The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) recently filed suit against a production company, seeking to hold the company accountable for violating the union’s regulations. This latest lawsuit is an example of SAG-AFTRA’s intensified efforts to combat the growing trend of TV and film productions attempting to skirt union regulations by filming overseas. This practice is known as “foreign skirting.” If you have questions about complying with SAG-AFTRA, especially if you are working internationally, an experienced entertainment attorney can help you understand best practices.
What is Production Skirting?
Production skirting occurs when production companies deliberately structure their operations to avoid SAG-AFTRA’s jurisdiction and requirements. SAG-AFTRA is a labor union that represents approximately 160,000 actors and other on-screen media professionals. Every three years, SAG-AFTRA negotiates a new contract – known as a collective bargaining agreement – with the major Hollywood film and TV studios. The SAG-AFTRA collective bargaining agreement ensures minimum compensation for actors, residuals, insurance, pension and health benefits, on-set safety protocols, limitations on AI, among other regulations to protect actors.
Production companies may try to avoid SAG-AFTRA’s minimum requirements because of the extra costs. Skirting can manifest in different ways, including using different shell corporations in foreign countries, misclassify productions as “independent” or “foreign,” use complex corporate structures to obscure true ownership, or exploit international co-production treaties. But, when the production company uses SAG-AFTRA actors, the company cannot “skirt” SAG-AFTRA’s regulations. And if they do, then SAG-AFTRA will arbitrate against the production company to enforce the crucial protections regarding working conditions, compensation, and benefits that the collective bargaining agreements guarantee.
The Recent SAG-AFTRA Suit
In late November 2024, SAG-AFTRA sued production company UFO Pictures for skirting on the (ironically titled) movie “Beyond The Law,” which was filmed abroad in Romania. UFO Pictures became a signatory of SAG-AFTRA in 2019 and is bound by the union’s collective bargaining agreement. However, UFO Pictures skirted by not paying the actors properly, not making the appropriate contributions to the actors’ pension and health funds, and improperly calculating taxes and payroll expenses.
SAG-AFTRA was successful in its arbitration against UFO Pictures, who were found to have violated the collective bargaining agreement, and the union was awarded roughly $164,000 in damages. SAG-AFTRA recently filed that arbitration judgment with the California federal court, looking to compel UFO Pictures to make the payment.
How Hollywood Handles Skirting
California governor Gavin Newsom has proposed a major tax incentive to keep Hollywood at home in California, recognizing that production companies are incentivized to keep their costs low. If passed into law, California will offer production companies more favorable financial treatment that can help offset the costs of SAG-AFTRA compliance and hopefully reduce the incentive to skirt.
SAG-AFTRA has adopted a multi-pronged approach to combat skirting. The union has been executing comprehensive monitoring through digital production tracking, member reporting systems, international production databases, and social media surveillance. On the legal front, SAG-AFTRA actively pursues production companies who try to skirt their obligations, such as their recent suit against UFO Pictures. International cooperation has also become increasingly important, as SAG-AFTRA seeks out partnerships with foreign performers’ unions, develops global industry standards and enforcement mechanisms, among other efforts.
Conclusion
SAG-AFTRA’s recent efforts represent a necessary defense of actors’ rights and industry standards. The entertainment industry’s global nature makes combating production skirting crucial and complex. If you have questions about compliance with SAG-AFTRA regulation, reach out to a member of our team for next steps.
