BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1401| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1401 Author: Assembly Arts, Entertainment, Sports, Tourism, and Internet Media Committee Amended: As introduced Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 4-1, 6/8/11 AYES: Lieu, DeSaulnier, Leno, Yee NOES: Runner NO VOTE RECORDED: Wyland, Padilla SENATE JUDICIARY COMMITTEE : 4-0, 6/21/11 AYES: Evans, Blakeslee, Corbett, Leno NO VOTE RECORDED: Harman SENATE APPROPRIATIONS COMMITTEE : 6-2, 7/11/11 AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg NOES: Walters, Emmerson NO VOTE RECORDED: Runner ASSEMBLY FLOOR : 52-24, 5/26/11 - See last page for vote SUBJECT : Employment: minors SOURCE : Screen Actors Guild DIGEST : This bill establishes an Internet Web site permit process to be administered by the Division of Labor Standards Enforcement for the issuance of temporary work CONTINUED AB 1401 Page 2 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 requires 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. ANALYSIS : Existing law requires written consent of the Labor Commissioner for the employment of a minor in the entertainment industry, as specified. (Labor Code Section 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. (Labor Code Section 1308.9) Existing law defines a "Coogan Trust Account" to mean a trust account established for the purpose of preserving for the benefit of a minor the portion of the minor's gross earnings. (Family Code Section 6753) This bill authorizes, 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: 1. A temporary permit shall be valid for ten days from the date of issuance; 2. 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; CONTINUED AB 1401 Page 3 3. 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 4. Upon receipt of the completed application and fee, the DLSE shall immediately issue a temporary permit. This bill creates the Entertainment Work Permit Fund (Fund) in the State Treasury and requires 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 authorizes 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. Background In 1938, the Coogan law was passed in response to Jackie Coogan's plight. Even though he earned millions as a child actor, Coogan was surprised to find out when he reached adulthood that his entire earnings were depleted, because his mother and stepfather spent all his money legally, as the law of the time considered his earnings to be his parents property. The Coogan law 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 turns 18 years of age, or becomes legally emancipated. SB 1162 (Burton), Chapter 940, Statutes of 1999, overhauled the Coogan law. Applicable to both court-approved and non court-approved minors' contracts for creative or artistic employment, SB 1162 required 15 percent of a minor's earnings to be set aside and deposited into a "Coogan trust" account, invested in low-risk financial vehicles, CONTINUED AB 1401 Page 4 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 years of age or becomes legally emancipated. To further strengthen enforcement of the Coogan law, the Legislature adopted, and the Governor signed, SB 210 (Burton), Chapter 667, Statutes of 2004, which added the requirement that the Labor Commissioner'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, as discussed above. The enforcement of this system is placed upon the studio teachers, with whom the duty to check a child performer's paperwork rests. A studio teacher is a certificated teacher who holds both a valid and current California Elementary and a California Secondary teaching credential, which is certified by the Labor Commissioner. Studio teachers are paid by the employer (e.g. a production company or studio). A studio teacher, in addition to teaching, has the responsibility for caring and attending to the health, safety, and morals of minors under 16 years of age, and shall take cognizance of such factors as: working conditions, physical surroundings, signs of minor's mental and physical fatigue, demands placed upon the minor in relation to the minor's age, agility, strength, and stamina, and may refuse to allow engagement of a minor on a set or a location and may remove the minor there from, if in judgment of studio teacher, conditions are such as to present a danger to the health, safety, or morals of the minor. Prior Legislation AB 2032 (Davis), 2009-10 Session, would have required CONTINUED AB 1401 Page 5 applicants for an Entertainment Work Permit for minors to pay a fee in order to fund the administration of the Entertainment Work Permits and the enforcement of the working conditions of minors in the entertainment industry. The bill was vetoed by Governor Schwarzenegger, whose veto message stated: "This bill would require that an application fee be submitted at the time a minor applies for a child labor entertainment work permit. The fee would be deposited into the Entertainment Work Permit Fund, which would be created by the bill. Money in the fund would be subject to appropriation by the Legislature to the Labor Commissioner for costs in issuing the permit, enforcing entertainment work permit requirements, developing and enhancing a website with informational materials, and training studio teachers. "This bill is essentially the same as AB 402 (Davis, 2009), which I also vetoed. Oversight of California-certificated teachers and the issuance of entertainment permits for mostly school-aged children are functions that reasonably fall within the oversight of the Department of Education, and not the Department of Industrial Relations. As I have stressed throughout my Administration, government must operate more efficiently within existing resources. This bill does not advance that goal." AB 402 (Davis), 2009-10 Session, was virtually identical to AB 2032. It was vetoed by Governor Schwarzenegger. SB 210 (Burton), Chapter 667, Statutes of 2004, which was discussed earlier, added the requirement that the Labor Commissioner's written consent for performances of a minor be limited to 10 days, unless a Coogan Trust Account has been established. SB 1162 (Burton), Chapter 940, Statutes of 1999, which was discussed earlier, made significant changes to the Coogan law. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No CONTINUED AB 1401 Page 6 SUPPORT : (Verified 7/13/11) Screen Actors Guild (source) ARGUMENTS IN SUPPORT : Proponents state: "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 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." ASSEMBLY FLOOR : 52-24, 5/26/11 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Chesbro, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V. CONTINUED AB 1401 Page 7 Manuel Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Conway, Cook, Donnelly, Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey, Jeffries, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner NO VOTE RECORDED: Cedillo, Davis, Gorell, Jones PQ:mw 7/13/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED