OH, NO. IT'S ALL RIGHT. WELCOME
TO THE ASSEMBLY COMMITTEE ON
INSURANCE. CAN THEY HEAR ME?
I'LL GROWS UP. AND THAT'S WHY I
HAD SECOND THOUGHTS. TEST, TEST,
TEST. OKAY. ALL RIGHT. OKAY.
TODAY WE'RE GOING TO CONSIDER
THREE BILLS. THE TWO, THE
FOLLOWING TWO BILLS ARE
RECOMMENDED. CONSENT FILE ITEM
NUMBER ONE AB 1239 CALDERON. AND
FILE ITEM NUMBER TWO ÁP 1505.
RODRIGUEZ. LET'S ESTABLISH A
QUORUM. COMMITTEE SECRETARY,
PLEASE CALL THE ROLL. CALDERON.
HERE. CALDERON. HERE. CHEN CHEN.
HERE. ALVAREZ. B¢O. KHN BERMAN.
GIBSON. HERE. GIBSON. HERE.
JONES-SAWYER. LOWENTHAL.
LOWENTHAL HERE. ORTEGA. JOE.
PATTERSON. JOE. PATTERSON. HERE.
PETRIE-NORRIS. HERE.
PETRIE-NORRIS. HERE. RUBIO.
RUBIO. HERE. VALENCIA. WALLACE.
WOOD. HERE WOOD. HERE OKAY. DO
WE HAVE A MOTION AND A SECOND
FOR THE CONSENT CALENDAR? YES.
SECOND. THANK YOU. PLEASE CALL
THE ROLL. THE CONSENT CALENDAR
IS FILE ITEM NUMBER ONE, AB
1239. CALDERON. MOTION IS SENATE
AMENDMENTS BE CONCURRED IN FILE
ITEM NUMBER TWO, AB 1505.
RODRIGUEZ MOTION IS SENATE
AMENDMENTS TO BE CONCURRED IN
CALDERON Ã CALDERON AYE. CHEN
CHEN. AYE. ALVAREZ. BAUER-KAHAN
BERMAN. GIBSON, A GIBSON. AYE.
JONES-SAWYER. LOWENTHAL.
LOWENTHAL. AYE. ORTEGA. JOE.
PATTERSON. JOE. PATTERSON. AYE.
PETRIE-NORRIS. AYE.
PETRIE-NORRIS. AYE. RUBIO.
RUBIO. AYE. VALENCIA WILLIS.
WOULD WOULD. AYE. BERMAN. BERMAN
AYE. OKAY. THE FIRST ITEM IS SB
422 BY SENATOR PORTANTINO.
WHENEVER YOU'RE READY, SENATOR.
THANK YOU. THANK YOU, MADAM
CHAIR AND MEMBERS, I'M VERY
PROUD TO BE PRESENTING SB 422 TO
THE COMMITTEE FOR OVER 100
YEARS. THE MOTION PICTURE
INDUSTRY OF CALIFORNIA HAS BEEN
AN ECONOMIC ENGINE FOR GOOD,
STRONG UNION JOBS AND MANY SMALL
BUSINESSES, AS WELL AS A
GENERATOR OF SIGNIFICANT STATE
AND LOCAL TAX REVENUE. THE
PROJECT, BY PROJECT NATURE OF
THE INDUSTRY MEANS THAT CAST,
CREW, DIRECTORS AND WRITERS
OFTEN WORK TIME LIMITED
ASSIGNMENTS FOR DIFFERENT
EMPLOYERS OVER THE COURSE OF A
YEAR TO ENSURE WORKERS HAVE A
STEADY PAYCHECK AND ACCESS TO
STABLE BENEFITS. A UNIQUE
EMPLOYMENT STRUCTURE STRUCTURE
EVOLVED OVER THE PAST CENTURY.
FOR DECADES, FILM AND TELEVISION
STUDIOS HAVE ENGAGED SOME OF
THESE WORKERS THROUGH PERSONAL
SERVICE CORPORATIONS, COMMONLY
KNOWN AS LOAN OUT COMPANIES.
