Three Key Employment Law Considerations for Film Studios and Production Companies

By: Robert I. Lockwood

Employment law compliance continues to be an active risk mitigation area for film production companies and producers on film projects. Below are three important considerations to help limit exposure before the cameras start rolling.

1. Employees vs. Independent Contractors

Though contractors for discrete projects may seem preferable, the circumstances under which these arrangements will be deemed appropriate are more limited than many realize. Companies should consult qualified counsel before cast and crew begin work to determine whether each position will permit a contractor classification in view of applicable federal and state law.

While federal law considers a variety of factors, including the nature and degree of control exercised over the work, some state law tests are more restrictive. For example, in California, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions, known as the “ABC Test”: (1) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (2) the work performed is outside of the usual course of the hiring entity’s business; and (3) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Early evaluation can help avoid a variety of potential headaches, including individual or class action lawsuits, administrative agency complaints, claims for unemployment benefits and tax audits.

2. Pay Issues for Employees

Even after a proper, informed designation of a worker as an employee is made, issues pertaining to how to pay an employee can create potential liability pitfalls for employers. Classification of an employee as an exempt, salaried employee versus a nonexempt, hourly employee involves a complex analysis of a multitude of factors. Companies would be prudent to consult qualified counsel to assist with this analysis. The outcome of the analysis may also trigger specific state laws, such as California’s meal and rest break requirements that are mandated for non-exempt hourly workers.

For salaried employees, whether a position’s pay meets the threshold for exempt status under applicable federal and state law is an important issue for consideration. If the position’s pay does meet the threshold, job duties should then be analyzed to ensure that this classification is defensible.

For hourly employees, policies should be instituted to ensure that all time worked is accurately reported and appropriately paid. Companies should not only apply the proper overtime calculation, but also confirm that the regular hourly rate is at or above the current local minimum wage, which in some states can vary by city or county and increase according to varying schedules.  

3. Preventing Unlawful Discrimination and Harassment

Federal law prohibits employment discrimination based on race, color, religion, sex, national origin, age (40 or older), and disability. Other states expand this list further, like California, which also provides for individual liability in connection with harassment claims. Consequently, companies should implement policies that prohibit all unlawful conduct and mandate prompt reporting of complaints, timely and thoroughly investigate complaints, and take appropriate remedial action when necessary.

Employees should also be regularly trained on these policies and issues. Several other states have laws regulating this training. For example, California law requires all employers of five or more employees to provide training to supervisory and nonsupervisory employees on sexual harassment and abusive conduct prevention. Additionally, the Golden State mandates that every two years, nonsupervisory employees must receive at least one hour of training and supervisory employees must receive at least two hours of training. Companies should consult with qualified counsel to confirm compliance with all timing and content requirements.

For more information on these topics, please contact the author of this alert or visit our Entertainment, Media & Sports Practice page or Labor & Employment Practice page to find an attorney in your area. You can also subscribe to this blog to receive email alerts when new posts go up.

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