BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Noreen Evans, Chair 2011-2012 Regular Session AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) As Introduced Hearing Date: June 21, 2011 Fiscal: Yes Urgency: No TW SUBJECT Employment: Minors DESCRIPTION This bill would establish an Internet Web site permit process to be administered by the Division of Labor Standards Enforcement for the issuance of temporary work permits for minors working in the entertainment industry. The temporary work permit issued under this bill would enable a parent or guardian of a minor to establish a Coogan Trust Account for the benefit of the minor. This bill would require the Labor Commissioner to place fees received for a temporary minor's entertainment work permit into an Entertainment Work Permit Fund, which funds would pay for the costs of administration of the Internet Web site created under this bill. BACKGROUND In 1975, the California Labor and Education Codes were overhauled to provide for child labor protections. (AB 436 (McCarthy, Ch. 436, Stats. 1975).) At that time, provisions were enacted for the employment of children in the entertainment industry, including the requirement of obtaining the written consent of the Labor Commissioner in advance of entertainment industry employment. (Lab. Code Sec. 1308.5.) Since 1975, this Labor Code provision has not been substantively amended. Children entering into contracts to provide professional entertainment services are subject to the permit requirement. Work permits issued by the Labor Commissioner related to (more) AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) Page 2 of ? contracted services are valid for ten days, unless the permit is attached to a trustee's statement evidencing the establishment of a Coogan Trust Account. (Lab. Code Sec. 1308.9.) Coogan Trust Accounts were established under the Coogan Law in 1938 in response to child star Jackie Coogan's plight. Even though he earned millions as a child, Coogan was surprised to find out when he reached adulthood that he was flat broke, because his mother and stepfather spent all of his money - legally. Community property laws in California made all earnings of individual members of a family the property of the family, and a child had no control over his or her earnings. Thus, the Coogan Law was passed in order to preserve a portion of the minor's earnings for the minor's use when he or she reaches the age of majority. In 1999 and 2003, the Coogan Law was amended to provide enhanced protections for a minor's earnings. (SB 1162 (Burton, Ch. 940, Stats. 1999); SB 210 (Burton, Ch. 667, Stats. 2003).) This bill, sponsored by the Screen Actors Guild, would update the current minor's entertainment temporary work permit application process by establishing an Internet Web site administered by the Division of Labor Standards Enforcement for same-day processing of the temporary work permit. This bill would require the Labor Commissioner to place fees received for a temporary minor's entertainment work permit into an Entertainment Work Permit Fund, which funds would pay for the costs of administration of the Internet Web site created under this bill. CHANGES TO EXISTING LAW Existing law requires written consent of the Labor Commissioner for the employment of a minor in the entertainment industry, as specified. (Lab. Code Sec. 1308.5.) Existing law provides that the written consent of the Labor Commissioner expires after ten days unless a Coogan Trust Account or similar trust account (collectively, Coogan Trust Account) has been established for the benefit of the minor. If a trustee's statement evidencing the establishment of a Coogan Trust Account is attached to the written consent, then the written consent is valid for six months. (Lab. Code Sec. 1308.9.) Existing law defines a Coogan Trust Account to mean a trust AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) Page 3 of ? account established for the purpose of preserving for the benefit of a minor the portion of the minor's gross earnings. (Fam. Code Sec. 6753.) This bill would authorize, prior to the employment of a minor under 16 years of age, the Labor Commissioner to issue a temporary permit to enable the parent or guardian of the minor to apply for written consent for entertainment industry employment of the minor and to establish a Coogan Trust Account, or similar trust account for the benefit of the minor, as follows: a temporary permit shall be valid for ten days from the date of issuance; the temporary permit shall not be issued for the employment of a minor if the minor's parent or guardian has previously applied for or been issued a permit by the Labor Commissioner for employment of the minor; the Division of Labor Standards Enforcement (DLSE) shall prepare and make available on its Internet Web site the application form for a temporary permit, which must be completed by the applicant and submitted online with the appropriate fee; and upon receipt of the completed application and fee, the DLSE shall immediately issue a temporary permit. This bill would create the Entertainment Work Permit Fund (Fund) in the State Treasury and require the Labor Commissioner to deposit all fees received for temporary entertainment work permits into the Fund. The funds deposited in the Fund shall be available to