The Fine Print: Understanding Entertainment Employment Contracts
Employment Agreements play a vital role in the entertainment industry. But what makes them distinct from standard agreements?
This blog takes an in-depth look at how Entertainment Employment Contracts are crafted to meet the specific needs of those working within movies & TV sets and other facets of the entertainment landscape, as well as discussing their importance for protecting participants' rights and interests.
If you're eager for more info about creating your own agreement or want a refresher on basics - Wagner Legal is your Entertainment Employment Law Attorney and we've got it all here!
The Basics
For entertainment industry professionals, employment agreements may have some unique features and complexities, but at their core, they're not that far removed from the types of employment contracts seen in other sectors. It's important to remember when negotiating such deals that terms are usually tailored to each role and whether it requires union or non-union labor/talent.
The reason employment agreements in the entertainment industry complex than other sectors is due to the various rights and obligations included, such as those related to creative works, copyrights, and royalties.
Terms that may be included in an employment agreement unique to the entertainment industry include:
Creative Works: Language specifying which party owns the rights to any creative works produced during the course of the employment, including scripts, music, and other content. This sort of term may be reflected with language like Employee agrees that any creative works, including but not limited to scripts, music, and other content, created during the course of their employment with Company shall be the sole property of Company, and Employee shall have no right to use or exploit such works without the express written consent of Company.
Copyrights: Provisions outlining who owns the copyright to any creative works produced during the course of the employment and how they can be used. You may see this term with language that states: Employee agrees that any copyrights to creative works created during the course of their employment with Company shall be assigned to Company, and Employee shall execute any documents necessary to effect such assignment."
Royalties: Provisions outlining any royalties that may be paid to the employee for the use of their creative works, such as for distribution of a film or sale of a soundtrack. This may look like this: Employee shall be entitled to receive a royalty of 5% of net receipts for any commercial exploitation of any creative works created during the course of their employment with the Company. But oftentimes, entitlement to royalties is more specifically defined than a simple sentence.
Publicity Rights: In the entertainment industry, an employee's public image can be important to their career, so the agreement should include language specifying how the employee's image and likeness can be used and who has the right to exploit those rights. An employment agreement may have language specifying how the employee's image and likeness can be used, and who has the rights to exploit those rights. Such term may read like Employee agrees that Company shall have the right to use their name, image, and likeness in connection with the promotion and advertising of any creative works created during the course of their employment with Company.
Non-compete clauses: Provisions that prohibit the employee from working for competitors for a certain period of time after leaving the company (depending on the position as well as state/federal laws). This may include a term such as Employee agrees that for a period of 12 months following the termination of this agreement, they shall not engage in any activity that competes with the business of Company, including but not limited to working for a competitor or starting their own business in the same field."
Exclusivity clause: Provisions that restrict the employee from working for other employers or in other capacities during the term of the agreement. "Employee agrees that during the term of this agreement, they shall not accept any other employment or perform any services for any other person or entity without the prior written consent of Company."
Termination: Provisions outlining the conditions under which the agreement may be terminated, and any restrictions on the employee's ability to work afterward. You may see this written like this: This agreement may be terminated by either party upon written notice, with or without cause. Upon termination, Employee shall immediately return to Company any and all confidential information and property of Company."
Option clauses: Provisions that give the employer the option to extend the agreement, or to hire the employee again in the future. This may be written with language such as: Company shall have the option to extend this agreement for an additional one-year term upon written notice to Employee."
Performance-based compensation: Provisions that tie the employee's compensation to the success of the project they are working on, such as box office percentages, sales of merchandise, or rating of a show. This may include language such as: Employee shall receive a bonus of 5% of the box office gross for any film produced under this agreement in which Employee has a lead role."
Intellectual property rights: Provisions outlining how and when the employee's intellectual property rights can be used by the employer. This may be written like this: Employee agrees that any intellectual property rights, including patents, trademarks, and trade secrets, developed by Employee during the course of their employment with Company shall be the property of Company, and Employee shall execute any documents necessary to effect such assignment."