PAYMENTS TO THOSE LOAN OUT
EMPLOYEES ARE OFTEN PROCESSED
THROUGH PAYROLL COMPANIES,
RATHER THAN DIRECTLY PAID BY THE
STUDIOS. UNFORTUNATELY, OVER THE
LAST FOUR YEARS, WE'VE BROUGHT
SIGNIFICANT CHALLENGES TO
HOLLYWOOD AND CALIFORNIA'S
ENTERTAINMENT INDUSTRY.
EXACERBATED BY THE COVID
PANDEMIC COVID 19 PANDEMIC. MANY
FOLKS ARE STILL STRUGGLING
WITHIN THAT INDUSTRY AS IT GETS
BACK ON ITS FEET. RECENT ACTIONS
BY THE CALIFORNIA ED DISREGARDED
LOAN OUTS AS A LEGITIMATE
BUSINESS ENTITY, AND ASSERTED
THAT LOAN OUTS ARE EMPLOYEES OF
THE PAYROLL SERVICE COMPANY
RATHER THAN THE INDEPENDENT
BUSINESSES. THIS DECISION HAS
THE POTENTIAL TO DISRUPT THE
ENTIRE STRUCTURE OF THE INDUSTRY
OVERNIGHT, CREATING CHAOS AND
CHALLENGES FOR WORKERS AND THEIR
LOAN OUT COMPANIES. AB 422 WILL
ENSURE THAT A LOAN OUT STRUCTURE
REMAINS ACCESSIBLE TO THE
ENTERTAINMENT INDUSTRY BY
CODIFYING THE DEFINITION OF A
LOAN OUT COMPANY AND CONFIRMS
THAT LOAN OUTS AND THE EMPLOYEES
OF LOAN OUTS ARE NOT EMPLOYEES
OF THE PAYROLL SERVICE COMPANY.
THE BILL HAS, IS I BELIEVE,
GOING TO GET SIGNIFICANT
BIPARTISAN SUPPORT. AND AS A
LITTLE BIT OF HISTORY RELATIVE
TO LOAN OUT COMPANIES, IT'S NOT
UNIQUE FOR THE LEGISLATURE TO BE
GRAPPLING WITH THIS ISSUE OR TO
HELP WITH THIS ISSUE. GOING BACK
TO 2008, WHEN, SPEAKER NUNEZ AT
THE TIME AUTHORED UNIVERSAL
HEALTH CARE, THERE WAS A PIECE
IN THE BILL THAT WAS GOING THAT
DIDN'T UNDERSTAND LOAN OUT
COMPANIES AT THE TIME. AND SO
WORKING WITH THE DGA AND OTHER
FOLKS IN THAT INDUSTRY, WE HAD
TO EXPLAIN TO THE SPEAKER'S
OFFICE THAT THE INDUSTRY WAS
FINE PAYING ONE TAX ON THE
TRANSACTION, BUT NOT TWO. AND SO
THE LEGISLATURE ACCOMMODATED
THIS UNIQUE BUSINESS MODEL THAT
MANY IN THE ENTERTAINMENT
INDUSTRY HAPPEN. AND AT THE
TIME, ONE OF THE BIG QUESTIONS
THEY ASKED WAS, WELL, ARE THESE
LOAN OUT CORPORATIONS ONLY FOR
THE WEALTHIEST, ONLY FOR THE TOP
TALENT? AND THE ANSWER IS NO.
MANY OF THE RANK AND FILE
TRADESPEOPLE IN THE INDUSTRY,
FRANKLY, THE MIDDLE CLASS IN THE
INDUSTRY, USE THESE LOAN OUT
AGREEMENTS FOR THEIR FAMILIES
BENEFIT BECAUSE OF THE NATURE OF
MULTIPLE EMPLOYERS IN THE SAME
YEAR. SO IT'S IMPORTANT TO NOTE
WE'RE NOT TALKING ABOUT
REWARDING THE TOP STARS WHO MAKE
HUNDREDS OF MILLIONS OF DOLLARS.
