BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 533
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          Date of Hearing:   May 8, 2013

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                               Roger Hernández, Chair
                 AB 533 (Ian Calderon) - As Amended:  April 18, 2013
           
          SUBJECT  :   Artistic Employment Contracts: minors.

           SUMMARY  :   Excludes background performers from the requirement  
          of establishing a Coogan Trust Account (Account), as specified.   
          Specifically,  this bill  :  

          1)Provides that the court shall not require the employer of a  
            minor for services as an extra, background performer, or in a  
            similar capacity, as specified, to set aside 15% of the  
            minor's gross earnings. 

          2)Exempts an employer of a minor for services as an extra,  
            background performer, or in a similar capacity, as specified,  
            from depositing or disbursing the 15% of the minor's gross  
            earnings pursuant to the contract within 15 business days  
            after receiving a true and accurate copy of the trustee's  
            statement, a certified copy of the minor's birth certificate,  
            and, in the case of a guardian, a certified copy of the court  
            document appointing the person as the minor's guardian. 

          3)Provides that notwithstanding any other statute, for any  
            minor's contract for services as an extra, background  
            performer, or similar capacity, as specified, that is not  
            being submitted for approval by the court pursuant to existing  
            law, or for which the court has issued a final order denying  
            approval, is exempt from having 15% of the minor's gross  
            earnings pursuant to the contract be set aside by the minor's  
            employer.

          4)Stipulates that an employer of a minor for services as an  
            extra, background performer, or in a similar capacity, as  
            specified, is not required to deposit 15% of the minor's gross  
            earnings pursuant to the contract within 15 business days of  
            receiving the trustee's statement, or if the court denies  
            approval of the contract, within 15 business days of receiving  
            a final order denying approval of the contract.  

           EXISTING LAW :









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          1)Requires the written consent of the Labor Commissioner (LC)  
            for the employment of a minor in the entertainment industry,  
            as specified.  

          2)Provides that once written consent is given by the LC, as  
            specified, that consent shall be void after the expiration of  
            ten business days from the date the written consent was  
            granted unless it is attached to a true and correct copy as  
            evidence that a "Coogan Trust Account" has been established on  
            behalf of the minor.  

          3)Requires that 15% of a minor's gross earnings be set aside by  
            the minor's employer in trust, in an account or other savings  
            plan, and preserved for the benefit of the minor. 



          4)Requires that the minor's employer deposit or disburse the 15%  
            of the minor's gross earnings within 15 business days, as  
            specified.  Pending receipt of (among other things proof of  
            the establishment of a trust account), the minor's employer  
            shall hold, for the benefit of the minor, the 15% of the  
            minor's gross earnings pursuant to the contract. 

          5)States that if a parent, guardian, or trustee fails to provide  
            the minor's employer with a true and accurate photocopy of the  
            trustee's statement within 180 days after the commencement of  
            employment, the employer shall forward to The Actors' Fund of  
            America 15% of the minor's gross earnings to hold until the  
            minor reaches 18 years of age, as specified.

          6)Provides that if a minor renders services as an extra,  
            background performer, or in a similar capacity through an  
            agency or service that provides one or more of those  
            performers for a fee, such as a casting agency, the agency or  
            service shall be considered the minor's employer.  

           FISCAL EFFECT  :   None

           COMMENTS  :  According to the author, "Existing law requires that  
          all child actors must have 15% of their earnings set aside in a  
          Coogan Trust Account, which may not be accessed by anyone   
          including the child actor until after they become adults.  For  
          child actors who earn large sums as principal performers, the  
          Coogan law provides needed and beneficial protection.  However,  








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          for kids who only work once or twice a year as an extra or  
          background performer, this requirement is an unnecessary and  
          inefficient waste, and simply denies kids some summer fun money.  
           This bill corrects this situation and removes the requirement  
          that the parents of background kids have to create Accounts." 

          Central Casting, the largest casting agency in the world, states  
          that background kids work less than two times a year on average.  
           The author concludes, "The daily pay rate for the background  
          actors is $64/8 non-union and $145/8 for kids who are in  
          SAG/AFTRA.  When you take out 20% for their agent; 7% for taxes;  
          15% a Coogan Trust Account, very little is left to deposit.   
          Given that some banks charge fees for the Account, and draw it  
          from the corpus of the trust, this pittance is exhausted  
          quickly.  For those accounts which are in place waiting until a  
          child becomes an adult to release the funds is really  
          inefficient and does little further our goal with the Coogan Act  
          to protect kids."

          According to The Actor's Fund of America (AFA), "the Unclaimed  
          Coogan Fund has over 38,000 individual deposits, and over 32,000  
          of them are for less than $99."  Very few have aggregated sums  
          of substance, which leads AFA to conclude it's probably all  
          background players who are abandoning their money rather than  
          establish a Coogan Trust Account.

          In a recent article discussing the ongoing class action lawsuit  
          against Bank of America (B of A), (alleging that their practice  
          of collecting fees from Coogan Account Trust Funds violates the  
          Coogan Act), it was noted that B of A requires a minimum deposit  
          amount of $300, and will charge service fees on accounts which  
          slip below that limit.   Backstage, Did Bank of America Steal  
          From Child Actors? Sean J. Miller, Sept. 24, 2012  .  Other banks  
          also charge fees for the establishment and maintenance of the  
          Accounts. 

           


          Background on The Coogan Trust Act  

          The Coogan Trust Act was enacted to preserve a portion of a  
          minor's earnings under an employment contract for creative or  
          artistic services, for the minor's use when he or she reaches  
          the age of majority.  SB 1162 (Burton), Chapter 940, Statutes of  








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          1999, overhauled the Coogan Act.  Applicable to both  
          court-approved and non-court-approved minors' contracts for  
          creative or artistic  employment, SB 1162 required 15% of a  
          minor's earnings to be set aside and deposited into a "Coogan  
          Trust Account", invested in low-risk financial vehicles, and  
          blocked from use until the minor is emancipated or reaches age  
          18.  To enforce the set-aside, SB 1162 imposed a duty on the  
          employer to make the deposit directly into the minor's Coogan  
          Trust Account, which a parent or guardian is required to open at  
          an insured financial institution and to invest in a manner  
          consistent with that of a trustee.  Annual accounting is  
          required, and court supervision of trust accounts for minors  
          with court-approved contracts continues until the minor turns  
          18.

          To further strengthen enforcement of the Coogan Act, the  
          Legislature adopted, and the Governor signed, SB 210 (Burton),  
          Chapter 667, Statutes of 2004, which added the requirement that  
          the LC's written consent for performances of a minor under Labor  
          Code Section 1308.5 be limited to 10 days, unless a Coogan Trust  
          Account has been established. 

          SB 210 also created a mechanism for payment of the Coogan  
          set-aside to AFA for those child performers whose parents failed  
          to establish a Coogan Trust Account.  The AFA holds the money  
          for the benefit of the child until such time as the child claims  
          his or her funds.  Periodically AFA will advertise the Unclaimed  
          Coogan Account, and makes best efforts to contact children whose  
          15% set aside is being held in trust for them. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 

           BizParentz
          The Actors Fund of America

           Opposition 
           
          None on file.
           

          Analysis Prepared by  :    Lorie Alvarez/ L. & E. / (916) 319-2091  










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