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In the latest episode of Inside Indies, Cast & Crew’s John Cooke provides an essential breakdown of California’s AB5 law and its significant impact on independent film productions hiring in the state. Understanding AB5 is crucial for producers, filmmakers, and production managers navigating the complexities of worker classification and payroll compliance.
AB5 is a California state law designed to clarify how workers should be classified—as independent contractors or employees. This classification has serious implications for payroll processes, tax obligations, benefits, and legal compliance. At the heart of AB5 is the “ABC test,” a three-part standard used to determine whether a worker can legally be classified as an independent contractor.
The ABC test asks:
- A: Does the worker control how they perform their job?
- B: Is the worker’s job different from the employer’s main business?
- C: Does the worker usually work independently in their own field?
John Cooke explains, “Workers are considered employees unless production can satisfy all three conditions.” This means that many roles traditionally filled by freelancers or gig workers, especially those integral to film and TV production, may now require W-2 employee classification under California law. This change affects everything from hiring decisions to payroll management.
Misclassifying workers as independent contractors rather than employees can lead to severe financial penalties, legal risks, and potential audits. “Misclassifying workers can lead to fines, legal risks, and financial penalties,” Cooke warns. To ensure compliance, productions are strongly advised to classify most crew members as employees and use an employer of record payroll provider like Media Services. This approach helps productions handle payroll taxes, workers’ compensation, unemployment insurance, and legal protections properly, reducing risk and administrative burden.
Watch the full episode above or listen on your favorite podcast platform to gain a deeper understanding of worker classification and how to keep your production compliant with evolving laws. Even experienced producers can overlook important details, so staying informed is key to avoiding costly mistakes. If you want to make sure your production is set up correctly from the beginning, reach out to John Cooke for a personalized consultation.
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