WE'RE TALKING ABOUT THE ACTUAL
WORKING CAST AND CREW ON THESE
MOVIES THAT CREATE SO MUCH FOR
THE STATE OF CALIFORNIA. AND SO
WITH ME, I HAVE MISSY JOHNSON
FROM THE DGA AND I THINK GREG
CAMPBELL. I DON'T KNOW IF YOU
MADE IT OR NOT, ARE TWO EXPERT
WITNESSES AND RESPECTFULLY ASK
FOR AN AYE VOTE WHEN APPROPRIATE
AND APPRECIATE THE OPPORTUNITY
TO PRESENT THIS IMPORTANT BILL.
OKAY. THANK YOU. YOU MAY BEGIN
WHENEVER YOU'RE READY. THANK
YOU, MADAM CHAIR. MISSY JOHNSON
HERE IN SUPPORT OF SB 422 ON
BEHALF OF THE DIRECTORS GUILD
AND ITS 19,000 MEMBERS, WHO ARE
DIRECTORS AND MEMBERS OF THE
DIRECTORIAL TEAM, DGA IS A
MEMBER OF THE ENTERTAINMENT
UNION COALITION, WHOSE MEMBERS
INCLUDE THE CALIFORNIA ARTS
COUNCIL, TEAMSTERS LOCAL 399,
LIUNA LOCAL 724, SAG-AFTRA. ALL
OF THEM SUPPORT THIS LEGISLATION
FOR OVER A CENTURY, THE MOTION
PICTURE INDUSTRY HAS BEEN AN
ECONOMIC ENGINE FOR THOUSANDS OF
GOOD UNION JOBS AND SMALL
BUSINESSES, A MAJOR GENERATOR OF
STATE AND LOCAL TAX REVENUE, AND
A PILLAR OF CALIFORNIA TOURISM.
IT IS ALSO LARGELY A FREELANCE
INDUSTRY, ONE THAT IS BUILT
AROUND PRODUCTION BY PRODUCTION
NATURE OF OUR BUSINESS. THAT
MEANS THE DIRECTORS AND MEMBERS
OF THE DIRECTORIAL TEAM, AS WELL
AS THE CAST AND CREW AND
WRITERS, COME TOGETHER TO MAKE A
PARTICULAR PRODUCT OR A
PRODUCTION. SORRY. AND THEN THEY
DISBAND, AND THEN THEY GO ON
WORK ON ANOTHER PRODUCTION,
COMPLETELY UNRELATED WITH A
WHOLE DIFFERENT TEAM OF TALENT,
CAST, CREW, TECHNICIANS, ETC.
WHILE THEY GO FROM JOB TO JOB,
THE DIRECTORS AND OTHER WORKERS
ARE PROTECTED BY STRONG
CONTRACTS IN A LARGELY UNIONIZED
INDUSTRY, THE TRANSITORY AND
EPISODIC NATURE OF THE INDUSTRY
HAS LED MANY OF OUR MEMBERS AND
MEMBERS OF OTHER UNIONS AND
GUILDS TO OPERATE THROUGH LEGAL
BUSINESS ENTITIES KNOWN AS LOAN
OUT COMPANIES, TO MANAGE THEIR
CAREERS. AS SENATOR PORTENTINO
ADEQUATELY DESCRIBED, THE WORD
LOAN OUT IS GENERATED FROM THE
CONCEPT THAT THE OWNER SLASH
EMPLOYEE OF THAT COMPANY LENDS
THE SERVICES OF ITS EMPLOYEES,
AND IN MANY CASES, THE HIGHLY
SPECIALIZED EQUIPMENT NEEDED TO
FULFILL THE SPECIFIED SERVICE.
LIKE DIRECTING THE MAJORITY OF
LOAN OUT COMPANIES ARE MADE UP
OF A SINGLE WORKER SLASH OWNER.
