California Introduces Legislation to Limit Record Label Contracts to 7 Years

AB5

The California State Capitol in Sacramento, where lawmakers are considering a bill that would limit record label contracts to seven years. Photo Credit: Coolcaesar

A California lawmaker has introduced legislation (AB 1385) that would expand the state’s seven-year limit on entertainment-industry agreements to record label contracts.

California Assemblywoman Lorena Gonzalez – who spearheaded the controversial AB 5 and subsequently authored AB 2257, which exempted many in the music community from the former’s restrictions – introduced AB 1385 last month, and an amended version of the bill was just recently published.

For background, section 2855 of California’s Labor Code indicates that “a contract to render personal service…may not be enforced against the employee beyond seven years from the commencement of service under it.” The clause refers specifically to agreements concerning services “of a special, unique, unusual, extraordinary, or intellectual character.”

But a subsection, added to section 2855 in 1987, essentially exempts artists from the seven-year rule, noting in part that those who are under contract “to render personal service in the production of phonorecords” must provide “written notice to the employer” in order to utilize the seven-year rule.

More pressingly, if an artist “is, or could contractually be” required to craft a certain number of recordings under a contract and hasn’t yet delivered each of the works upon providing notice of termination via the seven-year rule, “the party damaged by the failure shall have the right to recover damages for each phonorecord.”

In other words, it appears that the clause could open the door to litigation against artists who work to terminate their record label contracts under the seven-year rule – effectively preventing them from turning to the measure.

AB 1385, for its part, would strike out the written-notification component of Section 2855 of the Labor Code as well as the provision concerning the opportunity for record labels to “recover damages” in the event that an artist terminates a contract without completing each work that it encompasses.

Plus, “a contract for the exclusive personal services of a music talent” – i.e. an artist – cannot contain options that extend more than six months after the earlier of “the satisfaction of the delivery obligation” or the “initial release” of the corresponding project, under AB 1385. After this six-month option stretch, artists would be able to terminate the contract simply by “providing notice.”

The remainder of the bill modifies contract-termination nuances for television actors – or, more specifically, those who appear in episodic works, “excluding motion pictures produced for initial theatrical distribution” – before relaying that “any provision in a contract that would deprive the music talent or actor of the protections of this section shall be void.”

And in conclusion, the legislation states that the options-related changes will “apply to all unexercised option periods after January 1, 2022, regardless of the start date of the contract containing those option periods.”

Last year, Kanye West posted hundreds of screenshots of his early contracts to social media, while Money Man revealed that he’d paid a staggering $250,000 to exit his Cash Money deal.