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The regulation of talent agencies in California

Posted by Steve Vondran | May 03, 2020 | 0 Comments

Attorney Steve® Entertainment Law - The Talent Agency Contract in California ("TAA")

Hollywood Attorney

Introduction

I just got done reviewing a California talent agency agreement.  This is an agreement whereby a talent agent (a company in the business of procuring employment opportunities for artists in the entertainment business) seeks to have the artists "sign" with them for a period (ex. up to 7 years) on an EXCLUSIVE basis.  The agency was pressuring a young woman to "sign today, I need this back by 11:00". I asked to see the contract.  It was a one-pager and I did not like the terms.  I looked the agency up on the California Labor Commission website and did not see that this person was property licensed.  This raised suspicions.  I informed my client of my concerns, and was told that the agent "does not negotiate their contract."  I told them to RUN don't walk away. 

Even though a talent agency website may appear credible with faces of actors and actresses posted looking for entertainment work, this DOES NOT MEAN the talent agency is in compliance with basic requirements of the California Labor Code Section 1700-1700.47 and other applicable rules, and if not, as part of your due diligence review, you might want to seek legal counsel before signing on the bottom line (which could bind you, or worse, your kids to exclusive contracts.

PODCAST:  Hear Attorney Steve® discuss a general legal overview in this into podcast

Void talent agent contract

Personal manager vs. agent, what's the big deal?

NOTE:   There is a distinction between "Agents" and "Managers" (although the line has become blurred).  Technically the TAA covers "agents" who usually procure the casting calls, negotiate the deals, etc.  However, many managers also do things similar (ex. schedule meetings, setup coaching or photo shoots, talk with promoters, setup auditions or "bookings" etc.).  If you cross the line into "procuring, offering, promising or attempting to procure entertainment work on behalf of your client, arguably you could be forced to comply with the TAA.  The failure to do so could lead you to a similar outcome as a manager realized in the Deftones TAA case.  Basically, a manager who violates the California Talent Agency Act can have their management contracts cancelled, commissions lost, lost of potential future profits, etc.  So, it is important - especially if you are getting into acting or comedy - to know what role your professional is playing.  Is it that of a manager?  Or that of your agent?  Clearly defined roles can prevent a lot of confusion, and many times an entertainment attorney is needed to make sure you are properly protected, especially if you are dealing with new agents and managers.

Licensing requirement

Any person or company wishing to become a talent agent in California must get properly licensed with the Labor Commission.  This includes:

1.  Filing out an application

2.  Fingerprints (criminal background check)

3.   $25 filing fee

4.  $225 license issue fee

5.  Must post 50k bond (to protect public from fraudulent work)

6.  License should be noted in a prominent place at their office (and branch offices - $50 filing fee)

7.  Applicant must pass good character review

8.  There is an annual renewal process

9.  Licensed agents will show up in the licensing database (Go here to check to see if a California Talent Agent if licensed)

10.  The agreement with the Artist / Talent, must be approved in advance by the Labor Commissioner.  Here is a look at DLSE 315A form.

§ 1700.23. Forms of contracts for services of talent agency; Approval; Prerequisites Every talent agency shall submit to the Labor Commissioner a form or forms of contract to be utilized by such talent agency in entering into written contracts with artists for the employment of the services of such talent agency by such artists, and secure the approval of the Labor Commissioner thereof. Such approval shall not be withheld as to any proposed form of contract unless such proposed form of contract is unfair, unjust and oppressive to the artist. Each such form of contract, except under the conditions specified in Section 1700.45, shall contain an agreement by the talent agency to refer any controversy between the artist and the talent agency relating to the terms of the contract to the Labor Commissioner for adjustment.

There shall be printed on the face of the contract in prominent type.

11.  Fee schedule must be filed with the Labor Commission

§ 1700.24. Fee schedules of talent agency; Filing; Posting; Changes Every talent agency shall file with the Labor Commissioner a schedule of fees to be charged and collected in the conduct of that occupation, and shall also keep a copy of the schedule posted in a conspicuous place in the office of the talent agency. Changes in the schedule may be made from time to time, but no fee or change of fee shall become effective until seven days after the date of filing thereof with the Labor Commissioner and until posted for not less than seven days in a conspicuous place in the office of the talent agency.

12.  Trust Fund requirements

§ 1700.25. Trust fund accounts; Disbursement of funds; Recordkeeping requirements

(a) A licensee who receives any payment of funds on behalf of an artist shall immediately deposit that amount in a trust fund account maintained by him or her in a bank or other recognized depository. The funds, less the licensee's commission, shall be disbursed to the artist within 30 days after receipt. However, notwithstanding the preceding sentence, the licensee may retain the funds beyond 30 days of receipt in either of the following circumstances: (1) To the extent necessary to offset an obligation of the artist to the talent agency that is then due and owing. (2) When the funds are the subject of a controversy pending before the Labor Commissioner under Section 1700.44 concerning a fee alleged to be owed by the artist to the licensee.

