DAN MORALES 

.ATTORNEY GENERAL 

QBffice of tty Bttornep Q&nerd 

Qtate of lltexae 

November 27,lWl 

Mr. Larry E. Kosta 

Executive Director 

Opinion No. DM-60 

Department of LicensingandRegulation Re: Whether a talent agency that 

P. 0. I3ox 12157 .follows certain amendments to Screen 

Austin Texas 78711 Actors Guild franchise regulations 

would violate the Texas Talent Agency 

Act, article SUla-9, V.T.C.S. 

(N-146) 

Dear Mr. Kosta: 

You have asked whether a Texas talent agency franchised by the Screen 

Actors Guild1 would violate the Texas Talent Agency Act, article 5221a-9, V.T.C.S., 

by adhering to certain franchise regulations. At issue are recent amendments to the 

Screen Actors Guild Codified Agency Regulations, Rule 16(g). Rule 16(g) includes 

the basic contract between the Screen Actors Guild and the Association of Talent 

Agents and the National Association of Talent Representatives, and controls the 

contractual relationship between the Screen Actors Guild and all franchised talent 

agencies, including franchised talent agencies in Texas.2 Your letter summarizes the 

effect of the amendments to Rule 16(g) as follows: 

In both the franchising agreement [Rule 16(g)] and the 

amendment, [the Screen Actors Guild] considers all talent 

represented by a franchised agent to be [Screen Actors Guild] 

members, regardless of actual membership and that the agents 

should .be restricted in the representation of their non-union 

‘TIE Screen Actors Guild is a aational union which nprcsents performers in the motion 

pichuc and television industry. 

%ent age&es represent performcr~ plaeiq them in performing employment for a fee. The. 

Scxeeo Actors Guild attempts to regulate talent agencies by frahisiog them. The Association of 

Talent Agents and the National Association of Talent Representatives arc trade organizations which 

represent a large number of franchised talent agencies throughout the country. 

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Mr. Larry Kosta - Page 2 (DM-60) 

talent to only producers who sign contracts with [the Screen 

Actors Guild]. 

Furthermore, the [Screen Actors Guild] franchised talent 

agency, if it represents non-union talent to producers who are 

also non-union, must forfeit all fees and commission[s] to the 

union. 

In a brief submitted to this office, the Screen Actors Guild disagrees with this 

characterization of Rule 16(g) and the effect of amendments. Because we do not 

interpret contracts in the opinion process, we simply accept your characterization as 

correct. We express no view on the correct interpretation of the amendments to 

Rule 16(g).3 

To answer your question whether the amendments to Rule 16(g), as you 

interpret them, would violate the Texas Talent Agency Act, we first consider both 

the legislative history of the statute and its general framework. The Texas Talent 

Agency Act (hereinafter “the act”) was adopted in 1989.4 According to the House 

Bill Analysis, prior to 1979 talent agencies, were subject to rules regulating 

employment agencies under article 5221a-6, V.T.C.S. See House Comm. on Labor 

and Employment Relations, Bill Analysis, S.B. 759, 71st Leg. (1989). In 1979, that 

provision was rewritten, and talent and modeling agents were eliminated from its 

licensing and regulatory requirements. Id. As a result, talent agencies were 

unregulated, and as the bill analysis states, “many ffly by night’ operations . . . infiltrated the industry and [were taking] advantage of the consumer.” Id. 

Clearly, the purpose of the act was to remedy this situation by regulating the 

industry. Id. 

!We also note that the briefs submitted by counsel for the Sczen Actors Guild and various 

Texas talent agencies address at great length the legality of the amendments to Rule 16(g) under 

Texas’ antitrust and right to work statutes. The purpose of the opinion process is to address questions 

affecting the public interest or concerning the off~c@ duties of governmental o&ials posed by specitic, 

statutorily-authorized reqwstors, not to address questioos posed by private parties. See Ten Coast. 

art. IV, 5 22; Gov’t Code $402.042(a). Because. your request seeks an opinion only with respect to the 

Texas Talent Agency Act, we must confine our analysis to that provision. 

4S.B. 159, Acts 1989,71st Leg., ch. 202, at 869. 

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. , 

Mr. Larry Kosta - Page 3 (DM-60) 

Significantly, it is evident from the bill analysis that the act was enacted to 

protect consumers, ie. the artists5 who use talent agencies to obtain employment, 

rather than talent agencies themselves. That the primary purpose of the act is to 

protect artists is also evident from its substantive provisions. First and foremost, the 

act protects artists by requiring talent agents to register with the Department of 

Licensing and Regulation (hereinafter “the department”)6 and to post surety bonds 

with the department. Id; see &so V.T.C.S. art. 5221a-9, 85 2, 5. The act also sets 

forth certain prohibited conduct, including operating a talent agency without a 

certificate of registration, charging artists registration or advance fees, and splitting 

a fee with a person who is not registered under the act. V.T.C.S. art. 5221a-9, B 2. 