IN PRACTICAL TERMS, WHEN A WHEN
AN INDIVIDUAL CREATES A LOAN
OUT, THEY MOST OFTEN BECOME ITS
OWNER AND BOTH ITS SOLE
EMPLOYEE. THEY ARE CODIFIED IN
THE DGA'S SELECTIVE COLLECTIVE
BARGAINING AGREEMENTS, JUST AS
THEY ARE IN THE OTHER AGREEMENTS
FOR UNIONS AND GUILDS, AND THAT
ENSURES THAT OUR MEMBERS WHO
HAVE LOAN OUTS ARE ENTITLED TO
AND RECEIVE ALL OF THE SAME
PROTECTIONS OF OUR COLLECTIVE
BARGAINING AGREEMENTS, SUCH AS
MINIMUM COMPENSATION, HEALTH
INSURANCE AND PENSIONS. THE SAME
THINGS THAT SOMEONE WOULD
RECEIVE AS A DIRECT W-2
EMPLOYEE. THIS IS VERY IMPORTANT
HERE. THE CHOICE TO UTILIZE A
LOAN OUT IS COMPLETELY UP TO THE
EMPLOYEE. IT'S NOT A DECISION
THAT ANYBODY BUT THAT INDIVIDUAL
MAKES. AND EXISTING LAW HAS LONG
RECOGNIZED THE MOTION PICTURE
INDUSTRY RELATIONSHIP FOR
PRODUCTION WORKERS. THIS BILL
WILL CODIFY THAT PRACTICE
REGARDING LOAN OUT COMPANIES,
AND ESTABLISHES A NEW REPORTING
REQUIREMENT FOR THE SORRY,
ESTABLISHES NEW, REPORTING
REQUIREMENTS TO SIMPLIFY EDD
COMPLIANCE ADMINISTRATION. AS
MANY OF YOU KNOW, THE MOTION
PICTURE INDUSTRY IS FACING
SEVERAL CHALLENGES RELATED TO
DISLOCATION, GLOBAL COMPETITION,
AND THE RISE OF ARTIFICIAL
INTELLIGENCE. THIS BILL
CLARIFIES THE EXISTENCE OF LOAN
OUTS AND PROVIDES THE EDD WITH
NECESSARY INFORMATION FOR
APPROPRIATE OVERSIGHT. IT'S FOR
THAT REASON THAT THE DGA AND THE
MEMBERS OF THE èC STRONGLY
SUPPORT THIS BILL AND
RESPECTFULLY REQUEST YOUR AYE
VOTE. MADAM CHAIR AND MEMBERS,
GREG CAMPBELL, ON BEHALF OF CAST
AND CREW ON READING THE ROOM AND
THE MOTION, I DON'T HAVE MUCH
MORE TO ADD. OTHER THAN WE
APPRECIATE THE AUTHOR STAFF.
IT'S BEEN A LOT OF WORK TO MAKE
SURE THAT WE GET THIS RIGHT. WE
WANT TO CLARIFY WHAT THE INTENT
OF THIS IS, AND MAKE SURE THAT
THE FUNCTIONING PRACTICES OF AN
INDUSTRY THAT HAVE BEEN GOING ON
FOR 75 YEARS ARE CONTINUING TO
HAPPEN, AND NOT CAUSE ANY
DISRUPTION TO LEAD TO LOSS OF
PRODUCTION OR ANYTHING IN
CALIFORNIA. SO WITH THAT, WE
RESPECTFULLY ASK FOR YOUR AYE
VOTE. THANK YOU. IS THERE ANY
ADDITIONAL SUPPORT IN THE ROOM?
MADAM CHAIR, MEMBERS OF THE
COMMITTEE, SHANE GUSMAN, ON
BEHALF OF THE TEAMSTERS AND
SAG-AFTRA IN SUPPORT. THANK YOU,
MADAM CHAIR. AND MEMBERS. MEGAN
SUBERS, ON BEHALF OF THE WRITERS
GUILD OF AMERICA WEST IN SUPPORT.