(b) A separate record shall be maintained of all funds received on behalf of an artist and the record shall further indicate the disposition of the funds.

(c) If disputed by the artist and the dispute is referred to the Labor Commissioner, the failure of a licensee to disburse funds to an artist within 30 days of receipt shall constitute a "controversy" within the meaning of Section 1700.44.

(d) Any funds specified in subdivision (a) that are the subject of a controversy pending before the Labor Commissioner under Section 1700.44 shall be retained in the trust fund account specified in subdivision (a) and shall not be used by the licensee for any purpose until the controversy is determined by the Labor Commissioner or settled by the parties.

(e) If the Labor Commissioner finds, in proceedings under Section 1700.44, that the licensee's failure to disburse funds to an artist within the time required by subdivision (a) was a willful violation, the Labor Commissioner may, in addition to other relief under Section 1700.44, order the following:

(1) Award reasonable attorney's fees to the prevailing artist.

(2) Award interest to the prevailing artist on the funds wrongfully withheld at the rate of 10 percent per annum during the period of the violation.

Can a Minor (under 18 at time of entering into the contract) Disaffirm or void their talent agency contract?

The Labor Code has provided for this interestingly enough.  Generally, minors under 18 can void contracts unless it is for essentials: food, clothing, shelters, and apparently jobs in the entertainment industry.  This section says:

§ 1700.37. Contract between minor and talent agency; Absence of right to disaffirm approved contract; Approval by Labor Commissioner; Proceeding for judicial approval A minor cannot disaffirm a contract, otherwise valid, entered into during minority, either during the actual minority of the minor entering into such contract or at any time thereafter, with a duly licensed talent agency as defined in Section 1700.4 to secure him engagements to render artistic or creative services in motion pictures, television, the production of phonograph records, the legitimate or living stage, or otherwise in the entertainment field including, but without being limited to, services as an actor, actress, dancer, musician, comedian, singer, or other performer or entertainer, or as a writer, director, producer, production executive, choreographer, composer, conductor or designer, the blank form of which has been approved by the Labor Commissioner pursuant to Section 1700.23, where such contract has been approved by the superior court of the county where such minor resides or is employed. Such approval may be given by the superior court on the petition of either party to the contract after such reasonable notice to the other party thereto as may be fixed by said court, with opportunity to such other party to appear and be heard.

What about "Coogan Accounts" to protect child actors?

California entertainment attorney Coogan Account

VIDEO:  This is addressed in this great video.  Click to watch, and make sure to SUBSCRIBE to our channel.  According to SAG-ACTRA

"In most instances, you will have to supply proof of a trust account prior to receiving a work permit. 15% of the minor's gross wages are required to be withheld by the employer and deposited into the Coogan account within 15 days of employment. The parent must supply the Coogan account number to the employer."

How a talent agency can LOSE their license

Under the California Labor Code:

"§ 1700.21. Revocation or suspension of license; Grounds The Labor Commissioner may revoke or suspend any license when it is shown that any of the following occur:

(a) The licensee or his or her agent has violated or failed to comply with any of the provisions of this chapter. (wrongful conduct)

(b) The licensee has ceased to be of good moral character (could be all kinds of things)

(c) The conditions under which the license was issued have changed or no longer exist.

(d) The licensee has made any material misrepresentation or false statement in his or her application for a license.

 If any of these happen, a hearing (due process) can be required by the Labor Commissioner.

Don't forget an "agent" is a fiduciary owing many duties to their clients

An agency relationship is a fiduciary one, obliging the agent to act in the interest of the principal. (See Fischer v. Machado (1996) 50 Cal. App. 4th 1069, 1072 [58 Cal. Rptr. 2d 213].). See also Engalla v. Permanente Medical Group, Inc. (1997) - 15 Cal. 4th 951, 64 Cal. Rptr. 2d 843, 938 P.2d 903.

Administrative Hearings

§12005. Revocation or Suspension of License. The failure of any talent agency to comply with these Rules and Regulations or with any order made by the Labor Commissioner in pursuance thereof shall be cause for the suspension or revocation of the license of such talent agency pursuant to Labor Code Section 1700.21.

§ 1700.22. Requirement of opportunity to be heard; Statutory provisions governing proceeding Before revoking or suspending any license, the Labor Commissioner shall afford the holder of such license an opportunity to be heard in person or by counsel. The proceedings shall be conducted in accordance with Chapter 5 (commencing at Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted therein.

Disputes between Parties to a talent agency agreement can be resolved before the Board (one year to bring claim).

