Recently, I spoke with one of my larger clients whom was trying to purchase non-exclusive rights to content that was being created by performer/content creators – at home with their own partners – during the COVID-19 quarantine.

It was a simple offer, the company would agree to pay a flat rate for any content that the performer/content creator wanted to license to the company. The performer/content-creator would retain all ownership rights in the content and could continue to use the content on any of their sites or any platform or license it to anyone else. The company just wanted some fresh content to update their company’s websites with. It was meant to be a win-win for both the company and the performer/content-creators.

However, not a single performer/content-creator whom they spoked to could complete the deal.

Why not ? Not a single performer/content creator had the necessary “paperwork” to go along with the content, so the company could actually use the content.

If you are creating content at home with your friend(s), lover(s), significant other(s) or even someone you met on Tinder, YOU NEED A SIGNED MODEL RELEASE AND 2257 DOCUMENT FOR EACH PERSON FOR EACH SCENE.

If you are producing content and you are not securing the necessary agreements signed by your models, whether they are amateurs of professionals, you really don’t own your content and you can lose the right to use it. And certainly, in the case of my client, your content can never be sold or licensed to anyone.

For some reason amateur models/performers/content creators have a mistaken belief that the same laws that apply to mainstream pornography companies such as Blacked, Brazzers, AdultTime, Gamma ect., do not apply to small amateur productions. This is simply not true. Small production companies – and even you only self-produce for your own OnlyFans account – must also comply with the same laws as the large mainstream studios.

Failure to secure a signed model release means that whoever appears in your content can at some point demand that you stop using the content and remove it from all of your accounts.

See also – https://adultbizlaw.com/2018/01/04/so-you-broke-up-with-your-scene-partner-now-what-who-owns-your-content/

Failure to secure a signed 2257 Document and a valid ID from the other performers in the scene can result in jail time at worst, and at best, without such, no one will purchase or license your content.

See also – https://adultbizlaw.com/2012/10/22/porn-101-18-u-s-c-2257-the-basics/

Failure to secure a signed work for hire agreement from your photographer and/or videographer means that you don’t actually own the copyright to the scene even though you may have paid that person for their work.

See also – https://adultbizlaw.com/2012/07/30/who-owns-your-content/

If you are reading this and do not have the necessary documents/agreements, there is hope but you will need to backtrack and secure the documents now. Which may be difficult from people that appeared in your content that you no longer have contact with.

And what if you do not have the “right” documents or do not even know where to find them ?

For $100 you can purchase a complete package of production forms – including a Content Trade Release that needs to be used instead of the standard Model Release when you trade content with other performers.

See also – https://adultbizlaw.com/2694-2/

Don’t sell yourself short and not be able to capitalize on licensing fees. Your content has value more than just what you may make from it by posting it to your OnlyFans account. With the correct documentation, you can resell that same content, usually over and over again. Owning your content is probably one of the most important aspects to be a Content Creator.

California’s new Consumer’s Privacy Act (“CCPA”), which came into effect on January 1, 2020, is the most far-reaching privacy law enacted in the United States by either the federal government or a state government. It mimics, to a certain extent, the GDPR privacy laws of the European Union.

The CCPA is quite difficult and onerous to comply with. First you have to determine if it applies to your website. If your website has customers that are California residents, then you may have to comply with the CCPA. It doesn’t mean that just companies located in California must comply, rather anyone who has a website that has customers in California whom provide 25% of the company’s total revenue are liable if they do not comply. And if your company pays more than 25% of its costs/compensation to California residents, independent contractors or other companies you may also be liable if you do not comply with CCPA. In summary, if you “do business” in California then you must comply with the CCPA. You can obviously “opt out” of compliance but you would need to block all internet traffic that is visiting your site from an IP addresses located in California. This is what many US companies do with regard to the GDPR in the European Union. Rather than complying with EU law, they simply do not allow visitors to the website from any of the twenty-six (26) European Union member countries.

The next step is to determine when you met the other initial thresholds of the CCPA.

The CCPA applies to any business, including any for-profit entity that collects consumers’ personal data, which does business in California, and satisfies at least ONE of the following thresholds:

• has annual gross revenues in excess of $25 million;
• buys, receives, or sells the personal information of 50,000 or more consumers or households;
• Earns more than half of its annual revenue from selling consumers’ personal information.

