The California Employment Development Department has stated that loan out corporations will not be prohibited in the state, despite concerns raised by entertainment payroll agencies.
The state of California is implementing policy changes that will impact Hollywood’s creative community who use loan out corporations to manage their business affairs. This change will require Hollywood employers to pay creative talent wages as individuals rather than as fees owed to a business entity. This will result in full income tax withholding and payment of employee and employer taxes on all income earned by the owners of loan-out companies. The change is in line with California’s labor-friendly policy agenda under Governor Gavin Newsom.