Source: http://www.dianekrausz.com/new-york-law-journals.html
Timestamp: 2019-04-18 12:55:28+00:00

Document:
Current New York State laws, which govern a minor’s employment in the entertainment industry, reflect concern both for the needs of a young performer as well as its employer. Most people are familiar with published accounts of the minor who, upon reaching “legal age” finds that all of her earnings are gone, and the spendthrift parent or parents accused of squandering the funds, or, the minor who “reneges” on a sequel to his blockbuster hit with the intention of increasing the compensation for this sequel for substantially more than pre-negotiated in the original agreement.
For an employer, the insecurity of knowing that a minor could renege on a contract because of his or her age often hinders the progress of a production, or venture. Alternatively, for a minor’s talent contract to be legally binding, a New York employer must face a time-consuming, costly and difficult procedure before either the Surrogate’s Court or state Supreme Court in New York State. As a result, most minors working in New York State have contracts that have not been court-approved and therefore may be “disaffirmed by the minor” until the minor reaches the legal age of 18, which is New York State’s “age of majority.” Furthermore, until very recently, other than petitioning the court for approval, there were no mechanisms in place in New York to provide for the setting aside a portion of a minor’s earnings until he reached the legal age of majority.
However, as of March 2004, New York has adopted a law similar to California’s “Coogan Law”, named after the child actor, Jackie Coogan, codified as California Family Code §§6750-6753.
The entertainment industry, particularly with respect to film and music, is youth-oriented, which explains why so many youngsters—even infants—are at work in the field. The costs to produce a project are often much more than even a star performers’ salary. If the performer is wellknown and in demand, his salary and compensation increases; often, a project’s being “green lighted” (given the go-ahead) can often depend or be contingent on the expectation of his or her services. In addition, a minor’s agent or manager may invest a year’s worth of work without any or minimal compensation—except for the expectation of percentage of a performer’s gross earnings in success.
In these cases, the ability of a minor to renege on a deal jeopardizes not only the production or venture, but also substantial investments of time and services made by industry representatives (agents, managers, business managers and attorneys).
However, a minor is not legally obligated to fulfill an obligation for future services, because it is believed that a minor should have the right to walk away from her obligations, until such time that the minor reaches legal age. N.Y. Gen. Obl. Law §3-101.
In 1983, New York State, following the example of California’s Legislature, enacted Arts and Cultural Affairs Law §§35.01 and 35.03, which set forth the circumstances in which an employer may seek to have a minor’s services contract approved by the court. Once the court approves a contract, it cannot be disaffirmed by the minor, or even by a claim that the minor’s parents or guardian lacked contractual authority. Often, a contract is negotiated on behalf of a minor and a production company (employer) with both sides represented by competent counsel, only to find that, in order to meet the requirements of an approval proceeding, the entire initial bargaining and drafting process needs to be reviewed and revisited once again.
Therefore, in a situation where it is anticipated that an approval procedure will be sought for a contract, or a set of contracts, which together represent the transaction—such as a producer-artist contract for a label and a label-recording contract between the producer and record company, or a television series contract as well as a personal management agreement for the same minor—it is important to anticipate and provide for this scrutiny upon the initial drafting of the contracts, as well as to include an undertaking by the minor and the guardians of the minor to cooperate with and agree to this approval procedure as a condition of the contract.
Parental Consent: The granting of approval is contingent on a written, filed acquiescence of the parent(s) or guardian or a finding that the infant is emancipated, §35.03(2)(c). The initial contract should provide a separate approval and acknowledgement either in the text of the main agreement or, preferably, as a separate signed and notarized document. It is important to note that consent of both parents is required, whether custodial or otherwise, or proof that one parent is deceased or cannot be located despite the best efforts of the minor and his counsel.
Other Considerations Made by the Court Involving the Best Interests of the Minor: The statute in New York specifically mandates that the court inquire as to the overall contract being “in the best interest of the child,” §35.03(5)(k). For this reason, an employer should be aware that, often, in addition to salary and related expenses such as hotel and travel, the employer is usually responsible for the cost of tutoring and other educational needs of the minor, particularly if the services required under the contract will prevent the minor from attending his or her regular school. Generally, it is recommended to an employer who will require a minor to tour, record in a studio or be present on a movie set that he ascertain the nature of the educational or tutoring requirements and the costs to pay for them, at the time that the contract is initially negotiated.
New York courts will also consider the nature of the work and type of services to be performed when reviewing a contract for approval, §35.01(5)(c). Often the content involved (sexual content, violence or dangerous stunts), the time frame and the age of the minor will all weigh heavily on deciding whether a contract meets the “best interests of the minor.” In addition, the petitioner’s attorney should be prepared to discuss the application of a collective bargaining agreement, such as for the Screen Actors’ Guild, to the proposed agreement. It is often very helpful in certain cases, such as a recording contract, to have the petitioner’s attorney, or the attorney who originally negotiated the agreement on behalf of the employer, be available to explain the business and practices of a particular industry to the court. It should also be noted that in New York State, contrary to processes in California, the approval process is only for a minor’s services, not for a grant or license of intellectual property interests. Compare Cal. Fam. Code §§6750-53 with Arts & Cult. Aff. §35.03.
