The New Coogan Law SB 1162

The new Coogan Law covers 100% of all minors' contracts, rather than the previous law which only covers 5% of contracts that are court-approved.

* makes earnings the separate property of the child, rather than community property of the parents according to California community property laws.

* lowers the set aside amount to 15% of gross earnings, compared to the former court requirement of 30% (which does not allow for payment of operating expenses such as agents, managers, attorneys, acting lessons, professional photographs, transportation costs, tutoring, publicists and accountants).

* requires producers to make timely deposits which will allow interest to build on the principal earnings right away - unlike the current situation where employers have been known to wait ten months before depositing earnings.

Types of contracts covered

The new Coogan Law covers contracts signed on or after January 1, 2000, pursuant to which a person is employed or agrees to render artistic or creative services, including services as an actor, actress, dancer, musician, comedian, singer, stunt-person, voice-over artist, songwriter, composer, conductor or designer. The new law will also cover contracts pursuant to which a person agrees to purchase or otherwise secure, sell lease, license, or otherwise dispose of literary, musical, or dramatice properties, or use of a person's likeness, voice recording, performance, or story of or incidents in his or her life, either tangible or intangible, or any rights therein for use in motion pictures, television, the production of sound recordings, the legitimate or living stage, or otherwise in the entertainment field. Finally, the new law will cover contracts pursuant to which a person is employed or agrees to render services as a participant or player in a sport.

Court-Approved Process and Removal or Right to Disaffirm

Upon petition by any party, the contract may be approved by the court as fair, which removes the minor's right to disaffirm (or break) the contract simply because the minor signed during minority. Usually studios seek approval of theatrical or television series contracts so minors cannot stop working in the middle of a project.

Parent/Guardian Requirements & Fiduciary Duties

The parent/guardian is required to provide a certified copy of the minor's birth certificate indicating the minor's minority to the other party or parties to the contract (e.g. the studio), and in the case of a guardian, a certified copy of the court document appointing the person as the minor's legal guardian

The parent/guardian has a fiduciary relationship with the minor that is governed by the law of trusts, and shall pay all liabilities incurred by the minor under the contract, including payments for taxes on all earnings (including taxes on the amounts set aside for the minor) and payments for personal or professional services rendered to the minor or the business related to the contract. Nothing in the new law alters any other existing responsibilities of a parent/guardian to provide for the support of a minor child.

Court-Approved Contracts

Under court approved contracts, 15% of gross earnings are required to be set aside by the minor's employer in trust, in an account or other savings plan, and preserved for the benefit of the minor. The parent/guardian or minor, through the guardian ad litem, may petition the court to request that more than 15% of gross earnings be set aside.

The court shall require that at least one parent or legal guardian be appointed as trustee at the time the approval order is issued, unless the court determines that appointment of a different individual(s), entity or entities as trustee(s) is in the best interest of the minor.

Non-Court Approved Contracts or Contracts Which Were Denied Court Approval

15% of the gross earnings are required to be set aside by the minor's employer in trust, in an account or other savings plan and preserved for the benefit of the minor. At least one parent or legal guardian shall be the trustee, unless the court, upon petition by the parent/guardian, minor (through the parent/guardian ad litem), or trustees, shall determine that appointment of a different individual(s), entity or entities is in the best interest of the minor.

Depositing of funds

The minor's employer is required to deposit or disburse the funds within 15 business days of receiving the trustee's statement with the account information, or if the court denies approval of the contract, within 15 business days of receiving a final order denying approval of the contract. If the employer has not received the trustee's statement or the final court order, the employer will hold for the benefit of the minor the set aside amount.

The parent / guardian is required to promptly notify the minor's employer in writing of any change in facts that affect the employer's obligation or ability to set aside funds, including a change of financial institution or account number, or the existence of a new or amended order amending or terminating the employer's obligations under the original order.