Pay-or-Play vs. COVID-19

Pay-or-Play language is a heavily negotiated contract clause for above-the-line talent. The simplest meaning is this: The commitment by a studio to pay the talent, regardless of whether the studio subsequently determines that such talent’s services are no longer required.

 

In the past, a producer or studio could rely on force majeure as a way to terminate the contract, relinquishing them from having to pay the talent’s pay-or-play fee. Now, in a COVID world, the narrow question becomes how force majeure is affecting pay-or-play in contracts.

 

Pay-or-play is a commonly accepted standard for A-list directors, producers, and talent. A force majeure event (in layman’s terms an “act of God”), such as war, an industry strike, a pandemic, or unforeseeable weather conditions, is a big reason for a employer (such as a studio) to be relieved of having to pay the talent’s pay-or-play fee. Until now, most people rarely gave this the force majeure clause much thought or attention because the chances of force majeure being triggered was quite low. Now that COVID-19 is the new reality, a force majeure type event is now a reality, entertainment attorneys such us here at Entertainment Law Partners, are now taking a careful look at these force majeure clauses.

 

A new and crucial question is how to negotiate this “act of God” issue in relation to current pay-or-play rights. For now, we recommend going back and examining any pay-or-play agreements you are making or re-negotiating the agreement on a case-by-case basis; there is no definite answer except to make sure you have experienced counsel navigating you through these unprecedented issues.

 

For those of you working with Directors on these issues, we would be remiss if we didn’t note to you that when hiring a DGA director, the DGA has already built in force majeure protections.

 

According to the DGA’s 2014 Basic Agreement, Section 6-101:

 

“No suspension or termination of Director's services shall be permitted or effected by Employer under such force majeure clause or provisions unless the entire cast and the Director of Photography of the picture are likewise suspended or terminated, as the case may be. Subject to such rights of suspension and/or termination, the obligation of the Employer upon entering into a contract for the employment of a Freelance Director to furnish employment during any of the foregoing "guarantee" periods of employment shall be wholly satisfied by the payment of the agreed salary for the applicable minimum period.”

 

The DGA Basic Agreement is clear when saying that an incident affecting a member of the cast for one (1) week or less is not consideration for the force majeure clause to take effect.

 

Depending on whether the project is a television or theatrical picture, a director must be offered reinstatement within six (6) and twelve (12) months to continue the director’s previous employment in accordance with the previous agreement.

 

Main point of this article? Do not read or negotiate pay-or-play issues in a bubble. It works together with other contract clauses that affect how pay-or-play unfolds. You can save yourself from potentially paying out the entirety of a contract by making sure you are protected in cases such as project cancellation due to the current pandemic because it is a pandemic, an act of God and categorized as a force majeure event.

 

Now with the basic understanding of pay-or-play, what does all of this mean for A-list directors, producers, and talent? Simply, now more than ever, it is important to consider the ways pay-or-play can be terminated. Safeguard yourself by having representation that understands the intricacies of the industry and can negotiate protection into your contracts through pay-or-play and force majeure language. 

 

If you have questions concerning this topic, or other areas of entertainment, business or corporate law, please email us at Asst@entlawpartners.com or call us at 310-684-3666 to schedule a free initial consultation. . 

 

COPYRIGHT; DISCLAIMER: Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs. 

 

Entertainment Law Partners is a full-service Los Angeles and Miami area based entertainment, business and corporate transactional law firm providing expert counsel in a wide array of business transactions with a focus on corporate, business, entertainment, media and technology industries. 

 

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