You may want to stop reading here, but don’t. For some the threshold of 50,000 consumers per year is very easy to meet. From an internet traffic standpoint, if your website is receiving an average of 137 unique visitors per day, then it is quite possible that the CCPA applies to your business. If your website utilizes any type of web traffic analysis software or application – ie., Google Analytics – then you need to comply with the CCPA. Google Analytics captures information from your visitors through the use of cookies and shares that information with Google directly.

If you have an email capture form on your website where you ask visitors for the personal identifying information such as name, phone number or email address, you also receive information on your visitors that might cause CCPA to be applicable to your business.

If your website meets just one of the three thresholds then the CCPA applies to your business and your visitors are protected under the CCPA.

The intentions of the Act are to provide California residents with the right to:

1. Know what personal data is being collected about them.
2. Know whether their personal data is sold or disclosed and to whom.
3. Say no to the sale of personal data.
4. Access their personal data.
5. Request a business to delete any personal information about a consumer collected from that consumer.
6. Not be discriminated against for exercising their privacy rights.

The question then becomes what happens if my company does not comply with the CCPA?

The two most severe penalties are;

• Companies that become victims of data theft or other data security breaches can be ordered in civil class action lawsuits to pay statutory damages between $100 to $750 per California resident and incident, or actual damages, whichever is greater, and any other relief a court deems proper, subject to an option of the California Attorney General’s Office to prosecute the company instead of allowing civil suits to be brought against it (Cal. Civ. Code § 1798.150).
• A fine up to $7,500 for each intentional violation and $2,500 for each unintentional violation (Cal. Civ. Code § 1798.155).

For example, if your website’s data is breached, and you have 500 California residents who are victims of the breach you may be ordered to pay more than $375,000 in restitution to all of those California residents.

Obviously, with the recent data breaches by numerous adult companies (Ashley Madison, Cam4, ImLive) it is clear that not enough is being done to protect performer’s and client’s private information. Failure to protect such information and to not comply with California’s CCPA can lead to the financial destruction of your business.

If your website does not have a current Privacy Policy, it is absolutely required by California law. If you do have one, it is now time to update that policy with the new requirements imposed by the CCPA. You have until June 30, 2020 to implement and post your new policies.

Despite earlier reports that this legislation would be pulled or killed off, alas it is still alive…

There’s been some changes to the language of the bill… training certification has replaced business license and fingerprinting is no longer required.

Employers (studio, camsites, ect) will still need to confirm that all performers have a valid training certificate and only hire those performers that are certified. And oh by the way, you now have to keep not only 2257 docs but also the performers’ certification of training for 3 years — subject to request/inspection by the California Department of Labor Standards & Enforcement. And the unlike the DOJ/FBI and 18 USC 2257, the California Department of Labor Standards and Enforcement does not need a warrant to enter your business and inspect your records. They can and will show up unannounced and demand to see your records, much like CalOSHA has in the past.

Here’s a link to the newly added and deleted language…

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB2389

This is bill can cause the industry to flee California, and if it spreads to other states like AB5 has, it could cause more companies to move to Canada and Europe.

Some of it is based on existing laws in other states. For example, dancers are required to have a ‘Sheriff’s Card” to be able to work at a gentlemen’s club in Las Vegas. Which basically means they have to pass a criminal background check. This law borrows that idea and now would require it for all sex workers.

So what does that mean ??? If this bill becomes law – it is not going to be easy to challenge in the courts.

So if you thought AB5 was bad for the adult industry – this bill is much worse – performers/models, studios and platforms alike.

This is what AB #2389 would require;

Dynamex decided April 30, 2018

Dynamex makes it harder for companies to misclassify because it uses a simple and objective test for whether a worker is an employee or a contractor. Under the “ABC Test,” if a company wants to classify a worker as a contractor, the company must prove all three of the following: (1) the worker is free from company control and direction, (2) the worker performs work outside the usual course of the hiring entity’s business, and (3)the worker is customarily engaged in an independently established trade of the same nature as the work performed.

Why did the court decide in favour of the workers in Dynamex?

