Hollywood labor groups are seeking answers amid an apparent crackdown by the state of California on the use of so-called loan-out corporations — a long-standing industry practice that helps actors, screenwriters and other entertainment workers organize their employment records and qualify for tax benefits.

Over the weekend, Hollywood payroll company Cast & Crew sent a memo to workers alerting them that the California Employment Development Department had said it was reviewing loan-out company activity, spurring swift responses from various organizations advocating for entertainment workers.

“It is anticipated that this will quickly become an industry-wide issue,” the memo read.

“This challenge appears to be targeted generally to the use of loan-out corporations in the entertainment production industry and would have a major impact on loan-outs working on countless productions in California.”

Cast & Crew added that it is “actively contesting the EDD’s position as well as working with union leadership and other entertainment companies to address this extremely important issue.”

Many actors, screenwriters and other entertainment workers are self-employed under their own loan-out corporations, which are single-person companies through which they “lend” their services to various film, TV and stage productions. They also qualify for certain tax breaks not otherwise available to individuals.

In a statement provided to The Times, the California EDD said Tuesday that it does not intend to “ban” loan-out companies in the state.

“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,” the EDD said after an influx of inquiries regarding its ongoing review of loan-out corporations.

“Our commitment is to ensure these taxes are collected according to state law. … We will continue our communication with industry representatives to ensure their concerns are heard and understood. We are optimistic that this dialog will help bring further clarity and information for the benefit of everyone who works in one of California’s most iconic industries.”

Because entertainment workers generally operate in a gig-based economy — hopping from one project to the next — it’s rare that they are consistently employed by a single company or entity, explained Kevin Klowden, executive director of MI Finance at the Milken Institute.

For this reason, Klowden continued, Hollywood players often create loan-out corporations to keep their employment records in one place.

Without banning loan-outs altogether, the EDD could hobble the established Hollywood system by requiring such corporations to pay certain taxes and fines, Klowden said.

He noted that this is probably part of a larger effort by Sacramento to penalize firms that hire workers for a number of short-term jobs without full benefits — which, on the surface, loan-out companies could appear to be.

Gig workers in the entertainment industry typically depend on unions to provide them with insurance and other benefits.

Hollywood labor unions representing performers, writers, crew members and other entertainment workers have responded to the EDD’s actions.

“IATSE is working closely with our allies in the entertainment industry labor movement, as well as Cast & Crew and other payroll companies, to closely monitor the EDD review of loan-out corporations and determine next steps,” said the International Alliance of Theatrical Stage Employees, which represents more than 60,000 crew members in the film and TV industry.

Performers union SAG-AFTRA said Saturday that it has been in contact with other Hollywood labor organizations to discuss the matter.

“We are all prepared to explain the history, validity, and importance of loan-out companies to entertainment industry workers, and highlight the devastating impact disregarding these entities would have on the industry,” said the Screen Actors Guild-American Federation of Television and Radio Artists, which represents about 160,000 performers.

The Writers Guild of America, West, added that it would “take any necessary action to preserve the long-standing use of loan-outs in this industry.”

Over the last week, guild members have taken to social media to post a memo from IATSE Local 695 (representing sound and video technicians) warning members that such a move by the EDD “would fundamentally change” the way that business is conducted in the entertainment industry.

According to Cast & Crew, loan-out corporations that incur notices from the EDD will have the opportunity to file a petition opposing the change.

So far, no alterations to current employment practices have gone into effect, according to a union source who was not authorized to comment.

Dozens of recently closed 99 Cents Only stores across the Southland could reopen with another bargain retailer’s logo outside: Dollar Tree.

The Chesapeake, Va.-based company, which operates hundreds of Dollar Tree and Family Dollar stores in California, reportedly made a bid on about 100 recently shuttered locations of 99 Cents Only, which announced last month that it was going out of business, according to a LinkedIn post from Bill Read, executive vice president of the real estate firm Retail Specialists.

The development, first reported by the Orange County Register, involves a handful of stores in Arizona, Nevada and Texas, but the vast majority are in Southern California, including in Lancaster, North Hollywood, Burbank, Long Beach and Riverside, according to Read’s post.

