Talent Agency Agreements: Legal Requirements

The phrase “talent agent” means different things to different people.  For some, the words conjure images of a cocky Jeremy Piven wearing a power suit paired with an expensive tie in a perfect Windsor knot.  For others, the words invoke a vision of a group of powerful individuals acting as intimidating gatekeepers to Hollywood’s hottest talent.  But what do talent agents actually do?

In short, talent agents are responsible for procuring work for their clients.  Period.  This could mean anything from finding the ideal role for an actor in a film to landing a contract for the newest up-and-coming singer that will lead to their big break.  Any of these duties can lead to massive success for both the client and the agent.  So, what do these agreements contain?  Are there any regulations regarding the compensation talent agents can receive?  We will apply a legal lens to these questions in the paragraphs below.

First and foremost, it is important to understand that talent agents must have a license to operate in the state of California.  No license, no agent status.  Because the license requirement is a California regulation, the State of California (specifically the Labor Commissioner) governs the actions of all talent agents operating within the state; this governance even extends to the terms of the agreements themselves.  If the agreement does not comply with the baseline terms set forth in the California Labor Code (“Cal. Lab. Code” or “CLC” for short), it may be unenforceable.

Now, let’s get down to the nitty-gritty—a lawyer’s bread and butter.  Lawyers get involved to make sure that the talent agency agreements are in compliance with all CLC regulations as well as any applicable union requirements (such as minimum salary, etc.).  Each side’s lawyer will try to get the terms most favorable to their client, but at the end of the day, the agreement needs to be enforceable.  California has many rules governing these types of agreements, and the Labor Commissioner must actually approve an agency’s “form” version of the contract to be used by the parties (Cal. Lab. Code §1700.23).  After the form has been approved, the talent agency must print on the face of the of the contract the following: “This talent agency is licensed by the Labor Commissioner of the State of California” (Cal. Lab. Code §1700.23).

The Labor Commissioner may not withhold its approval over an agency’s proper form agreement unless its terms are unfair, unjust, and oppressive to the artist (Cal. Lab Code §1700.23).  Let’s take a look at what makes a “proper” talent agency agreement in the eyes of the law.

The California Code of Regulations §12001 mandates that the following six provisions must be included in every single talent agency agreement:

1) the term of employment (or blank space to be filled in at time of execution) of the talent agency by the artist;
‍2) a provision with a blank space for the rate of compensation to be paid by the artist to the agency, not to exceed the maximum set forth in the schedule of fees filed with the Labor Commissioner by the talent agency;
‍3) a provision stating that the talent agent may advise, counsel, or direct the artist in the development or advancement of his professional career;
‍4) a provision guaranteeing that the talent agency shall, subject to the artist’s availability, use all reasonable efforts to procure employment for the artist;
‍5) a term stating that, if the artist fails to obtain employment or a bona fide offer for employment after four months, the contract is terminable by either party (subject to certain conditions); and
‍6) a provision stating that in all cases of controversy that arise under the Labor Code or under the Rules and Regulations, regarding the terms of the contract, the parties shall refer the matters to the Labor Commissioner or one of his authorized agents (Cal. Lab. Code §12001(a)-(f)).  There is a slight caveat to the last provision: the parties may include an arbitration clause stipulating that any controversy arising from the terms of the agreement shall be decided by an arbitrator rather than the Labor Commissioner (Cal. Lab. Code §1700.45).

Once approved, the talent agency agreement is good to go.  Modifications may be made to an existing form, but any “substantial changes” to a previously approved form agreement must be submitted again to the Labor Commissioner for approval (Cal. Lab Code §12003.2). Examples of modifications that do not require additional approval include, but are not limited to:

1) a provision for the commencement of the contract at some specified date in the future, including one based on contingency;
‍2) the deletion of certain “fields of endeavor” from the scope of the representation;
‍3) a reduction in the compensation to be paid by the artist to the talent agency (notice this term does NOT go both ways);
‍4) a reduction of the four-month termination rule listed above;
‍5) any provision for additional services to be performed by the talent agency on behalf of the artist; and
‍6) any other modification which operates to the advantage of the artist (Cal. Lab Code §12003.3).

Reading between the lines of all these regulations, it is clear that the state tries to protect the interests of the artists in these agreements.  Many artists are neither business savvy, nor are they in a position with much leverage; they cannot always protect themselves from predatory talent agency agreements.  It is usually either a “sign this form, or try striking out on your own without an agent” type of deal.  Good luck with that.  Understanding these agreements is absolutely crucial to getting the best deal you possibly can and one that is enforceable.  It takes a good lawyer to help you navigate that process.