BYBOB LABATE
Many independent film producers assume–wrongly–that they either aren’t affected by or don’t need to worry about the many collective bargaining agreements that govern the entertainment industry. True, one can feel like Theseus in the Labyrinth when trying to determine whether you qualify for the Screen Actor’s Guild’s (SAG) Modified Low Budget Agreement or Limited Exhibition Agreement, but failing to plan for industry agreements that may affect your production can make your life miserable or, worse, can leave you with an enormous obligation for residual payments.
Unions and Collective Bargaining Agreements
Recognizing what unions might have a role in your film project can be challenging. In addition to the SAG (www.sag.org) and the American Federation of Television & Radio Artists (www.aftra.com) members, your film production may employ members of the following unions:
AFM–The American Federation of Musicians (www.afm.org) represents professional musicians throughout the world and in a wide variety of activities.
DGA–The Directors Guild of America (www.dga.org) represents directors of theatrical, industrial, educational and documentary films, as well as live television, filmed and taped radio, videos and commercials.
IATSE–The International Alliance of Theatrical Stage Employees (www.iatse.org) represents a broad range of technicians, artisans and craftsmen and women in the entertainment industry, including film and television production.
WGA–The Writers Guild of America, East (www.wgaeast.org) and Writers Guild of America, West (www.wga.org) represent writers in the motion picture, broadcast, cable, interactive and new media industries. The WGA, West also maintains a registry which allows you to register your scripts via on-line registration.
By law, these unions are the exclusive bargaining representatives for their respective members. Members of some unions–SAG, AFTRA and the DGA–are represented by independent agents who are specifically franchised by those unions to obtain employment for union members so long as the agents abide by the rules and conditions established by the unions.
Among other things, the unions negotiate and enforce collective bargaining agreements (often referred to as the "Basic Agreement") that establish the terms and conditions under which their members work on any entertainment project. The scope of these Basic Agreements is breathtaking.
For example, the SAG Basic Agreement sets minimum payments to professional performers (based on the final budget and intended use of the production), but it also sets minimum terms for items such as length of work day, meal breaks, overtime, pension and health contributions, transportation, record keeping, withholding taxes, social security, unemployment and disability insurance, and residual payments. In addition, SAG takes a security interest in the film to protect its members from any defaults in performance by the producer, and the producer is required to provide SAG with all chain-of-title documents relating to the film. The producer is also required to become a signatory to the current Basic Agreement, which means that all of the producer’s future productions must comply with SAG rules and conditions.
Don’t Ask, Don’t Tell
Given all of these requirements, it is perfectly rational for indie producers (most of whom are operating on shoestring budgets) to decide that employing union members is simply not worth the additional cost and hassle of complying with the Basic Agreement and operating (now and in the future) pursuant to its rules. Yes, union members will do an excellent job, but an excellent job may not be needed if the producer is simply learning the craft or trying to make the script into a film "calling card" that will help attract work with higher production values.
Unfortunately, there is a great temptation to use union professionals without complying with the Basic Agreement by adopting a "Don’t Ask, Don’t Tell" policy. After all, if your union actors, director, writer, cinematographer, etc. aren’t concerned, why should you create trouble for yourself or for them? The answer is simple: If you ignore the unions, you put your project and your production company at risk and, often, taking such risk is largely unnecessary.
Some Troubling Scenarios
Here’s one scenario. The producer has made one or two indie films and now believes that getting to the next level depends on getting name talent that might attract distribution. The project is non union, but the talent’s agent insists on receiving up-front compensation and residuals that are consistent with the SAG Basic Agreement for the film’s budget. The producer agrees to pay the talent "in a manner consistent with the SAG Basic Agreement," assuming that this is merely a bookkeeping matter and that the film’s distributor will be responsible for any residual payments to the actor.
Sometimes, during principal photography, the talent becomes dissatisfied with the producer (or the production) and a call is made to the local SAG office which, in turn, calls the producer to demand that the producer comply with the Basic Agreement or the talent will be ordered off the set. The producer, who may not have the money and organization to comply with the Basic Agreement, now has to either postpone production or raise some additional funds quickly.
Here’s a second scenario. Assume that the film is produced and is licensed to a distributor; however, the "advance" paid by the distributor covers only the cost of obtaining clearances and "delivering" the film. The film’s distributor required the producer to verify that he/she was not subject to any applicable Basic Agreements. Further assume that the film is in distribution and the talent’s agent calls about residual payments based on exhibition of the film. A hole develops in the producer’s gut.
The producer, who will not receive any money until the distributor "recoups" its expenses, is now in a position where they must pay residuals to the talent, but has no income from the film from which to pay such residuals. Without a Distributor’s Assumption Agreement, the distributor may or may not be liable for payment of residuals, but the producer has no defense and must either obtain money to pay residuals or the union may seek to prevent further distribution of the film.
The lesson is pretty simple. If a producer wants to use union professionals, then they must understand the responsibilities they’re undertaking. Long before negotiating talent (or other professional) agreements, they should talk to a union representative to see how to make the film within budget while complying with the union’s Basic Agreement. Believe it or not, the unions want you to make your film.
For instance, SAG has a series of Letter Agreements for films at various funding levels produced for a variety of purposes by people with a range of experience. Such Letter Agreements include Student Films with a maximum total budget of $35,000 to Limited Exhibition Films with a total budget of $200,000 (excluding deferrals), and Modified Low Budget Films with a total budget of $500,000 that may be increased to $750,000 depending on certain casting decisions.
Indie film production is never easy, but you can avoid getting caught in the labyrinth by understanding that one or more of the Basic Agreements may affect your production and by acting accordingly.
© 2002 Robert J. Labate. This column is provided as a source of information and is not to be construed as legal advice or opinion. You may contact me through our firm’s Web site (mbc.com), via email at labate@mbc.com or, via mail, to Bob or Kristen at McBride Baker & Coles, 500 West Madison Street, Suite 4000, Chicago, Illinois, 60661 312/715-5700.