The new SAG-AFTRA guidelines on advance paid residuals have created “an additional layer of confusion” within the community of agents and managers, Deadline reported.
What are advance paid residuals?
When the actors' union released the summary last week, it stated new rules around these advance paid residuals. These are part of an actor's per-episode fee, which are counted toward residual payments in the future.
Before these new guidelines, prepaid residuals had been part of an actor's starting payment. These are negotiated by the actor's agent and/or manager and part of the actor's “quote” before California adopted the salary history ban law.
California's salary history ban law, or California Labor Code 432.3, states that employers aren't allowed to ask job applicants regarding their salary history when they apply for positions.
Advance paid residuals work like this: the studio sends an actor's episodic fee check to their reps. The reps then process the check, minus their standard commission, usually 10% for agents. And then they send the payment to the actor.
All that will change when SAG-AFTRA and AMPTP's tentative agreement is ratified.
SAG-AFTRA vs. agents/managers?
According to the new guidelines, “all advance paid residuals shall be delivered to the union for processing and forwarding to performers.” This means that advance residual pay will be capped not more than 15% of an actor's guaranteed compensation for those who earn lower than $75,000 per week or per episode.
However, the one sticking point in this is how an upfront residual is paid out to the actor. In the new guidelines, the agents and/or managers are cut out from the process and will be unable to automatically deduct their commission from the payment they negotiated for their clients.
When and if the agreement is ratified, it will be up to the agents and/or managers to invoice their clients for that commission. Many of them say they don't feel comfortable doing so. Those who are comfortable doing said they're not sure if their clients would pay when they're not obligated to do so.
A talent representative told Deadline, “Needless to say if you convert upfront money that goes to the agency to an advance on residuals of up to 15% that goes directly to the union, most agencies are going to take a huge hit.”
Agents/managers to SAG-AFTRA: “We were all rooting for you!”
The potential of losing out on up to 15% in commissions has made at least one rep say they feel “stabbed in the back.”
“Reps were walking the picket lines, taking reduced or no salary during the strike,” one agent said.
“Now SAG-AFTRA is putting money in the actors’ pockets, but at the same time screwing over the reps — who are actors’ advocates — after we stood by them during the strike,” they continued.
Another added, “Feels like the union and AMPTP bridged a gap at the negotiating table at the expense of the reps, leveraging the reps’ bottom line to improve the value of the overall new deal.”
There is a common sense solution to this, a short cut, if you will: do away with the advance residuals. The initial payment should strictly be a performance fee. Then the residual payments can kick in when the show starts its reruns.
However, the studios might not want to go for this. This is because that initial payment would end up being lower than if it were just-based-on-a-performance fee. That's because it's sort of made up by the fact that that fee includes a pre-payment for something that hasn't been earned yet. That's the advance residual pay.
Another issue at hand is just confusion, which the guild claimed is what they're trying to address with the new guidelines.
A SAG-AFTRA source said, “There is a critical distinction to make from the initial compensation part of the deal and the residual part of the deal.”
“For many years, actors were confused what was initial pay and advance pay toward residuals, and this is making it very clear to our members.”
The confusion comes from the breakdown. It's stated in actors' contracts, but it usually isn't seen in the checks.
Another point of confusion which actors have gone through with SAG-AFTRA staffers, who handle all other residual payments, is why they're not getting their checks after their shows' episodes aired.
Maybe it's easier to think of the advance paid residuals as the money you load into a prepaid card. The amount of money loaded into the card is typically for the first couple of reruns. For streaming shows, it could be for the first couple of years the show has been on the platform.
One more sticking point for the talent agencies is that SAG-AFTRA usually holds up the residual payments because the guild processes a large volume of them. However, agents and/or managers send their actors the checks within a day or two without the commission.
That means, agents and/or managers wait on SAG-AFTRA for them to get their commission.
What happens to the little guys?
However, the biggest issue at hand is how this part of the new guidelines will affect smaller agencies and up-and-coming actors.
“It's going to kill the middle class,” one agent said.
The new guidelines will financially squeeze the smaller agencies. This is in turn would make the less willing to take on newcomers. And then these newcomers would end up having a difficult time looking for representation that would take a chance on them. And most Hollywood projects require actors to have representation before they're given a part.
It's a lot like what new jobseekers face: an entry-level job looks for workers with experience, when those who are only qualified for entry level positions normally would not have any work experience.
And round and round it goes.
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