Principal Performers: Residuals (Use Fees)

When are payments for residuals due?
Residual payments must be postmarked within 15 working days from the first use in a 13-week cycle.  However, payment for all Class A uses that occur from Monday through Sunday are due within 15 working days from the following Monday. In the event that payment is not made on time, late payment damages become due. 

What is “Class A” use?
This type of use is considered “network broadcast use.” If a commercial is running on interconnected stations (a network) in more than 21 cities, or sponsors a program (“This program is brought to you by …”) it constitutes Class A program use. The cycle begins with the first use date and payments are made on a declining rate formula for each use occurring within a 13-week period.

For example, the first Class A use is paid at the same rate as the session fee. The second use within the 13-week cycle is $135.80 for an on-camera performer. Uses #3-13 are paid at $107.75 each and the 14th and each use thereafter is paid at $51.65.  (Group performers and voice-over performers are paid under a similar formula, with lower rates reflecting their classifications).

What is Wild Spot use?
Wild Spot is a type of use in which a commercial does not air on interconnected stations and does not sponsor a program.  Time is bought on individual stations in individual markets or cities. Each market/city is assigned a unit value based on the number of television households and the performer is paid for all units of use within a 13-week cycle.

The Wild Spot payment is due within 15 working days from the start date of the cycle. If the commercial is broadcast in additional cities within the 13-week cycle, the producer may pay for those additional units within 15 working days from the end date of that 13-week cycle.

What are the payments for cable use?

There are two types of residual structures for cable:

1. Broadcast commercial used on cable networks: Cable residuals are based on the total units (up to a maximum of 2000 units) for all cable networks on which the commercial airs during a 13-week cycle.  A unit value is assigned to each network based on the number of subscribers. Depending on the number of units, the payment to an on-camera performer will range from a minimum amount of $592.20 (session fee) to a maximum amount of $2,836.00.  (Group performers and voice-overs are paid under a similar formula with lower rates.) Holding fees may not be credited against cable use.
   
2. Cable-only commercial: When a commercial is produced only for cable use, the formula described in Paragraph 1 above is used to calculate residuals. In cable-only commercials, holding fees are paid and a performer is held exclusive to the product. Holding fees may not be credited against cable use. A performer must be advised at the time of audition and/or booking that a commercial is for cable-only. The maximum period of use for a cable-only commercial is limited to one year. The producer must contact the performer and negotiate for any extended use periods.

What are the payments for Internet use?

There are three types of residual payment formulas for a commercial used on the Internet:

1. Commercials “made for” the Internet: There are currently no minimum fees set under the contract for a commercial made directly for the Internet.  The producer and the performer are free to bargain fees: session, use, extended editing rights, and exclusivity are all separate areas of negotiation.  The performer is not held exclusive for “made for” Internet commercials unless the producer negotiates for this right and pays holding fees.  The Pension & Health contribution rate is 15.5%, and is non-negotiable.  The producer must fully inform performers, at the time of audition and hire, the anticipated number of commercials, and the anticipated use (websites, viral campaigns, banner ads, etc.)

   As of April 1, 2011, the minimum fees for a commercial made directly for the Internet will be the same as a commercial made for initial use on broadcast (see below).
   

2. 1-Year Use Cycle for broadcast, cable or New Media commercials “moved over” to the Internet: A commercial made for broadcast, cable, or New Media and used subsequently on the Internet requires payment of not less than 350% of the session fee (3.5 x $592.20 = $2,072.70) for one year of use. Extending the use beyond the first year for up to 9 remaining months within the 21-month maximum period of use is permitted if the producer pays an additional $2,072.70.  The producer may also elect to use the commercial for a consecutive 8-week cycle for not less than 133% of the applicable session fee.  Session or holding fees cannot be credited against Internet use payments. If performer checks off the “do not consent to Internet use” box on the front of the employment contract, the producer is required to bargain with performer for Internet use rights.
3. 8-Week Use Cycle for “move over” from broadcast, cable or New Media into the Internet: The 8-week use cycle gives the producer the right to move broadcast, cable or New Media commercials over to the Internet for an 8-week cycle of use for which the performer will be compensated at not less than 133% of the applicable session fee for use. (If you received $592.20 for your session fee, then the 8-week cycle use payment would be not less than $787.65.) If the producer wishes to run the commercial for additional consecutive 8-week cycles of use, the performer shall be paid not less than 133% of the applicable session fee for each cycle. If the producer wishes to run the commercial one additional year of use, 350% of the applicable session fee would be due to the performer. This final one-year period of use will be limited to any maximum period of use limitations. Session or holding fees cannot be credited against Internet use payments. If performer checks off the “do not consent to Internet use” box on the front of the employment contract, the producer is required to bargain with performer for Internet use rights.

