As a seasoned gamer with decades of experience under my belt, I can’t help but appreciate the intricacies of this California Senate Bill 422. As someone who has navigated through various virtual realms and corporations, I understand the value of loan-out companies for entertainment workers, providing much-needed protection and tax benefits in a transitory industry like ours.
As a gamer, I’m thrilled that California Governor Gavin Newsom just gave the green light to a bill backed by unions, securing the continued use of loan-out companies for entertainment workers. Earlier this year, an audit stirred up quite a commotion about our future with these companies, but thanks to this new law, we can breathe a sigh of relief.
On Monday, it was made public that Governor Newsom had given final approval to Senator Anthony Portantino’s SB 422. This legislation, supported by the Entertainment Union Coalition (which includes the California IATSE Council, the Directors Guild of America, SAG-AFTRA, Teamsters Local 399, and LiUNA! Local 724), legally establishes that a loan-out company is responsible for paying taxes as the employer of entertainment workers who establish these companies and work under their management.
As a fan, I’d rephrase it like this: According to the new law, entertainment payroll firms can no longer claim they’re the employers for loan-out companies or their workers. Under this bill, these firms will need to submit a quarterly report to California’s Employment Development Director, detailing their payments made to loan-out companies.
This legislation endorses the longstanding practice of entertainment workers using S-Corporations, C-Corporations, or LLCs, often referred to as “loan-out” companies. These companies lend their services to different entities. Essentially, this means that these loan-out companies will carry on functioning in much the same way they have been for many years. Furthermore, this bill maintains a significant court ruling that grants UI benefits to loan-out employees under the same terms as other jobless workers.
Various professionals within various industries, including writers and reality TV producers, frequently employ loan-out companies. These businesses offer certain corporate protections and potential tax advantages. As explained by Rebecca Rhine, the executive director of DGA Western, whose union played a key role in drafting the bill, “Loan-outs have been an integral part of our industry for numerous decades due to the transient nature of work, multiple employers, and diverse projects. This structure assists professionals in the industry by providing a way to navigate their unique work lives.
Following the revelation in May about California’s Employment Development Department auditing significant payroll provider Cast & Crew, various parties started collaborating on the issue. In response to this audit, Cast & Crew issued a warning to industry employees, explaining that the state department was questioning the common practice of routing payments through loan-out companies instead of directly paying the owners or shareholders of these companies as if they were the payroll provider’s employees. At the time, Cast & Crew stated that they were actively challenging the EDD’s decision and cooperating with unions and entertainment companies to find a solution, expecting this matter to escalate into a broader industry concern.
At that point in time, the EDD stated they were collaborating with industry professionals and made it clear that they had no intention of prohibiting the practice of loan-outs in California.
After news broke about the audit, entertainment unions started discussing the issue with the governor’s office and eventually collaborated with Portantino to address it legislatively. The WGA West, EDD, and Cast & Crew were also part of this initiative, as mentioned in a message to members from the WGA West in August. Rhine stated that the new law brings clarity to their members, the state, and the industry regarding the function of loan-out corporations within our field.
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2024-10-01 04:25