California EDD Assures It Is ‘Not Taking Action to Ban’ Loan-Out Companies Key to State’s IATSE Members

“We understand the great importance of California’s film and television industry,” the Employment Development Department says

EDD and IATSE logos

The California Employment Development Department says it is not seeking to ban loan-out companies, which provide a key service to many entertainment workers, after concerns were raised by such companies and Hollywood unions like IATSE over Memorial Day weekend.

“We understand the great importance of California’s film and television industry and are proud of our work to support California’s employers and industries. We have received various inquiries highlighting questions about loan-out corporations’ ability to operate in California. As we have previously stated, EDD is not taking action to ban these companies in California,” read a statement from the EDD released Tuesday.

Loan-out companies allow Hollywood workers, from producers to crew members, to establish their own LLCs. This gives workers corporate protections and allows them to classify certain work expenses as tax breaks, which can provide economic relief, particularly at a time when California entertainment workers have seen a substantial downturn in employment opportunities.

But this past Friday, entertainment payroll company Cast & Crew sent a memo out to customers saying it was audited by the EDD and was informed that “payments made to loan-outs should have been paid directly to the loan-out corporation owner/shareholder as wages,” something the company interpreted as a potential challenge to the practice of loan-outs across the state.

“It is anticipated that this will quickly become an industry-wide issue. It will not be specific to payroll processed by Cast & Crew, and would apply state-wide, regardless of payroll provider,” read a memo from the company.

In its own statement on Tuesday, IATSE said it is “working closely with our allies in the entertainment industry labor movement, as well Cast & Crew and other payroll companies, to closely monitor the EDD review of loan-out corporations and determine next steps.”

TheWrap has reached out to Cast & Crew for comment.

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