In California, misclassification audits conducted by California’s EDD from 2005-2007 recovered $111,956,556 in payroll taxes, $18,537,894 in labour citations, and $40,348,667 in employment tax fraud.  In the Dynamex case, the DLSE estimated that misclassification costs the state $7 billion annually.

Fully Exempted Workers:

Insurance agents, physicians, dentists, veterinarians, psychologists, lawyers, engineers, private investigators, architects, accountants, securities brokers regulated by FINRA, direct salespeople, grant writers, fine artists, payment processors, real estate agents, repossession agencies, travel agents, graphic artists.

Provisionally Exempt Workers:

Human Resources administrators and marketing consultants are exempt under certain conditions, as are commercial fishermen, manicurists, aestheticians, barbers, and cosmetologists. Freelance writers, press photographers, and editorial cartoonists are only exempt if they produce fewer than 35 pieces per outlet they contribute to.

Applicability to the Adult Industry:

Live streaming models, pornstars/performers, chat/phone/text sex operators, writers, video editors, possibly programmers/web designers, or anyone else hired that performs a service for your company.

Not Applicable to:

Digital sales – models that sell clips on clips stores

Statute of Limitations Wage Claims:

In California, workers have up to 3 years to file wage and overtime claims for oral employment contracts and 4 years on written employment contracts. Wage and overtime claims can be brought on a class action basis under California’s Private Attorney General Act.

Penalties For Underpaid Wages & Overtime:

An employer may have to pay a penalty of $100 for the first pay period and $200 for subsequent pay periods. This penalty is per employee. When the claimed is file as a private attorney general, the state gets 75% of the money collected; the workers retain 25%.

Prior to Dynmaex – Borello Case:

1. Whether the person performing work is engaged in an occupation or business that is distinct from that of the company;
2. Whether the work is part of the company’s regular business;
3. Whether the company or the worker supplies the equipment, tools, and the place for the person doing the work;
4. The worker’s financial investment in the equipment or materials required to perform the work;
5. The skill required in the particular occupation;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the company’s direction or by a specialist without supervision;
7. The worker’s opportunity for profit or loss depending on his or her own managerial skill (a potential for profit does not include bonuses);
8. How long the services are to be performed;
9. The degree of permanence of the working relationship;
10. The payment method, whether by time or by the job; and
11. Whether the parties believe they are creating an employer/employee relationship.

What if the independent contractor has an LLC or an Inc?

In order to prove that the IC is truly an IC, or a “bonafide business to business relationship” – it will be on the hiring entity to prove all of the following;

(1) If a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that ALL of the following criteria are satisfied;

(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.

(C) The contract with the business service provider is in writing.

(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.

(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.

(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.

(J) The business service provider can negotiate its own rates.

(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

(L) The business service provider is not performing the type of work for which a license from the Contractor’s State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

So what does Dynamex and AB 5 mean to you?

If you are in California or have independent contractors in California applies to you.

If you are in California, does AB 5 apply to all of your workers outside of California? It may, it depends on what your agreements say.

If you are a studio/content producer, your directors, editors, models/pornstars/performers are employees. They have always been before but now that Dynamex and AB5 are law, it will be much harder to argue that they are independent contractors under Borello.

If you are a platform where models “sell” their services – not digital clips – or in addition to clips, if they receive tips for texts/chats/phone/DMs – they will be considered employees. It is not clear how minimum wage issues would be applied to the time spent online interacting vs. time spent online uploading digital clips.

If you are a cam site or independent studio, live-streaming models are now considered employees.

Web designers and programmers may also now be considered employees.

So what do I have to do as a platform, studio or cam site?

Immediately switch over and re-classify your independent workers to employees.

You will need to follow California law for minimum wage, overtime pay, meal and break periods. You will need to accurately track all hours worked, as well as overtime, and rest/meal periods. You cannot leave this up to your employees to track.

You will need to pay payroll taxes.

You will need to secure workers’ compensation insurance.

You will need to have an employee handbook and develop human resource materials. In the employee handbook, utilize an arbitration agreement and a class action waiver to limit your potential retro-liability for past wage, overtime and meal/rest claims and lawsuit. Be aware that requiring employees to use arbitration means that you will need to cover all costs for the arbitration, and if you lose you may have to pay your employees’ attorney’s fees.

