Is Hollywood’s loan-out corporations in danger? The industry searches for solutions

Hollywood labor groups are on high alert as the state of California cracks down on the use of loan-out corporations, a common practice in the entertainment industry. This crackdown has sparked concern among actors, screenwriters, and other entertainment workers who rely on these corporations to organize their employment records and qualify for tax benefits.

The California Employment Development Department’s review of loan-out company activity has prompted a swift response from industry organizations, with many anticipating that this will become an industry-wide issue. Hollywood payroll company Cast & Crew has sent out a memo alerting workers to the situation and is actively contesting the EDD’s position.

Many entertainment workers operate as self-employed individuals under their own loan-out corporations, allowing them to lend their services to various productions and qualify for tax breaks. The EDD has clarified that they do not intend to ban loan-out companies in the state but are focused on ensuring taxes are collected according to state law.

Industry experts believe that this crackdown could have a major impact on the Hollywood system, as loan-out corporations may be required to pay certain taxes and fines. Hollywood labor unions representing performers, writers, directors, and crew members are closely monitoring the situation and are prepared to take action to preserve the use of loan-outs in the industry.

As the situation continues to unfold, entertainment industry workers are anxiously awaiting further clarity and information on how this crackdown will affect their employment practices. Guild members have taken to social media to express their concerns, and loan-out corporations facing notices from the EDD will have the opportunity to file a petition opposing the change.