What are the payments for New Media use?

There are three types of residual payment formulas for a commercial used on New Media:

1. Commercials “made for” New Media: There are no minimum fees set under the contract for a commercial made directly for New Media.  The producer and the performer are free to bargain fees: session, use, extended editing rights, and exclusivity are all separate areas of negotiation.  The performer is not held exclusive for “made for” New Media commercials unless the producer negotiates for this right and pays holding fees.  The Pension & Health contribution rate is 15.5%, and is non-negotiable.  The producer must fully inform performers, at the time of audition and hire, the anticipated number of commercials, and the anticipated platforms of use (cell phone, iPod, etc.).

   As of April 1, 2011, the minimum fees for a commercial made directly for New Media will be the same as a commercial made for initial use on broadcast (see below).

2. 1-Year Use Cycle for broadcast, cable or Internet commercials “moved over” to New Media: A commercial made for broadcast, cable, or the Internet and used subsequently on New Media requires payment of not less than 350% of the session fee (3.5 x $592.20 = $2,072.70) for one year of use.  Extending the use beyond the first year for up to 9 remaining months within the 21-month maximum period of use is permitted if the producer pays an additional $2,072.70. The producer may also elect to use the commercial for a consecutive 8-week cycle for not less than 133% of the applicable session fee. Session or holding fees cannot be credited against New Media use payments. If  performer checks off the “do not consent to New Media” box of the front of the employment contract, the producer is required to bargain with performer for New Media use rights.
   
3. 8-Week Use Cycle for “move-over” from broadcast, cable or Internet into New Media: The 8-week use cycle gives the producer the right to move broadcast, cable or Internet commercials over to New Media for an 8-week cycle of use for which the performer will be compensated at not less than 133% of the applicable session fee for use.  (If you received $592.20 for your session fee, then the 8-week cycle use payment would be not less than $787.62.)  If the producer wishes to run the commercial for additional consecutive 8-week cycles of use, the performer shall be paid not less than 133% of the applicable session fee for each cycle. If the producer wishes to run the commercial one additional year of use, 350% of the applicable session fee would be due to the performer. This final one-year period of use will be limited to any maximum period of use limitations. Session or holding fees cannot be credited against Internet use payments. If performer checks off the “do not consent to New Media” box on the front of the a employment contract, the producer is required to bargain with performer for New Media use rights.

What should I do if I don’t believe I’ve been paid properly?
If you see your commercial airing but are not receiving use fees, you should file a claim with the Union. When you do so, it is helpful to provide as much information as possible, including the date of the sighting, the program, the channel, and the time. If you see your commercial on the Internet, take a “screen shot” of it as proof.

What are the penalties if my check is paid late?
In the event of untimely payment, late payment damages are due as follows: $3.00 per business day up to 25 days or a maximum of $75.00. Additional damages become due in the event that a claim is filed and full payment is not made within a specified time. When a payment is not made on time, generally late payment damages are not included in the check unless a claim has been filed by the union. If your payment is made late and late payment damages have not been included in the check, please contact the Guild to file a claim.

Does a principal performer continue to receive residuals if he/she is edited out of the commercial?
Downgrade. A principal performer is entitled to residuals and may not be downgraded as long as his/her face appears in the commercial. If his/her face does not appear but his/her performance otherwise remains, the performer must be notified of a downgrade and paid a downgrade fee. A downgrade fee is not less than a session fee. Thereafter, the performer will not receive residual payments.

Outgrade. If a principal performer’s photography or soundtrack is completely edited out of the final version of the commercial, the performer must be notified of the outgrade.  The notification must be made within 60 days after the completion of employment but in no event later than 15 business days after the first use of the commercial.  No additional fees or residuals are paid to an outgraded performer.

Would a new commercial be created if the ending were changed?
Under certain circumstances, the beginning and/or ending of a commercial made for a particular advertiser may be changed without creating an additional commercial for residual purposes. The Contract provisions governing this area are complicated and we suggest that you contact your local SAG office for assistance.

Are public service announcements (PSA’s) covered by a SAG contract?
Yes, members may not work in a PSA unless the company is signatory to the Commercials Contract. If the union has approved the commercial as a PSA, the session fee and Pension & Health contributions must be paid. However, residuals are waived for a one-year period as long as the performer agrees to such terms. Use for each additional one-year period requires the written consent of both the performers and the union. For these extensions, the performer may (but is not required to) waive additional payment. The producer may not request a use period longer than one year at the time of the original session.

Are Infomercials covered by a SAG contract?
Yes. Please check with the Guild to ensure the company is signed to the Infomercial Agreement before working in the production.