Other Issues:

Franchise Tax Board:

Now that you are re-classifying your independent contractors as employees you may face additional scrutiny from the FTB and may be assessed late fees and penalties for failure to pay payrolls taxes. Please see your accountant and CPA about this issue. Your employees may also face scrutiny if they have never filed taxes before.

Contract with an HR and Payroll administration company to handle the day-to-day requirements of running a company and keeping up to date with employment issues.

Over the past several weeks I have read numerous articles and opinions about California Assembly Bill 5, otherwise known as the gig-worker misclassification law. I have also read numerous comments on various message boards about how a platform/studio or company can “get-around” AB5. I have also read numerous social media posts from models and performers saying how they registered an LLC or Inc in California based on what a studio has told them they had to do to work.

Stop! Much of what I have read and heard is grossly inaccurate.

Do not register an entity in California, it probably won’t help you and may end up hurting you as a model and performer. And if you are an owner of a studio or a platform, do not think that you can get around AB5 simply by paying an LLC or Inc instead of a person. Please, also stop telling models and performers to incorporate, you may be putting them at risk. If an Inc or LLC were easy solutions to this issue, Uber and Lyft would be doing it for their drivers instead of funding a $100 million initiative to overturn AB5.

Models and Performers…

Do not think that having an Inc or an LLC will help with AB5. You may also end up revealing your real name and address to the public. If you establish a business in California, whether it is an Inc or LLC, you cannot be anonymous. There are only 4 states that allow your identity to be hidden from the public when you register an Inc or LLC; Wyoming, Delaware, Nevada and New Mexico. Be aware though, establishing an anonymous entity in those four states is usually very expensive.

I have seen countless tweets where models and performers have stated that their CPAs or accountants have set up an Inc or LLC for them. Also, Legal Zoom isn’t a good choice either. Using either is a very bad idea. I have nothing against DIY incorporations services, CPAs or accountants, but they aren’t lawyers and do not understand nor can they give you advice about California employment law. As an attorney, I do not give my clients tax advice because I am not a CPA and you shouldn’t take legal advice about setting up an entity in California from a CPA. Also, AB5 is a very complex area of law and your friend who is a personal injury attorney also shouldn’t be establishing your Inc or LLC. Invest the funds and get an experienced employment law attorney in California to advise you.

As a part of establishing a business entity in California, you are also required to file a yearly or bi-yearly Statement of Information with the Secretary of State.

Statement of Information for LLCs – https://bpd.cdn.sos.ca.gov/llc/forms/llc-12.pdf

Statement of Information for Incs – https://bpd.cdn.sos.ca.gov/corp/pdf/so/corp_so550.pdf

For each form you will need to list your real name and if you use your home address for your business, you will also need to list your home address. Anyone who knows your company’s name can easily search the Secretary of State’s database of business entities. They will then know your name and your home address. With that simple information, they can then get more information about you personally from other online databases that can be used to search for people anywhere in the US.

Be aware that you will need to keep your personal information updated with the State of California – every year for Incs and every two years for LLCs. If you fail to file a Statement of Information when required, the Secretary of State of California will suspend your corporation from doing business in California. Which means that your company will have no legal standing to enter into contracts or sue someone in court. Being suspended also means all your contracts are void and unenforceable. Basically, your company will no longer exist. And you will be forced to file penalties and interest to re-establish your corporation so it can operate properly.

If you have an Inc, you are also required to hold yearly shareholder meetings and record those meetings in your corporate books. Failure to do so can invalidate your corporate protections.

Establishing an Inc or LLC is easy, maintaining it is more complicated.

Platforms and Studios…

If you own a platform or a studio and if you are in California or employ models/performers in California, AB5 applies to you. I have heard that studios and platforms are now requiring their models/performers to establish LLCs or Incs for them to continue to work. The solution to AB5 is simply not that easy. For a platform or studio not to have wage and overtime liability under AB5 or the California Supreme Court decision in Dynamex (Dynamex Operations West, Inc. v. Superior Court of Los Angeles) requires more than just paying an LLC or an Inc rather than a natural person. This is a complex area of law that requires advice from an experienced and knowledgeable employment lawyer about how your business operates and can provide a relevant analysis of not only AB5 and Dynamex but also of the Borello case and the standards set forth by California courts under the “bona fide business relationship” line of cases.

