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March 20, 2023 | Entertainment

SAG-AFTRA’s Code Of Ethics Could Seriously Affect Management Businesses

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Author(s)
Carlianna Dengel

Associate Attorney

Jari Wilson

Associate Attorney

On March 4, 2014, SAG-AFTRA enacted its Personal Manager Code of Ethics and Conduct to “better promote an honest and ethical relationship” between the Union’s members – actors, announcers, broadcast journalists, dancers, stunt performers, puppeteers, voiceover artists, and other media professionals – and their managers.

By signing the Code, personal managers of SAG-AFTRA-affiliated actors pledge to uphold a number of practices, from serving in good faith to maintaining confidentiality and privacy in client dealings.  Adopting the Code is completely voluntary, though managers who comply are added to the Union’s official list of representatives and gain assistance from the Union for dispute resolution.

Several groups have opposed the Code, including the Talent Managers Association (TMA), an organization mandating ethical and responsible conduct for managers since 1954.  It notes the effects and limitations the Code places on management businesses.  Although SAG-AFTRA solicited comments from the Talent Manager’s Association before the Code was adopted, the final version still fails to address many of the TMA’s most serious concerns.

As a result, the TMA announced, “After thoughtful review and consultation with legal counsel our position is to advise members against signing the SAG-AFTRA Code in its current highly restrictive and regulatory form.  We stand for the most ethical protection of all actors whose careers we serve.  Often our dedication to an actor comes long before the hope for material compensation or the actor being signed by an agency.  Currently, there are counterproductive elements we believe that can be further revised for everyone’s benefit.”

Although there are some advantages to adopting the Code, it contains regulations that may impose serious limitations on management businesses, including:

Talent Agency

To conform to the Code, a manager must not be licensed by any state as a talent or employment agency.  Such a restriction could seriously affect businesses that provide a variety of services for many different clients and are in accordance with applicable law.  Managers who are licensed as talent agents are required to forfeit their licenses to comply with the Code.

Additionally, the Code prevents managers from procuring or soliciting employment without working under the control of a licensed talent agent.  This is especially problematic when working with newer talent without the customary media credits or public recognition needed to attract representation.  The prohibition, for even incidental (lawful) employment assistance, impedes the talent’s ability to attract qualified agencies.

Contract Limitations

The Code prohibits management contracts with a SAG member longer than 18 months, and caps renewal periods to 3 years.  Managers are also not permitted to use auto-renewal extensions (in New York, special precautions must be taken when auto-renewal is used).  Additionally, managers who sign the Code are never permitted to charge upfront fees: a restriction that will likely lead to managers selecting only established clients who do not require assistance in attaining headshots, acting classes or other start-up assistance.

Managers are required to (i) submit copies of all contracts between managers and SAG-AFTRA clients, (ii) provide contracts to SAG-AFTRA for approval before the business relationship commences and (iii) disclose to the Union “any and all professional affiliations.”  These restrictions can be a major pitfall for managers seeking confidentiality in their legitimate business dealings.

Referrals

The Code also prevents managers from referring matters to other professionals in the entertainment industry, such as acting coaches and photographers, to which the manager has a “direct or indirect financial (or other) interest.”  This vague definition has proved problematic.  Oddly enough, a main reason for hiring a manager is to gain access to the manager’s industry contacts and connections.  Prohibiting this standard practice of connecting clients to a manager’s contacts (most of whom may have an indirect or other-interest relationship to the manager) can limit the talent’s access to successful professionals.

Arbitration Requirements

The Code requires all disputes between managers and talent to be settled in binding Union arbitration, determined by SAG-AFTRA’s general counsel.  While the arbitration clause can save managers litigation costs, the Code requires arbitration regardless of the amount of the dispute.  Disputes over management agreements are not uncommon in the industry.  In a case where the claim is large or substantial, the artist or manager may strongly prefer to bring suit in a court of law.

Conclusion

Though the Code provides managers with advantages and is aimed at maintaining an honest and ethical relationship between managers and talent, it also imposes several limitations on managers.  Given the restrictions the Code invokes on talent managers, they should consider all aspects of the Code when deciding whether to adopt it.  Consulting an experienced attorney can help you understand the Code and protect your management business.

Photo by Kyle Head on Unsplash
 
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