In addition, the act provides certain specific protections for artists, including 

restricting the manner in which talent agencies handle funds on behalf of artists and 

requiring that talent agencies provide artists with complete, written contracts. Id 

$6 10(b), 12. The department is vested with rulemaking authority to implement the 

act. Id 9 3(a)(3). 

The act contains several enforcement provisions. First, a contract that does 

not comply with the act is void and unenforceable. Id P 13(a). Second, violations of 

the act are deceptive trade practices, and the act incorporates~ the remedies set forth 

in chapter 17 of the Business and Commerce Code. Id 5 13(b). Third, the 

department may institute an action for injunctive relief to enjoin violations of the 

act. Id $ 14. Finally, a person who knowingly or intentionally violates the act 

commits a Class A misdemeanor. Id $? 15; see aLro Penal Code 5 12.21. 

You have specifically asked whether the Screen Actors Guild amendments to 

Rule 16(g) would cause franchised talent agencies to violate sections 2(b), 2(c), or 

10(b) of the act. We examine each of these provisions in turn. Section 2(b) of the 

act provides: 

A talent agency may not charge, as a condition of registering 

any applicant or representing any artist, a registration or 

3We use the term “artist” as it is detined in the Texas Talent Agency Act to include adors, 

musicians, directors, writers, and other professionals in the entertainment industry. See V.T.C.S. art. 

SZ?la-9, % l(1); see also 16 TA.C. 0 78.10. 

%khougb the act refers to the Department of Labor and Standards, the name of the agency 

was changed to the Department of Licensing and Regulation in 1989. See Acts 1989, 71st Leg., ch. 

1039, % 6.03, at 4231. 

p. 301 
Mr. Larry Kosta - Page 4 (DM-60) 

advance fee and may not require the applicant or artist to 

subscribe to, use, or use the services of any specific publication, 

video or audio tapes, post card service, advertisement service, 

resume service, photographer, or acting or modeling school or 

workshop. 

The amendments to Rule 16(g) as you describe them would not directly implicate 

this provision. They would not require talent agents to charge a registration or 

advance fee, nor would they require talent agents to require artists to use any 

specitic,publication, video or audio tapes, post card service, advertisement service, 

resume service, photographer, or acting or modeling school or workshop. 

Section 2(c) of the act provides: 

A talent agency may not split or share fees with a person 

who is not registered under this Act. 

As you understand the amendments to Rule 16(g), they would require the talent 

agencies to forfeit to the Screen Actors Guild commissions earned from nonunion 

artists who are employed by nonunion producers. You suggest that this would 

constitute fee splitting in violation of section 2(c). Given the broad language of this 

provision, we agree that forfeiting fees to a third person could constitute splitting or 

sharing fees under the act. Thus, on the face of the act, it would appear that section 

2(c) would prohibit talent agents from forfeiting fees to the Screen Actors Guild 

since the Screen Actors Guild is not registered as a talent agency under the act. 

We note, however, that the department’s regulations interpreting the act 

appear to compel a different conclusion. The administrative regulations promulgated pursuant to the act interpret section 2(c) as follows: “A talent agency may not 

split or share fees with any person who k required to be but is not ~registered under the 

Act as a talent agency.” 16 T.A.C. 5 78.76(b) (emphasis added). The regulations also 

expressly state that the term “talent agency” does not apply to “a union that 

represents artists and whose efforts to obtain or attempt to obtain employment for 

its members is casual m nature only,” and exempts such unions from the 

requirements and prohibitions of the act. Id g 7830(b) (“Exemptions”). In their 

briec the Texas talent agencies concede that the Screen Actors Guild does not 

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obtain or attempt to obtain employment for its members.’ Assuming that this is 

actually the case, the Screen Actors Guild is not required to register as a talent 

agency. Therefore, it would appear that the act, as interpreted by the department’s 

regulations, would not prohibit talent agencies from splitting or sharing fees with the 

Screen Actors Guild. 

We further note that there is an apparent inconsistency between the act and 

the department’s regulations. Section 2(c) of the act prohibits talent agencies from 

splitting or sharing fees with any person who is not registered under the act. The act 

defines the term “person” broadly to mean “an individual, corporation, organization, 

business trust, estate, trust, partnership; association, or any other private legal 

entity.” V.T.C.S. art. 5221a-9, 3 l(5). As noted above, however, title 16, section 

78.76(b), of the Texas Administrative Code merely prohibits a talent agency from 

splitting or sharing fees with “any person who is required to be but is not registered 

under the act as a talent agency.” Thus, while the act would prohibit talent agencies 

from splitting fees with any nonregistered person, the regulations apparently would 

permit talent agencies to split fees with persons who are not registered under the act 

but are not required to register. 