For example, for you to have a bona fide business relationship with an LLC or Inc, you will need to show a court the following;

(e) Subdivision (a) and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions: 

(1) If a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that ALL of the following criteria are satisfied;

(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.

(C) The contract with the business service provider is in writing.

(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.

(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.

(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.

(J) The business service provider can negotiate its own rates.

(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

(L) The business service provider is not performing the type of work for which a license from the Contractor’s State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

For it to be a bona fide business relationship you need to satisfy ALL those points, not just most of them.

As you can see it simply not enough to show the court that you paid an LLC or Inc and you have a 1099 to prove it. You will still be held to be an employer under AB5 and liable for wage, overtime, meal breaks ect., – even if you did pay someone’s LLC or Inc.

You also are relying on whether that business you are paying is being operated properly. One of the issues that I see – is where the owner of the LLC or Inc is a model/performer – does that model/performer have a loan-out agreement in place with their own company? An LLC or Inc cannot be used simply as an alter-ego for the person who owns it.

One other issue that I see being missed in this conversation is that most people in adult believe that January 1, 2020 was doomsday for California employers. That is also simply not true. Dynamex Operations West, Inc. v. Superior Court of Los Angeles was decided in April 2018 and was held by the Ninth Circuit Court of Appeals to apply retroactively. Currently, the California Supreme Court will also decide whether Dynamex applies retroactively.  We are still waiting on that decision. None-the-less, even if you terminated all of your California based models/performers on December 31, 2019, you still have retroactively liability for wage, overtime, meal breaks ect.

Conclusion

For platforms and studios – AB5, Dynamex, Borello and the bona fide business relationship cases must all be analyzed in order to determine a studio or platform’s responsibility in their classification of models/performers. There is not a simple solution and the potential liability will be in the millions of dollars for the largest of California adult entertainment employers. We already know this based on the past lawsuits filed against gentlemen’s clubs for misclassifying dancers as independent contractors rather than treating them as employees.

I cannot stress enough that as an employer you need advice from a lawyer with substantial California employment law experience. You should retain one to work with your current legal team to ensure that you are compliant otherwise you could be staring down the barrel of a misclassification class action lawsuit filed by a plaintiff’s attorney on behalf of all your employee models and performers.

For models/performers – having a California Inc or LLC may be risky if your safety and anonymity is an issue. Before you pay Legal Zoom or your CPA/accountant to set up your Inc or LLC – consult with an attorney with California employment law experience so that you have all the information needed to make a reasonable decision whether having a company is the right answer for you.

If you are attending AVN or Internext-Expo.com in January 2020 in Las Vegas, I will be doing several free seminars on AB5 and the issues I have raised in this article. It will be worth it for you to attend.

You can find my AVN and Internext seminar schedule here;

https://adultbizlaw.com/2020/01/05/avn-schedule-legal-qa-seminars-meetings/

if you cannot attend my seminars and would like to set up a paid consultation about AB5 and these issues, please email me at Michael(at)fattlegal.com

Are you going to AVN Expo or Internext Expo ?

Do you want to set up a meeting or perhaps attend one of my legal Q&As, workshops or seminars ?

On Tuesday, January 21st at 9pm at a location to be announced, I will be offering a free Q&A – “Legally Delicious – Pasta, Sauce, Wine & Law.”

We will spend several hours talking law and tasting several Italian products I am importing; Lettere Wine, Sorrento Infused Olive Oil, Gragnano Pasta and San Marzano Tomato Sauce. Sample the tastes of true Southern Italian food and ask a few legal questions that you might have been wondering about.

If you are a member of the industry interested in attending, please email me at michael(at)fattlegal.com. This is a limited space Q&A.

On Friday, January 24th at 1:00 pm in Festival Hall C at the AVN Expo, I will be participating in a Legal Round Table Seminar. I will be discussing California AB 5 as well as other topics.

On Sunday, January 26th at 2:30pm during Internext Expo, I will hold a one hour Masterclass on California AB 5. I will be discussing the actual statute, AB 5, the case law behind it, Dynamex as well as how it will impact platforms, studios and performers, large and small.

