This is the third in a series of six articles examining recent developments and ongoing issues related to the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) Commercials Contract. Within the last five years, there have been significant changes in the way pension and health contributions paid on behalf of talent hired under multi-service endorsement agreements are determined and made. In 2009, Guidelines for Allocations in Overscale Agreements (the Allocation Guidelines) were appended to the SAG-AFTRA Commercials Contract, establishing safe harbor contribution “allocations” for various scenarios of services being performed by talent. A streamlined arbitration procedure was also introduced for pension and health allocation contribution disputes. And in 2012, the total amount of compensation paid to talent during a contract year that is subject to pension and health contributions payments was capped at $1 million.
By way of background, the SAG-AFTRA Commercials Contract requires the payment by a SAG-AFTRA signatory of pension and health contributions with respect to that portion of the talent’s total compensation in a “multi-service” endorsement agreement — i.e., an endorsement agreement containing more than just television commercial production services, such as print, personal appearances, social media services, etc. — that is allocable to commercials, or so-called “covered services.” Prior to 2009, unilateral standards were used by the union to determine whether multi-service contract pension and health allocations had been properly made. For example, the union would routinely argue that, absent extenuating circumstances, no less than 50 percent of the talent’s compensation in any multi-service endorsement agreement could be allocable to covered services. This standard and others that apply to different types of endorsement deals were memorialized as the Allocation Guidelines in the 2009 SAG-AFTRA Commercials Contract to “assist” in determining proper allocations.