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Many professionals across the entertainment industry still have questions about how Assembly Bill 5—legislation originally intended to address gig-economy worker misclassification—affects film, television, and other creative productions in California.
AB-5, signed into law by Governor Gavin Newsom on September 18, 2019, significantly tightened the rules governing how California businesses classify workers as independent contractors. Although app-based rideshare companies were a primary focus of the law, its effects have rippled through every sector of the state’s economy, including entertainment.
In this guide, we break down what AB-5 changed, how the industry has responded, and what producers should know when hiring cast and crew in California.
AB-5 reshaped how California determines whether a worker is an employee or an independent contractor by making the ABC test the default classification standard.
Before AB-5, California relied on the more flexible Borello test, which evaluated many factors and often allowed employers to classify workers as contractors. Under AB-5, however, workers must be treated as employees unless the hiring entity can prove—with all three prongs—that a worker qualifies as an independent contractor under the ABC test.
At the time of its passage, analysts estimated that more than 2.5 million workers might need to be reclassified under the new criteria.
Although the law was widely viewed as targeting companies like Uber and Lyft, Proposition 22 later created a carve-out specifically for app-based drivers. That exemption does not apply broadly to other industries.
Misclassification—whether intentional or accidental—remains a serious compliance risk.
Employers who misclassify workers may face penalties, back taxes, and liability for unpaid benefits. Workers, in turn, lose access to protections such as overtime pay, workers’ compensation, paid sick leave, unemployment insurance, and employer-provided benefits.
If you’d like to read AB-5 directly, you can find the official text here.
In 2020, California enacted AB-2257, which refined and expanded exemptions to AB-5. Several creative professions—including various musicians, performers, writers, and specialized freelancers—received clearer classification guidelines.
It’s important to note:
For a deeper look at how these distinctions work in practice, see our guide to California worker classification tests.
AB-5 places the burden of proof on employers: workers are employees unless the employer demonstrates otherwise.
The ABC test assumes employment by default and requires the hiring entity to show that:
A) The worker is free from the control and direction of the hiring entity, both contractually and in practice.
B) The worker performs work outside the usual course of the hiring entity’s business.
C) The worker is customarily engaged in an independently established trade or business.
All three conditions must be met. Failure to satisfy even one prong means the worker must be treated as an employee.
For entertainment companies, prong B is often the most difficult, because roles such as actors, crew members, camera operators, gaffers, hair/makeup artists, and production assistants all contribute directly to the employer’s core business—producing entertainment content.
Because the ABC test is considerably stricter than Borello, many workers who were historically engaged as freelancers now fall squarely within employee status under California law.
Unionized productions were largely unaffected by AB-5. Most union jurisdictions require productions to hire members as W-2 employees, and existing collective bargaining agreements supersede the classification framework used by non-union employers.
SAG-AFTRA, WGA West, IATSE, Teamsters Local 399, and Studio Utility Employees Local 724 issued a joint statement confirming that AB-5 does not interfere with the use of loan-out companies or undermine contractually negotiated worker rights.
Because union contracts already dictate employment terms, AB-5 has had minimal impact on union productions.
Loan-out companies—a longstanding mechanism through which many entertainment professionals are paid—were a major concern when AB-5 was introduced.
However, the general consensus, supported by guild guidance, is that AB-5 did not invalidate loan-outs. Producers may continue using them, provided they adhere to union agreements and applicable tax requirements.
AB-5 has significantly affected non-union productions. Under the ABC test:
Therefore, most non-union workers in entertainment must now be classified as employees, not independent contractors.
Examples of “control” under prong A may include:
Given this reality, independent producers may need support transitioning workers to W-2 status. Film payroll services and employer-of-record (EOR) providers like Wrapbook can streamline onboarding, timecard collection, and compliant payroll.
The breadth of AB-5 should motivate any employer operating in California to audit their workforce and update classifications where needed.
AB-5 sets clear boundaries for worker classification: unless a hiring entity can prove the absence of control, that the worker’s trade falls outside the employer’s usual business, and that the worker independently practices that trade, the worker must be classified as an employee.
Misclassification mistakes can be costly. Using a payroll partner like Wrapbook can make it easier to classify workers correctly and pay cast and crew efficiently.
To learn more—or to see how Wrapbook can support your next production—contact us or schedule a demo.
