BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2013-2014 Regular Session


          AB 533 (Calderon)
          As Amended June 3, 2013
          Hearing Date: June 11, 2013
          Fiscal: No
          Urgency: No
          TMW


                                        SUBJECT
                                           
                        Artistic Employment Contracts: Minors

                                      DESCRIPTION  

          This bill would exempt children who are background performers  
          from the requirement of establishing a Coogan Trust Account.  

                                      BACKGROUND  

          Under existing law, children entering into contracts to provide  
          professional entertainment services are required to obtain a  
          permit from the Labor Commissioner.  Work permits issued by the  
          Labor Commissioner related to contracted services are only 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  
          (15 percent) 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).)
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          This author-sponsored bill would exempt children who are  
          background performers and extras from the Coogan Trust Account  
          requirement.

                                CHANGES TO EXISTING LAW
           
           Existing law  provides protections for minors who contract to  
          render artistic or creative services.  (Fam. Code Sec. 6750 et  
          seq.)
          
          Existing law  requires the employer of a minor, who provides  
          artistic, creative, or sports services, to set aside 15 percent  
          of the minor's gross earnings for placement into a Coogan Trust  
          Account that must be established by the minor's parent or legal  
          guardian, who acts as the trustee of the trust account.  (Fam.  
          Code Sec. 6752.)
           
          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.   
          (Fam. Code Sec. 6753.)

           Existing law  provides that if the parent or legal guardian fails  
          to establish a Coogan Trust Account, the employer must transmit  
          the required portion of gross earnings to The Actors Fund  
          America, which is required to take specified steps to provide  
          notice of the unclaimed funds to the parent or legal guardian.   
          (Fam. Code Sec. 6752(b)(9), (c).)  
           
            This bill  would exempt from the Coogan Trust Account  
          requirements minors who contract to provide services as an  
          extra, background performer, or in another similar capacity.

           This bill  would also make various technical corrections.
                   
                                        COMMENT
           
          1.  Stated need for the bill  
           
          The author writes:
            
            Existing law requires that all child actors must have 15  
            [percent] of their earnings set aside in a Coogan Trust  
            Account, which may not be accessed by anyone including the  
            child actor until after they become adults.  For child actors  
                                                                      



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            who earn large sums as principal performers, the Coogan law  
            provides needed and beneficial protection.  However, for kids  
            who only work once or twice a year as an extra or background  
            performer, this requirement is an unnecessary and inefficient  
            waste, and simply denies kids some summer fun money.  This  
            bill corrects this situation and removes the requirement that  
            the parents of background kids have to create Accounts. 

          2.  Exempting child extras and background performers from Coogan  
            Trust Account requirements  

          Existing law requires a Coogan Trust Account to be established  
          for children employed in the entertainment industry, into which  
          15 percent of the child's earnings must be placed for  
          safekeeping and access only by the child upon reaching  
          adulthood.  The Coogan Trust Accounts requirement was created to  
          protect the earnings of child actors from mismanagement by their  
          parents and management.  Jackie Coogan was the primary example  
          of the need to protect child actors' earnings.  Coogan had  
          starred in nearly 20 films before his 18th birthday, including  
          Charlie Chaplin's "The Kid," and sued his mother and stepfather  
          to recover earnings they had stolen from him as a child actor.   
          This bill would exempt children contracting to provide artistic  
          or creative services as an extra, background perform, or in  
          another similar capacity from the Coogan Trust Account  
          requirement.  
           
          According to the author, Central Casting (the largest extras  
          casting company) reports that background child actors typically  
          perform two or less times per year for wages amounting to $145  
          or less per performance.  Further, The Actor's Fund of America  
          (AFA), which is statutorily designated as the trustee of  
          unclaimed child actor earnings, reports that the Unclaimed  
          Coogan Fund has over 38,000 individual deposits, over 32,000 of  
          which are for less than $99.  The Unclaimed Coogan Fund is  
          comprised of earnings forwarded by employers when the child  
          actor has not provided proof of an established Coogan Trust  
          Account.  The AFA has concluded that most of these deposits are  
          from background players who have abandoned their money rather  
          than establishing a Coogan Trust Account.  

          Proponents further argue that requiring background performers to  
          establish Coogan Trust Accounts does not further the purpose of  
          protecting the child's career earnings for use by the child  
          later in life.  As such, it makes more sense to allow these  
          children to receive their background performance wages as earned  
                                                                      



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          rather than requiring them to wait until adulthood to have  
          access to miniscule amounts in the trust accounts.

          The author notes a recent class action demonstrates another  
          issue with Coogan Trust Accounts required to be established for  
          child actors.  ABC News reported on a lawsuit brought by the  
          trustee parents of child performers alleging improper fee  
          withdrawals by Bank of America.  (Miller, Did Bank of America  
          Steal From Child Actors (Sept. 24, 2012) ABC News  
           [as of May 31, 2013].)  The current status of  
          this class action case is unknown; however, it demonstrates that  
          Coogan Trust Accounts containing less than specified amounts  
          ($300 at Bank of America) are charged fees, which use up a  
          child's earnings from a few days of extra work rather than  
          maintaining the earnings for the use by the child later in life.  
           The author argues that after agent fees and taxes, the amount  
          left to deposit in the Coogan Trust is insubstantial and  
          effectively exhausted by fees charged by banks for accounts  
          containing amounts less than $300.  

          The issue presented by this bill is whether it is appropriate to  
          exempt children who are providing extra or background services  
          from the Coogan Trust Account protections.  Arguably, the Coogan  
          Law was aimed at protecting children earning large amounts from  
          their child acting career.  On the other hand, a child earning  
          less than $300 per year (two union days of acting at $145/day),  
          minus the 20 percent agent fees, minus federal and state taxes,  
          may benefit more from immediate access to the 15 percent of  
          these earnings currently required to be placed in trust ($45)  
          rather than paying fees from this amount to the bank maintaining  
          the Coogan Trust Fund on the child's behalf.  As such, it  
          appears appropriate to exempt children performing as extras and  
          background performers from the Coogan Trust Account requirement.  
           Notably, children performing in acting roles not designated as  
          extra or background work would still be required to establish a  
          Coogan Trust Account.


           Support  :  BizParentz Foundation; Children in Film, Inc.; The  
          Actors Fund of America

           Opposition  :  None Known

                                        HISTORY
           
                                                                      



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           Source  :  Author

          Related Pending Legislation  :  None Known

           Prior Legislation  :

          AB 1401 (Committee on Arts, Entertainment, Sports, Tourism, and  
          Internet Media, Ch. 557, Stats. 2011) established an online  
          temporary work permit process administered by the Division of  
          Labor Standards Enforcement in order to assist parents  
          establishing a Coogan Trust Account for the benefit of the minor  
          performer.  

          SB 210 (Burton, Ch. 667, Stats. 2003) See Background.

          SB 1162 (Burton, Ch. 940, Stats. 1999) See Background.

          AB 436 (McCarthy, Ch. 436, Stats. 1975) See Background.

           Prior Vote  :

          Assembly Committee on Arts, Entertainment, Sports, Tourism, and  
          Internet Media (Ayes 6, Noes 0)
          Assembly Committee on Labor and Employment (Ayes 7, Noes 0)
          Assembly Floor (Ayes 70, Noes 0) 

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