§ 1700.44. Reference of disputes to Labor Commissioner; Statute of limitations; Unlicensed persons (a) In cases of controversy arising under this chapter, the parties involved shall refer the matters in dispute to the Labor Commissioner, who shall hear and determine the same, subject to an appeal within 10 days after determination, to the superior court where the same shall be heard de novo.

To stay any award for money, the party aggrieved shall execute a bond approved by the superior court in a sum not exceeding twice the amount of the judgment. In all other cases the bond shall be in a sum of not less than one thousand dollars ($1,000) and approved by the superior court.

Arbitration of disputes also possible:

§ 1700.45. Contract provision for arbitration; Provisions prerequisite to validity Notwithstanding Section 1700.44, a provision in a contract providing for the decision by arbitration of any controversy under the contract or as to its existence, validity, construction, performance, nonperformance, breach, operation, continuance, or termination, shall be valid:

(a) If the provision is contained in a contract between a talent agency and a person for whom the talent agency under the contract undertakes to endeavor to secure employment, or

(b) If the provision is inserted in the contract pursuant to any rule, regulation, or contract of a bona fide labor union regulating the relations of its members to a talent agency, and DLSE 2009 (Rev. 1/09) Laws Relating to Talent Agencies 9

(c) If the contract provides for reasonable notice to the Labor Commissioner of the time and place of all arbitration hearings, and

(d) If the contract provides that the Labor Commissioner or his or her authorized representative has the right to attend all arbitration hearings. Except as otherwise provided in this section, any arbitration shall be governed by the provisions of Title 9 (commencing with Section 1280) of Part 3 of the Code of Civil Procedure. If there is an arbitration provision in a contract, the contract need not provide that the talent agency agrees to refer any controversy between the applicant and the talent agency regarding the terms of the contract to the Labor Commissioner for adjustment, and Section 1700.44 shall not apply to controversies pertaining to the contract.

A provision in a contract providing for the decision by arbitration of any controversy arising under this chapter which does not meet the requirements of this section is not made valid by Section 1281 of the Code of Civil Procedure.  

California Talent Agent Contracts must be Approved

§12003. Form of Contracts Must Be Approved.

Approval of the form of contract as required by Labor Code Section 1700.23 will be indicated by an endorsement thereon by the Labor Commissioner which must be retained by the talent agency, or by a letter from the Labor Commissioner that the contract adopted by the talent agency has been endorsed by the Labor Commissioner. §12003.1.

Required Statements on Contract Forms Indicating Approval of Labor Commissioner. After approval of the form of contract by the Labor Commissioner, the same may be legibly reproduced, which reproduction must bear thereon the following statement: "THIS TALENT AGENCY IS LICENSED BY THE LABOR COMMISSIONER OF THE STATE OF CALIFORNIA The form of this contract has been approved by the State Labor Commissioner on the ____ day of ________ 19____."

§12003.2. Approval of the Labor Commissioner for Reproduction of Approved Contract Forms. No form of contract which incorporates substantial changes in the form of contract previously approved shall be reproduced again unless the same shall be submitted to the Labor Commissioner for approval and shall not be reproduced again prior to the granting of approval and written consent by the Labor Commissioner.  

Contact a Los Angeles based Entertainment Attorney

To file a dispute against an agent or a manager, contact an Entertainment Attorney in California. We can also review talent agency and personal manager contracts, represent you in entertainment arbitration or litigation, handle Coogan-Account abuse, breach of fiduciary duty claims, and intellectual property and social media claims including right of publicity and celebrity endorsement.  We have appeared in over 175 federal court cases in our 15 years of law practice and against some of the biggest law firms on the planet.

We have offices in San Diego, Newport Beach, Santa Monica, and San Francisco. 

You can go here for more details on the dispute process and a sample complaint petition

For more information contact us at (877) 276-5084 or email us through our contact form.

About the Author

Steve Vondran

Thank you for viewing our blogs, videos and podcasts. As noted, all information on this website is Attorney Advertising. Decisions to hire an attorney should never be based on advertising alone. Any past results discussed herein do not guarantee or predict any future results. All blogs are written by Steve Vondran, Esq. unless otherwise indicated. Our firm handles a wide variety of intellectual property and entertainment law cases from music and video law, Youtube disputes, DMCA litigation, copyright infringement cases involving software licensing disputes (ex. BSA, SIIA, Siemens, Autodesk, Vero, CNC, VB Conversion and others), torrent internet file-sharing (Strike 3 and Malibu Media), California right of publicity, TV Signal Piracy, and many other types of IP, piracy, technology, and social media disputes. Call us at (877) 276-5084. AZ Bar Lic. #025911 CA. Bar Lic. #232337

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