Clarity or Confusion: New SAG-AFTRA Advance Payment Process Confuses Talent Reps

The hotly contested SAG-AFTRA agreement with studios threatens to create a rift between actors and their representatives, as a new provision meant to give actors more clarity on residual payments created “additional confusion” among agents and managers has. as someone said, fueling fears that the new rules could wipe out smaller agencies and make it harder for up-and-coming players to find representation.

The core of the problem is the so-called prepaid residual. This is a portion of an artist’s compensation per episode that will be applied to future residual payments.

For as long as anyone can remember, prepaid balances have been part of an actor’s initial compensation, negotiated by the actor’s agents; They were part of the artist’s “citation” before California’s wage history ban law was passed in 2018.

The way it works is that the studio sends the actor’s royalty check for the episodes to its agents, who edit it, take their standard commission (usually 10% for agents) and then send the payment to the client.

This will change if SAG-AFTRA’s provisional agreement with the AMPTP is ratified.

According to the agreement summary released by the guild, beginning 60 days after ratification, all prepaid balances will be transferred to the union for processing and distribution to the artists.” The preliminary agreement with AMPTP limits the advance on the remaining wages to no more than 15 % a performer’s guaranteed compensation for those earning less than $75,000 per week or per episode.

The redetermination of the pre-residual portion of actors’ salaries, which was done in a separate tab, caused uproar among talent agents who, under the new arrangement, would no longer be able to automatically collect the full initial payment negotiated on their behalf. of their customers. The responsibility now falls on them: if they want to get the rest of the deposit back, the representatives will have to invoice their customers, which many do not like to do, and those who do, are not sure if the customers are willing not. to pay something they are not required to do.

“It goes without saying that if you convert the advance payments that go to the agency into a residual advance of up to 15% that goes directly to the union, most agencies will take a big loss,” said one representative.

The potential 15% drop in commissions for talent agents and managers comes as they are already reeling from the impact of the seven-month production shutdown caused by the two Hollywood strikes and feel “shot in the back,” a talent representative said. said.

“Representatives walked the line and received reduced or no wages during the strike,” an official said. “Now SAG-AFTRA is putting money in the actors’ pockets, but at the same time screwing the representatives – who are the actors’ advocates – after we stood by them during the strike.”

Another added: “It feels like the union and AMPTP have bridged a rift at the bargaining table at the expense of the reps, using the reps’ findings to improve the value of the new overall deal.”

We’ve reached out to SAG-AFTRA for comment.

The studios’ practice of bundling the remaining advance into episode fees is problematic. By definition, a salary should reflect an actor’s worth as a performer and reward their work on a show. Instead, the actual monetary value of the benefit is less because the episode cost includes a prepayment for future balances that have not yet been earned. (In the rare event that the show is not repeated, the actor may keep any remaining advance fees.)

The sensible solution would be to eliminate upfront payments, with the initial payment only a performance fee and the remaining payments accruing once a show is repeated.

That’s something studios probably wouldn’t go for. Instead, SAG-AFTRA’s new rules sought to provide artists with clarity on this issue.

“A critical distinction needs to be made between the initial compensation portion of the deal and the rest of the deal,” a guild source said. “For years, actors weren’t sure what the starting wage and residual advance was, and this makes that very clear to our members.”

Although the breakdown is clearly stated in actors’ contracts, it is usually not shown on checks, which can cause confusion for some SPs.

SAG-AFTRA processes any remaining payments to other actors, so its staff likely had questions from cast members wondering why they didn’t receive checks after their episodes aired. (Upfront payments usually cover the first few reruns; for streaming shows, the upfront payment may be for a show spending its first few years on the platform. Actors receive residual checks after the upfront payment is made.)

The forward residuals will be processed the same way SAG-AFTRA processes traditional residuals, guild sources said. They will be added to the 4 million remaining checks the union processes and sends to its members annually.

Sources within the agencies indicate that remaining payments from SAG-AFTRA are typically delayed by several months due to high volume, while the agencies process and send their checks to clients within a day or two, which the first payments (commission-free ) much makes easier. received faster. than what the guild would probably do with the advance amount.

The new level of hostility between SAG-AFTRA and the agencies strengthens the already distant relationship between them. The guild has not had a franchise agreement with the Association of Talent Agents since the last one in 2002. SAG-AFTRA still has rules on which balances are assignable and which are not, but agency sources point out that instead of a franchise agreement, agencies are governed by a blanket service agreement with the state of California, which sources say allows the law to take care of the whole thing Disposal of residual products.

This does not mean that agents who do not negotiate residuals do; There are different guidelines as to what constitutes an appropriate amount of assignment leftover material; this often includes the first three repetitions.

Sources close to the guild claim that “which balances are subject to commission should not change based on the timing of their payments.”

Nevertheless, there is great fear about the impact of the new rules on medium and small agencies.

“It will kill the middle class,” one agent said of the potential impact on smaller agencies’ revenue.

These boutique agencies play a crucial role in the Hollywood ecosystem. They sign new talent and spend time developing their clients without paying until actors start booking roles and paying commissions, so every penny of those commissions is vital to the survival of these agencies. If some of these companies were to disappear, “it would be very worrying, as it would be difficult for emerging players to recruit agents.”

Being under financial pressure, these smaller agencies may also be less willing to hire artists who are environmentally friendly and require a time commitment before they can make money and pay commissions, making it harder for newcomers to find representation .

There would also be a triple effect, since virtually all the top movie stars from the major talent agencies started at a smaller boutique shop, so a threat to those companies is a threat to Hollywood’s talent pipeline.