Dollar Tree did not immediately respond to requests for comment. A representative for 99 Cents Only could not be reached.

The 99 Cents Only chain — a longtime icon of L.A.’s discount retail world — started in 1982 with a single store on La Tijera Boulevard and expanded rapidly.

Before the City of Commerce company abruptly announced its closure in April — citing several factors, including shifting consumer demands and inflation — the chain had 371 locations.

But shelves quickly emptied out during liquidation sales, and several of the locations today are covered in graffiti.

Dollar Tree has faced financial turmoil of its own.

In 2014, Dollar Tree Inc. announced a plan to buy its big rival Family Dollar Stores Inc. for more than $8 billion — an acquisition that, according to the company’s website, brought its total to 15,000 stores. But this year, Dollar Tree announced a plan to close nearly 1,000 locations, including about 600 Family Dollar stores, in the first half of 2024, as well as several other Dollar Tree stores in the years ahead.

The Associated Press contributed to this report.

ChatGPT creator OpenAI on Tuesday said it formed a safety and security committee to evaluate the company’s processes and safeguards as concerns mount over the use of rapidly developing artificial intelligence technology.

The committee is expected to take 90 days to finish its evaluation. After that, it will present the company’s full board with recommendations on critical safety and security decisions for OpenAI projects and operations, the firm said in a blog post.

The announcement comes after two high-level leaders, co-founder Ilya Sutskever and fellow executive Jan Leike, resigned from the company. Their departures raised concerns about the company’s priorities, because both had been focused on the importance of ensuring a safe future for humanity amid the rise of AI.

Sutskever and Leike led OpenAI’s so-called superalignment team, which was meant to create systems to curb the tech’s longterm risks. The group was tasked with “scientific and technical breakthroughs to steer and control AI systems much smarter than us.” Upon his departure, Leike said OpenAI’s “safety culture and processes have taken a backseat to shiny products.”

OpenAI’s new safety and security committee is led by board chair Bret Taylor, directors Adam D’Angelo and Nicole Seligman and Chief Executive Sam Altman. Multiple OpenAI technical and policy leaders are on the committee as well. OpenAI said that it will “retain and consult with other safety, security and technical experts to support this work.”

The committee’s formation arrives as the company begins work on training what it calls its “next frontier model” for artificial intelligence.

“While we are proud to build and release models that are industry-leading on both capabilities and safety, we welcome a robust debate at this important moment,” OpenAI said in its blog post.

Controversies about use of AI have dogged the San Francisco-based company, including in the entertainment business, which is worried about the technology’s implications for intellectual property and the potential displacement of jobs.

Actor Scarlett Johansson criticized the company last week over its handling of a ChatGPT voice feature that she and others said sounded eerily like her. Johansson, who voiced an AI program in the Oscar-winning Spike Jonze movie “Her,” said she was approached by Altman with a request to provide her voice, but she declined, only to later hear what sounded like her voice in an OpenAI demo.

OpenAI said that the voice featured in the demo was not Johansson’s, but another actor’s. After Johansson raised the alarm, OpenAI put a pause on its voice option, “Sky,” one of many human voices available on the app. An OpenAI spokesperson said the formation of the safety committee was not related to the issues involving Johansson.

OpenAI is best known for ChatGPT and Sora, a text to video tool that has major potential ramifications for filmmakers and studios.

OpenAI and other tech companies have been holding discussions with Hollywood, as the entertainment industry grapples with the long-term effects of AI on employment and creativity.

Some film and TV directors have said AI allows them to think more boldly, testing ideas without having the constraints of limited visual effects and travel budgets. Others worry that increased efficiency through AI tools could whittle away jobs in areas like makeup, production and animation.

As it faced safety questions, OpenAI’s business, which is backed by Microsoft, also must deal with competition from other companies that are building their own artificial intelligence tools and funding.

San Francisco-based Anthropic has received billions of dollars from Amazon and Google. On Sunday, xAI, which is led by Elon Musk, announced it closed on a $6-billion funding round that goes toward research and development, building its infrastructure and bringing its first products to market.