The New Coogan Law, SB 1162
A Minor Consideration wants to thank all those involved with getting this bill passed and signed into law.
The New Coogan Law will
- cover 100% of all minors' contracts, rather than the previous law which only covers 5% of contracts that are court-approved.
- make the earnings the separate property of the child, rather than community property of the parents according to California community property laws.
- lower the set aside amount to 15% of gross earnings, compared to the current 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.
- require 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.
How it works
Types of contracts covered
The new Coogan Law will cover 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
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
Deposit of the 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.