Generally, regulations interpreting a legislative provision promulgated by an 

agency with the authority to implement the provision are presumed valid, see 2 TEX. 

JUR. 3d Admin~adve Law $9 18, 85 (1979), and are regarded as having the force 

and effect of law, id 0 19. An order which exceeds an agency’s authority, however, 

is invalid. Id 0 16 at 209. Given the apparent inconsistency between section 2(c) of 

the act and section 78.76(b) of title 16 of the Texas Administrative Code, we must 

consider whether the latter is a valid regulation or whether the department has 

exceeded its authority. 

The critical factor in determining if an agency has exceeded its rulemaking 

authority is whether the regulation is in harmony witlr the general objectives of the 

‘In their briefs, the Texas talent agencies contend that this regulation doea not exempt the 

Screen Actors Guild from the prohibitions of section 2(c) because the Screen Actors Guild does not 

attempt to obtain employment for its members in any respect. They contend that the regulation 

exempts onfy unions which casually attempt to obtain work for their members. We fmd this 

interpretation of tbe regulations unpersuasive. Clearly, the regulations are intended to exclude n/l 

entities which do not obtain or do not attempt to obtain employment for artists from the requirements 

of the act. This regulation merely clarifies that unions which casually attempt to obtain employment 

for their members are also exempt. Tbe regulation is clearly nof intended to exclude unions which 

never engage in such activities from the exemption. 

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Mr. Larry Kosta - Page 6 (DM-60) 

statute. Gerst v. Oak Cliff Sav. & ban Ass’n, 432 S.W.2d 702, 706 (Tex. 1968). 

Applying this factor, we conclude that the regulation regarding the section 2(c) fee 

splitting prohibition is not inconsistent with the general objectives of the act. As 

noted above, the primary purpose of the act is to protect artists by requiring talent 

agencies to register with the department. See House Comm. on Labor and 

Employment Relations, Bill Analysis, S.B. 759, 71st Leg. (1989). The purpose of 

section 2(c) appears to be to enforce,the registration requirement by preventing 

persons who fail to register from continuing to earn fees. The regulation does not 

conflict with this purpose because it does not exempt persons who are required to 

register from the registration requirement. Although the regulation does limit the 

scope of the section 2(c) fee splitting provision to exclude persons who are not 

required to register, we believe that this is not problematic because the act is simply 

not intended to regulate the conduct of persons who do not obtain employment for 

artists. We believe that the department did not exceed its authority in enacting this 

regulation and that it is valid. On this basis, we conclude that section 2(c) would not 

prohibit talent agents from forfeiting fees to the Screen Actors Guild. 

Finally, we consider whether the amendments to Rule 16(g) would violate 

section 10(b) of the act. Section 10(b) of the act provides: 

A registrant who receives any funds on behalf of an artist 

shall deposit those funds in an account maintained in a financial 

institution covered by federal deposit insurance. The funds may 

be disbursed only as prescribed by department rule. 

The department regulations set forth the length of time within which talent agencies 

must disburse such funds to artists and the records they must maintain with respect 

to such funds. 16 T.A.C. 9 78.72. Apparently, your concern is that forfeiture of fees 

by the talent agencies to the Screen Actors Guild would run afoul of this provision. 

We conclude, however, that this provision does not speak to how talent agencies 

handle monies after artists have been fully compensated. The purpose of this 

provision appears to be to protect artists from unscrupulous talent agencies by 

regulating how talent agencies disburse funds to which artists are entitled as 

payment for their work. It is clearly nor intended to protect talent agencies. 

Certainly, this provision would preclude a talent agency from disbursing an artist’s 

monies to a third person. It appears, however, to have no bearing on the 

disbursement of monies a talent agency retains as a commission after proper and 

complete disbursement of funds to an artist. Thus, we believe that section 10(b) 

would not prohibit a talent agency from forfeiting its own monies to the Screen 

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Mr. Larry Kosta - Page 7 (DM-60) 

Actors Guild after it had properly disbursed to the artist all funds to which he or she 

is entitled. 

SUMMARY 

Talent agencies would not violate sections 2(b), 2(c), or 

10(b) of the Texas Talent Agency Act, article 5221a-9, V.T.C.S., 

by following certain amendments to Screen Actors Guild 

franchise regulations, as those amendments are interpreted by 

the-Department of Licensing and Regulation. 

DAN MORALES 

Attorney General of Texas 

WILL PRYOR 

First Assistant Attorney General 

MARY KELLER 

Deputy Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY (Ret.) 

Special Assistant Attorney General 

RENEA HICKS 

Special Assistant Attorney General 

MADELEINE B. JOHNSON 

Chair, Opinion Committee 

Prepared by Mary R. Crouter 

Assistant Attorney General 

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