Posts Tagged profit participation
I read an article this morning that posed this very question, and it will be interesting to see how this will play out in Hollywood. An industry already under scrutiny and pressure over pay-disparity of its female actresses as compared to males, due in part to the post-Sony leak of Jennifer Lawrence’s lower profit participation (as compared to co-star Bradley Cooper; 7% vs. 9%, respectively), followed by Patricia Arquette’s Academy Award acceptance speech bringing attention to 35 million people, which then prompted an inundation of media speculation by morning as to why. Some say this law was a reaction to that pressure.
The law is interesting for 2 reasons: 1) it applies to “similar” jobs, not “same.” 2) it shifts the burden on employers, to justify why there is a disparity, if there is one. In an industry in which pays are already presumably guided by box office numbers and demand (and projections based on same), it will be interesting to see how things shift, and whether this will in turn change how calculations are done. In the film world, these calculations determine pre-sales, commitments that determine, in part, how much financing a project will get. A commitment from a foreign territory (for example) to buy your project at X pre-negotiated amount, before it’s even made, is taken to the bank and used as collateral for a loan. A risky move already on the part of distributors, sales agents are faced with the difficult and creative job of providing projections based on what talent, director, etc. is attached, and what those names typically bring in at the box office. Oh, how these numbers will change as pays are “equalized.” I have to ask if this will lower pay for everyone. Doubtful at the A-list level, but what about the low budget and modified low budget world many of my clients (and a significantly growing fraction of the film world) live in?
And while I sympathize, from my perspective, my client is just a cog in the wheel–meaning I can’t take all that into consideration when negotiating the best deal for my client. And what impact is that having?
The problem here is that there is no guidance yet. And guidance comes from judges deciding cases and interpreting what the law means in different factual scenarios. My hope is that this law will lead to actual change, as opposed to a slew of litigation….which sadly enough, is the only way we will get some clarity on how the law will be applied. You can bet on seeing some high profile cases pop up soon.
The other very interesting question that hasn’t been answered yet is what this means for the concept of the “loan-out.” Legally, the actor/producer/director/writer’s loan-out company is contracted by the studio, producer, etc. and it’s actually the loan-out that “hires” the talent, director, writer, etc (going to refer to them all as “talent” from here on out). So technically, the talent etc. is an employee of the loan-out, not the studio or producer. Hollywood runs on the concept of independent contractors. And the loan-out –a company set up for the sole purpose of minimizing legal exposure for talent etc.–could end up being a double-edged sword. Can an actor/producer/writer/director with a loan-out bring a claim against a studio or production company when they are technically employees of their own loan out? The independent contractor vs. employee has already been heavily litigated (there is a slew of case law to turn to, and the IRS even has its own 20 point checklist http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee), but we can bet on seeing this issue come up in future cases.
Anyway, just some thought for the curious mind. I’d love to hear what you all think. Thank you @latimes for getting my wheels turning this morning. http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-hollywood-fair-pay-20151008-story.html
(As a note, I haven’t addressed the important role of crew and “other” talent here, no doubt also subject to this disparity and deserving of notice.)
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