Finally, on Monday, January 27th at 4pm – also during Internext Expo, I will participate in another Legal Round Table Seminar this time with Larry Walters, Esq. of Walters Law Group and Corey Silverstein, Esq. of Silverstein Legal. Again, I will be covering AB 5 as well as recent updates on FOSTA.

If you cannot attend one of the Q&As or seminars, please feel free to contact me via email at michael(at)fattlegal.com to set up a date and time for a meeting.

I will be in Las Vegas from Sunday, January 19th through Tuesday, January 27th at the Hard Rock Hotel and Casino.

I will also have limited availability in Los Angeles from Wednesday, January 28th through January 31st.

Many of you have probably heard about California Assembly Bill 5, now signed into law by California Governor Gavin Newsome. While this law was meant to deal with gig type employees such as Uber and Lyft drivers, it may also have negative effects on cam sites and cam performers.

The preamble to the legislation reads “The bill would provide that for purposes of the provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. The bill would exempt specified occupations from the application of Dynamex and would instead provide that these occupations are governed by Borello. These exempt occupations would include, among others, licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services, and others performing work under a contract for professional services, with another business entity, or pursuant to a subcontract in the construction industry.”

When employers are allowed to classify potential employees as independent contractors, state and local governments lose tax revenue. There has always been a presumption in California that anyone paid by a company is in fact an employee of that company. Now California has codified this idea and made it a statute. However, one that is not easy to understand though.

Obviously, cam performer is not listed as an exempt occupation listed above – which means that it is included in the list of occupations that are now covered by Assembly Bill 5. It should be noted that an actor or actress performing for an adult studio or director under the direction of that studio would most certainly be considered an employee under this new law. As for cam performers, it is a bit more confusing.

The entire text of the law can be found here…

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5

An article discussing the law from the Los Angeles Times can be found here…

https://www.latimes.com/california/story/2019-09-18/gavin-newsom-signs-ab5-employees0independent-contractors-california

Here is the important language of AB5 that will affect cam performers;

…a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed…

In order to be considered an independent contract as a cam performer – all three of those tests must be met and satisfied. It is not enough that 2 out of the 3 are satisfied. The text explicitly states “ALL.”

For the most part, a cam performer cannot meet the legal requirements for (B) and (C). It is more than likely that they will satisfy (A) though. Unfortunately, satisfying just one of the prongs of the 3-part test is not enough.

Cam performers would most likely be considered employees under Assembly Bill 5 if this issue is ever litigated in a California court.

So what does this all mean?

Cam sites may have to treat those performers that are located in California as actual employees, no different than Uber and Lyft now have to reclassify their California drivers. Which would require them to collect information about the cam performer’s immigration status, Social Security number as well as withhold payroll taxes from each payment issued to a performer. Cam sites may also be required to pay state minimum wages to performers if a performer does not earn enough in tips. Cam performers may also have to be given mandatory breaks depending on how many hours they decide to perform on camera for. Also, cam sites would need to keep track of the time spent on-cam versus time spent off cam for each California based performer.

Failure to do all of that could result in a class action litigation being instituted against the various cam sites by employment law plaintiff attorneys. This is exactly what happened to numerous gentlemen’s clubs in California and Nevada.

See the following articles…

https://topclassactions.com/lawsuit-settlements/closed-settlements/890442-seventh-veil-royal-palace-dancer-wages-class-action-settlement/

https://www.lamag.com/citythinkblog/soldiers-of-pole-stripper-union/

https://www.latimes.com/local/lanow/la-me-ln-6.5-million-award-exotic-dancers-tips-20150423-story.html

Millions of dollars in settlements have been paid to dancers by various gentlemen clubs in California. Those dancers are now required to be treated as employees not independent contractors. If adult entertainment dancers are considered employees in California, it is likely that cam performers would be considered employees as well.

I am sure cam sites and cam studios located or that do business in California may be changing how they treat their California based performers or risk potential lawsuits filed by disgruntled cam performers.

Assembly Bill 5 may completely change the cam industry in California forever. The potential is there for other states to adopt similar legislation in the future.