MADAM CHAIR, MEMBERS OF THE
COMMITTEE, YVONNE FERNANDEZ WITH
THE CALIFORNIA LABOR FEDERATION
AND THE CALIFORNIA ARTS COUNCIL
IN SUPPORT. THANK YOU. IS THERE
ANY OPPOSITION IN THE ROOM?
SEEING NONE, I'LL BRING IT BACK
TO THE COMMITTEE. DO WE HAVE ANY
QUESTIONS FROM MEMBERS?
ASSEMBLYMAN, WOULD JUST JUST A
COMMENT, FIRST OF ALL, THANK YOU
FOR BRINGING THE BILL, I HAD NO
IDEA ABOUT THIS STRUCTURE AT
ALL. IT'S FASCINATING THAT IT
EXISTS. I GUESS MY FIRST CONCERN
WOULD BE OBVIOUSLY FOR THE
WORKERS, BUT THE WAY YOU'VE LAID
IT OUT IS, IS OBVIOUSLY FOR THE
PROTECTION OF THE WORKERS. SO,
YOU LEARN SOMETHING NEW EVERY
DAY. THANK YOU SO MUCH, MR.
PORTANTINO, I'LL BE SUPPORTING
THE BILL. THANK YOU. GREAT.
OKAY, SENATOR, WOULD YOU LIKE TO
CLOSE? YEAH, JUST FOR THE
RECORD, CAST AND CREW IS ONE OF
THE PAYROLL COMPANIES. AND SO
YOU HAVE LABOR, YOU HAVE THE
PAYROLL COMPANIES, YOU HAVE THE
PRODUCTION COMPANIES. YOU HAVE
TOTAL CONSENSUS ON THE MODEL AND
WHY IT NEEDS THE CLARIFICATION.
AND SO I APPRECIATE THE
OPPORTUNITY TO PRESENT FOR YOU
AND RESPECTFULLY ASK FOR AN AYE
VOTE. THANK YOU. SENATOR,
SECRETARY, PLEASE CALL THE ROLL.
FILE ITEM NUMBER THREE SB 422.
MOTION IS Dð. PASS CALDERON I
CALDERON AYE. CHEN CHEN AYE.
ALVAREZ. ALVAREZ. AYE BAUER.
KHN. BERMAN. BERMAN. AYE
GIBSON. GIBSON. AYE.
JONES-SAWYER JONES-SAWYER. AYE.
LOWENTHAL. LOWENTHAL. AYE
ORTEGA. JOE. PATTERSON. JOE.
PATTERSON. AYE PETRIE-NORRIS.
PETRIE-NORRIS. AYE. RUBIO RUBIO.
AYE. VALENCIA. VALENCIA AYE.
WILLIS. WALLACE. SORRY. AYE
WALLACE I WOULD WOULD. AYE THANK
YOU. THANK YOU. SENATOR. THAT
GETS OUT, WE'RE GOING TO LET
MEMBERS ADD ON RIGHT NOW TO THE
CONSENT CALENDAR. THE CONSENT
CALENDAR. ALVAREZ ALVAREZ. AYE.
BAUER KHN. JONES-SAWYER
JONES-SAWYER. AYE. ORTEGA
VALENCIA. VALENCIA. AYE WALLACE.
WALLACE. AYE. THERE YOU GO.
THANK YOU. THANK YOU. THURMOND I
APPRECIATE THAT. YEAH. OF
COURSE, WE'RE NOT FINDING
WONDERING,
GOOD POLICY TO MAKE SURE. OKAY.
WE'RE GOING TO LEAVE THE ROLL
OPEN FOR FIVE MINUTES.
SECRETARY, OPEN THE ROLL.
CONSENT CALENDAR. BAUER-KAHAN
BAUER-KAHAN. AYE FILE NUMBER
THREE, SB 422 BAUER-KAHAN
BAUER-KAHAN. AYE THANK YOU GUYS.
THANK YOU SO MUCH. SORRY ABOUT
THAT. THIS CONCLUDES THE
ASSEMBLY INSURANCE COMMITTEE.