Employers Face Rising Staffing Costs Nationwide After California’s Chaotic Legislation

For the last year, the advocacy group Californians for the Arts has been working to create exemption language for arts industries and educate the legislature on the common arts employment model, which is run largely on independent contractors. “In a highly creative industry, we’re really not the kind of employment models where you fit into this neat box,” said Julie Baker, Californians for the Arts’ executive director.

Converting an independent contractor to an employee typically increases staffing costs by 30%, said M.J. Bogatin, an attorney and board member of California Lawyers for the Arts. Those costs include insurance premiums, disability premiums, workers compensation, “a bunch of additional admin and the costs of now administering these people as employees.”

Those who fail to comply with the law face fines. Under AB5, if a court finds a company or small arts organization willfully violating the law, penalties may run from $5,000 to $25,000 per violation.

For arts organizations staying afloat on grants and donations, both options — paying a penalty or facing a 30% increase in costs — could be devastating. Read details here.