This is the fourth 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 and will focus again on the payment of pension and health contributions arising from compensation payable under multi-service endorsement agreements.
Advertisers and agencies may be allocating too much compensation in certain multi-service endorsement agreements and paying higher amounts in pension and health contributions relating to television services granted by actors, athletes, and other performers than warranted by the perceived value of those services. Where certain “silent” rights under a talent contract — for instance, television rights are granted but not exercised — trigger a pension and health obligation under the Guidelines for Allocations in Overscale Agreements, as appended to the 2009 SAG-AFTRA Commercials Contract, advertisers and agencies may consider strategies for making lower allocations to offset the fact that pension and health contributions are owed. Arguably, the perceived value to the advertiser of the SAG-AFTRA covered services component of such a multi-service agreement is less than had commercial production services been rendered. Athlete and performer endorsement agreements containing merchandizing rights do command lower allocations under the Allocation Guidelines, but there are inconsistencies regarding how those more forgiving provisions are applied.