BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1401|
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                                 THIRD READING


          Bill No:  AB 1401
          Author:   Assembly Arts, Entertainment, Sports, Tourism, 
          and Internet 
                    Media Committee
          Amended:  8/15/11 in Senate
          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 
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          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.

           Senate Floor Amendments  of 8/15/11 (1) authorize the Labor 
          Commissioner to borrow up to $250,000 from the Labor 
          Enforcement and Compliance Fund to cover the one-time 
          startup costs related to the temporary permit program, and 
          (2) require the loan to be repaid as soon as sufficient 
          funds are available in the Entertainment Work Permit Fund, 
          provided repayment does not compromise the operations of 
          the temporary work permit program.

           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 

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          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;

          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.

          This bill authorizes the Labor Commissioner to borrow up to 
          $250,000 from the Labor Enforcement and Compliance Fund to 
          cover the one-time startup costs related to the temporary 
          permit program.

          This bill also requires the loan to be repaid as soon as 
          sufficient funds are available in the Entertainment Work 
          Permit Fund, provided repayment does not compromise the 
          operations of the temporary work permit program.

           Background  

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          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, 
          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 

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          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 
          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 

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            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

           SUPPORT  :   (Verified  8/22/11)

          Screen Actors Guild (source)
          BizParentz Foundation

           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.


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            "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. 
            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  8/22/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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