Limitations of Assignment of Contract: The court usually takes the position that any approval that is granted be limited to the specific employer that is submitting the application. It will not permit an assignment of a contract absent the employer seeking and receiving the court’s approval in each instance, §35.03(1)(b). An exception that has been previously allowed by the court is that the court can pre-approve any assignment to a similar company of equal or greater assets, where the original assignor remains secondarily liable.
Term of the Contract: Approval is valid for contracts of three years or less, or seven years if the minor was represented by counsel experienced and competent in the entertainment field in the original negotiation of the contract, §35.03(2)(d).
For a contract containing an option for the minor’s services that may exceed three years, it is recommended that the attorney who negotiated the contract on behalf of the minor file a separate signed affidavit attesting to the overall fairness of the contract. Further, the affidavit should state that the proposed contract is fair and reasonable based on their prior experience in the entertainment industry, specifically the area of the industry with which the contract deals.
The court may require that a parent or guardian consent to the setting aside of a percentage of the infant’s earnings to be kept in a custodial account until the infant reaches majority, §35.03(3)(a). The attorney for the employer should be aware that, although they have obtained a contract signed by a minor, until the court has approved the contract, any payments to a minor are at risk. If a deposit or advance is owed pursuant to a signed agreement and an employer pays this sum prior to the approval of the contract, a minor’s right to disaffirm would not require reimbursement of any sums previously paid.
Moreover, to the extent that a part of the sum stated in the contract has already been given to the minor, this sum or part, would be required to be put aside in a separate guardianship account upon approval. If the minor has already spent this money, the court might take the position that, in order to approve the contract, the employer is required to place the additional funds (i.e., pay the same amount again) into the guardianship account regardless of the fact that the same sum or more had already been advanced prior to approval being granted.
Appointment of Guardian Ad Litem: The court shall appoint a guardian of the infant’s property for the duration of the contract. In Surrogate’s Court, the current practice is to require the employer’s attorney to file a separate guardian of property proceeding with the court, §35.03(3).
There are several well-publicized instances of an entertainer/actor’s earnings being spent before the minor has reached the age of majority, which in New York is the age of 18.
A Tony-award-winning musical even “sings” the tale of the squandering of Gary Coleman’s financial earnings from the television show, “Diff’rent Strokes,” by his parents. Until very recently, in New York, the only way that a minor could preserve a portion of his earnings, other than sums set aside voluntarily by a parent or guardian, was by petitioning a court for approval of the contract.
In October 2003, finally adopting California’s long-standing practice, New York enacted its own so-called “Coogan Law,” the Child Performer Education and Trust Act of 2003 (CPET). The CPET provides a much more-effective mechanism for protecting the interests of minor performers by placing the burden on the parent and employer to comply with new requirements for minimum income being set aside ab initio, as well as to maintain certain educational standards. See, generally, Child Performer Education and Trust Act of 2003, S. 4696-B, 2003 Sen., Reg. Sess. (N.Y. 2003).
As of March 29, 2004, a guardian or parent of any minor performer residing or working in New York, must establish a child performer trust account within 15 days of the start of employment, unless one already exists. An account for a minor already established pursuant to the California Coogan Law may be used, provided that the California trust account has offices in New York. An employer must be notified within 15 days of the start of employment of the existence of the account and any information necessary to facilitate the transfer of funds into the account.
A minimum of 15 percent of the child performer’s gross earnings must be transferred directly into the account from the employer. Child Performer Education and Trust Act of 2003, S. 4696-B, 2003 Sen., Reg. Sess. (N.Y. 2003) §4 (codified as amended at Est. Powers & Trusts §7- 7.1(2)(b) (2004)).
At this point, it is unclear whether the same account established for the CPET could be subsequently allowed to be used for setting aside additional sums pursuant to a court approved contract proceeding. This is unlikely, although an argument can be made that any amount set aside pursuant to the CPET should be credited against any additional amounts to be set aside pursuant to the court’s approval process. The CPET also requires that a trust company must be appointed as an additional guardian of an account once the balance of the trust account reaches $250,000. Id.
In addition to these requirements regarding a minor’s earnings, the parent/guardian is required by law to demonstrate each semester that the minor is maintaining satisfactory academic performance and to oversee any teacher hired by employer. See generally Id., §5 (codified as amended at LABOR, Art. 4-A, §152 (2004)). Any minor working in New York State, including nonresident minors, must obtain a work permit. Additionally, any minor who is a resident of New York State is required to apply for a work permit, even if the work is to be performed outside of New York. See generally Id., §5 (codified as amended at LABOR, Art. 4-A, §151 (2004)).
The new CPET mandates protections for the minor regarding regular reporting for the funds in the account as well as a minor’s educational needs being met. Id., §7 (codified as amended at State Fin. §§99-k (2004)). This law provides similar protection for all minors whether or not the employer petitions for a particular contract approval. When a contract is not approved, the employer runs the risk of a minor disaffirming the contract and jeopardizing employer’s particular project or production. The approval process, though often costly and arduous, ensures that the interests of all parties are protected.
In determining whether it is prudent to obtain court approval for a minor performer’s services in New York State, it is useful for a company who desires to employ minors to understand the cost and effort required in obtaining such approval as part of its business considerations for a specific project and to weigh them against the risk of disaffirmance of the contract by the minor.

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