the Labor Commissioner, upon appropriation by the Legislature, to pay for the costs of administration of the online minor's temporary entertainment work permit program. This bill would authorize the Labor Commissioner to set the fee, not to exceed $50, for the minor's temporary entertainment work permit in an amount sufficient to pay for the costs associated with the Internet Web site. COMMENT 1. Stated need for the bill The author writes: Parents of child performers often will obtain an entertainment work permit prior to even auditioning their child for a job. This results in an inefficient and expensive work volume for the Labor Commissioner's office - who issues over 60,000 AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) Page 4 of ? entertainment work permits for minors annually - which is vastly larger than the pool of actual children working in the industry in need of a permit. ÝU]nder the current system, there is no way to obtain a same day work permit. Instead, a paper application must be presented to the Labor Commissioner's office, and a work permit is mailed back to the applicant. This process takes up to two weeks to complete. The delay in obtaining a permit can deny some child performers the ability to work. Under AB 1401 parents would be able to apply for their child's first permit online for a temporary permit that will be granted immediately. This will allow parents to wait to apply for a permit until their child actually has a job - and save the Labor Commissioner many hours of work. The temporary permit is only valid for 10 days - time to allow the parents to submit the required documentation with their permit renewal application, including . . . Ýe]stablishing a Coogan blocked trust bank account. 2. This bill would maintain existing trust account protections This bill, sponsored by the Screen Actors Guild, would update the current minor's temporary entertainment work permit application process by establishing an Internet Web site administered by the Division of Labor Standards Enforcement for same-day processing of the temporary work permit. Existing law, in order for a minor to work in the entertainment industry, requires a permit to be issued by the Labor Commissioner prior to the minor's hiring. (Lab. Code Sec. 1308.5) Existing law provides that if a child enters into an entertainment services contract, a Coogan Trust Account must be established into which the child's earnings would be placed for the child's benefit. (Fam. Code Sec. 6750 et seq.) In order for the temporary work permit to be valid longer than ten days, the trustee (who, in most cases, is the child's parent or guardian) of the Coogan Trust Account must provide a statement that a Coogan Trust Account has been established for the child's benefit. (Lab. Code Sec. 1308.9.) A temporary work permit that is attached to a trustee's statement regarding the Coogan Trust Account is then valid for six months. The author reports that the antiquated method of applying by mail for the temporary work permit can take up to two weeks. In the meantime, the minor would not be able to provide proof of a AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) Page 5 of ? valid work permit and would not be hired. Because of this undesirable result, many parents and guardians are applying for the temporary work permits before the child even auditions for the entertainment job. Accordingly, the Labor Commissioner is processing far more temporary work permits than are actually needed because the child may or may not be hired after each audition. Importantly, this bill would not modify the current requirement for establishment of a Coogan Trust Account. Once the child enters into an entertainment services contract, the parent or guardian would still be required to open a Coogan Trust Account within ten days of signing the contract. Further, the parent or guardian would still be required to attach the temporary work permit to the trustee's statement of Coogan Trust Account in order for the child to continue working for the entertainment entity for six months. The current safeguards contained in Family Code Section 6752 protecting the minor's earnings also remain in place under this bill. In order for the child to receive payment for services rendered, the Coogan Trust Account must be established so that the employer, pursuant to statute, can deposit the minor's earnings into the account. If the account has not been established, the employer forwards the funds to the Actor's Fund of America (Fund) until the Fund receives proof that the minor's trust account has been established. Support : None Known Opposition : None Known HISTORY Source : Screen Actors Guild Related Pending Legislation : None Known Prior Legislation : AB 436 (McCarthy, Ch. 436, Stats. 1975) See Background. SB 1162 (Burton, Ch. 940, Stats. 1999) See Background. SB 210 (Burton, Ch. 667, Stats. 2003) See Background. Prior Vote : AB 1401 (Committee on Arts, Entertainment, Sports, Tourism & Internet Media) Page 6 of ? Senate Labor and Industrial Relations Committee (Ayes 4, Noes 1) Assembly Floor (Ayes 52, Noes 24) Assembly Appropriations Committee (Ayes 12, Noes 5) Assembly Labor and Employment Committee (Ayes 5, Noes 1) Assembly Arts, Entertainment, Sports, Tourism, and Internet Media Committee (Ayes 7, Noes 1) **************