Language addressing the right of first refusal: The right of first refusal gives the employer the first opportunity to hire the employee for future projects, this is a common practice in the entertainment industry. It is important to note that the right of first refusal is usually different from an exclusivity clause, which prohibits an employee from working for other employers or in other capacities during the term of the agreement. The right of first refusal gives the employer the opportunity to match or exceed an offer from another employer (or entity), but it doesn't prevent the employee from accepting other offers.
Language addressing credit: In the entertainment industry, credit can be important to an employee's career, so the agreement should include language specifying how an employee will be credited for their work. For example, this may read as "employee shall be credited as a co-producer on all advertising and publicity materials related to the film, including but not limited to posters, trailers, and any and all other promotional materials. Employee shall also be listed in the credits of the film as a co-producer. The final determination of the credit roll, in which the employee will be included as a co-producer, shall be at the discretion of the producer and the Director of the Film, but the Employee shall be consulted and their reasonable objections shall be taken into account."
It's worth noting that these are very general examples and the language may vary depending on the specific requirements of the parties involved, positions involved, and applicable federal and state laws. It's also important to have an experienced entertainment attorney review the agreement to ensure that the language is legally sound and that the rights and interests of all parties are protected.
What about Union Work?
When it comes to employing professionals for a production or project, union labor contracts often dictate the terms of employment. Guided by entertainment unions such as SAG-AFTRA, Teamsters, and IATSE - employers must become 'union signatories' before any talent can be hired!
What does it mean to be a signatory to a union contract?
Signing a contract binds you to certain rules - and that's certainly true when it comes to union agreements. A signatory of a union agreement is essentially an individual, company, or entity who has agreed to follow the guidelines set out by the said union. Depending on what talent they hire for their project, multiple contracts could need signing - so it's essential to double check all those little details are covered before jumping in and hiring away. Union contracts also can come with tiered pricing options depending on how much money this particular production requires-so worth keeping tabs there, too.
Takeaways for Drafting Employment Agreements in the Entertainment Industry
As with any employment agreement, when drafting an employment agreement for employment in the entertainment industry, it is important to include certain key terms.
These include provisions that specify:
The scope of employment and job duties expected of the employee.
Length of employment (will the employment be on a term or at-will/open-ended?).
Pay rate and other compensation (such as benefits).
Confidentiality and intellectual property rights (including who owns any copyright over any works created and/or produced during employment).
Noncompete, nondisclosure, and non-circumvention agreements (depending on circumstances and on state/federal laws).
Process for dispute resolution (such as pre-litigation mediation, binding arbitration, etc.)
Additionally, it is important to consider including a termination clause that defines what constitutes cause for immediate firing or discharge and any given notice periods before employment ends.
And don't forget to consider union rules and regulations: If the employee is a member of a union, the agreement should comply with union rules and regulations.
What about Freelancers?
The entertainment industry is a rapidly changing landscape, and recent developments in the law of California can have an impact on those offering or utilizing freelancer services. Before diving into any new arrangements be sure to consult with an experienced employment attorney for guidance – so you don't miss out on important information about current regulations.
And when drafting any Independent Contractor agreement, always make sure the agreement is consistent with the status of the worker and the nature of the work.
In conclusion, employment agreements in the entertainment industry are complex and must take into account many unique components connected to creative works, copyright laws, and royalties. To ensure a secure relationship between both parties involved it is essential that all appropriate considerations be addressed within an agreement. Employers should conduct regular reviews of their contracts as well to stay on top of any relevant changes or updates involving regulation or industry trends.
If you have questions about your entertainment employment contracts, including review, drafting, or advice on your agreement, we can help. Managing Attorney Lindsey Wagner is an employment agreement lawyer with experience negotiating, drafting, and reviewing entertainment employment contracts.
Contact Wagner Legal, your Entertainment Employment Law Attorney, for a consultation today. And don’t forget to subscribe to receive the Legal Cut, a newsletter built to keep you informed with the latest legal insights of the entertainment industry!
