A Brief History of Union Residuals

Sooner or later, every Hollywood labor rep gets questions about residuals (this is, generally speaking, money for working on a project that is above and beyond an employee's normal paycheck.) The questions are usually: "Do we get them?" and "Why don't we get more?" The answers are both simple and complicated. The simple answer is: "Yes, almost all unionized workers in Hollywood get residuals." The complicated answer is "Unionized workers get different residuals in different ways," which of course means that more explanations are in order (responding to the "why don't we get more" part). I go over some of the whys and wherefores below... Residuals were first proposed by the Screen Cartoonists Guild -- our predecessor -- in 1943. The SCG didn't get them, but neither did any other motion picture labor organization at that time. It wasn't until 1960 that the unions and guilds achieved their first major residual deal. Ronald Reagan was SAG's president then, and he negotiated that first residuals agreement during a long strike. At the time, many actors were unhappy with it because lots of pictures and television shows produced earlier were excluded. But that's the way the cake often crumbles in Hollywood. Sometimes you get the deal you can achieve rather than the one you want. And this particular SAG contract got itself, after heated argument, ratified. From then until now residuals have been part of every entertainment union's collective bargaining agreement. And the fights over residuals have been extensive. I won't go into the details of each guild's and union's contract, because I don't know the intricacies of them anyway. But in broad outline, SAG, the DGA and WGA receive "reuse money" above and beyond normal wages for the product their members have created. This money goes straight into members pockets in the form of residual checks. The IATSE has a different formula. Its "reuse money" (keyed off the formulas of the other guilds) goes into the IA's pension and health plans. Last year, IA residuals totaled $347 million. The money was used to bolster the Motion Picture Industry Health Plan, which, at present, is the best union health plan in the movie industry. (In years where there have been surpluses, the money not used for the health plan has gone into active participants' Individual Account Plans -- part of the Motion Picture Industry Pension Plan.) Over the years, the Animation Guild has received complaints about this formulation. A lot of people would prefer that residual moneys flow straight into their pockets, just as they do for directors, actors and writers under the WGA. But the problem facing the IA in 1960 is the same it faces today: there are 40,000-plus active participants working under IA contracts, and dividing the cash up among all of them would be a huge, complicated task, and individual checks would be small. So, for better or worse, the IA takes its share of the residual pie and sends it to its health and pension plans. But there is another type of residual that both live-action and animation writers get. This one's called "foreign copyright levies." Here's a brief explanation of them from the WGA's web site: Foreign Copyright Levies are funds received by the Guild on behalf of U.S. writers pursuant to a program established in 1990. Foreign collection societies send the WGA taxes and levies imposed by foreign governments in order to protect copyright holders of audiovisual product made available on public television, cable television, and through videocassette rentals. The primary source of these monies is “private copy” taxes on the sale of blank videocassettes and VCRs, although taxes are also imposed for cable retransmission of programs. Brian Walton, executive director of the WGA(w) flew to Europe and negotiated the writers guild's cut of these levies in 1990. He took some flak from WGA members for negotiating a split between companies and individual writers that favored companies (I remember the ratios as being 80%-companies/20%-writers.) This agreement covered U.S. animation writers, although the WGA(w) repped no animation writers in 1990. Negotiating Tactics Every three years, SAG, DGA, WGA and IATSE sit down with the Alliance of Motion Picture and Television Producers and hammer out a new three year contract. Residuals are always on their "to do" list, but every labor organization has a different negotiating style. The DGA and IATSE have often been the more conservative labor organizations of the Big Four (SAG, WGA, DGA and IATSE). The DGA, for instance, has only struck once over a collective bargaining agreement, and that was for three hours and five minutes. The rest of the time, they have thrashed out contracts with the media companies (under the umbrella of the Alliance of Motion Picture and Television Producers) earlier instead of later. The International Alliance of Theatrical and StagEmployeeses (IATSE - the Animation Guild's umbrella) has done the same. SAG and the WGA, on the other hand, have varied their negotiating styles over time. Some years they've negotiated early (this happened throughout the nineties) and some years they've negotiated right to contract deadline... and occasionally through a strike. (The WGA had a lengthy work-stoppage in 1988; SAG had a six-month strike against commercial producers in 2000. Both centered on residuals.*) The most concise analogy I can make regarding the differences between the guilds and unions negotiation strategies is: SAG and the WGA often move downfield by throwing the long ball; the IATSE and DGA grind things out with shorter ground attacks. The overarching rule is: If the producers give something to one union, they end up -- usually -- giving it to all. Over the past half-dozen contract cycles, one of the BIGGEST items of contention has been residuals. SAG and the WGA have pushed to get a larger piece of the DVD action (Since DVDs came in, they have received their percentage against only 20% of DVD revenue.) In 2000-2001, the Writers Guild of America and the Screen Actors Guild were again pushing for improved residuals. Under WGA President John Wells, the Guild proposed a percentage against 100% of revenue, then scaled the proposal back to 25% of revenue, and ended up agreeing to a contract with no revenue enhancement. (It stayed at 20%. FORBES magazine has a different take on the residual wars here.) As we move toward the next round of contract talks (taking place 2007-2009), residuals will again be at the top of SAG's and the WGA's agendas. IA President Tom Short has worried publically about the effects of the actors or writers negotiating to deadline and causing a "de facto" strike. I have heard AMPTP honcho Nick Counter declare that the guilds will get a better deal if they negotiate early instead of strike in actuality. I've no idea if the guilds will hit the bricks when their current agreements are up, but I know that the long-term health of the industry will depend on how well labor and management judge their opposite number across the table. misjudgmentnt will probably result in a lengthy labor action. Count on residuals/reuse money being a major bone of contention. Again. * The Animation Guild had lengthy negotiations over residuals in 2000. They also came up in early negotiation planning in the mid-nineties. Although TAG attained improvements for writers in its last three contracts, live-action style residuals were not among them.