid the government as an independent contractor, but this will be a virtual “wash.”  You will receive a single paycheck at the end of each month for all your performances during that period. That check will include all the deductions mandated by the new law, such as federal and state income tax, Social Security and Medicare contributions (as opposed to you paying them at the end of the year via 1099 filing).

For example:

• Our pianist plays 3 shows during the month, two at $100, one at $125.
• At the end of the month, our pianist receives a single check for $325 LESS the various withholding mandated by labor regulations. (The exact amount will vary based on information submitted via each individual’s w-4.)
• Early next year, the pianist’s full earnings for 2020 will be reported via a W-2.

As we move reporting to this new procedure, everyone will need to submit a w-4 prior to playing their next show with us. Please bear with me as I request this new documentation, probably through the payroll service I plan to use, called Gusto.

These measures are designed to keep our doors open, and our network of clients and musicians intact while AB5 and its impact become better settled.  Ultimately, I recommend that you consult with an accountant, attorney, or payroll accounts professional to navigate this complex environment.

Everyone can help

Everyone I know dearly hopes to continue entertaining our fans. You can help by sending a quick on-line note to your California representative. (You can find out who they are here.) If signing petitions is your thing, this one has already well over 50,000 signatures — but it could use yours! Want more info? A quick google search of “California”+”AB5”+”Musicians” will give you plenty. Finally, if an amendment comes up on a ballot later this year, vote!

Don’t hesitate to contact me if you have additional questions or suggestions.