California Lawmakers to Reconsider Legislation Modifying the Controversial ‘Seven-Year Statute’ — Now Featuring An Advance-Repayment Requirement

AB5

The California State Capitol in Sacramento. Photo Credit: Coolcaesar

Back in April, SAG-AFTRA announced an agreement to separate artist and actor components of a bill that would have, among other things, brought California’s seven-year limit on entertainment-industry contracts to record deals by ending liability for undelivered albums. Now, this split-up legislation is officially being considered in the state’s senate.

The retooled version of the bill (currently AB 983) was amended in the California Senate towards May’s beginning as well as earlier this week, its legislative history shows. In brief, regarding the measure’s pre-split background, legislation (AB 1385) that would have extended California’s seven-year limit on entertainment contracts to the music industry was introduced towards 2021’s start.

But the lawmaker behind the bill subsequently stepped down, and Assemblyman Ash Kalra in February of 2022 debuted the Fair Act (AB 2926), which suggested changes similar to those outlined in AB 1385. As mentioned at the outset, however, SAG-AFTRA spearheaded an effort to separate the artist and actor elements of the bill, with its author signaling that he was “committed to continuing the fight for more just contracts for actors and musicians.”

(SAG-AFTRA late yesterday posted to social media a video of president Fran Drescher, who made yet another push for a long-considered bill that would prompt terrestrial radio stations to pay recorded royalties.)

Assemblyman Kalra’s name is now attached to the initially noted AB 983, which is scheduled to receive a hearing before the California Senate on Wednesday, June 22nd. Like prior iterations of the bill, this newest proposal would modify Section 2855 of the Golden State’s Labor Code.

As it stands, the relevant component of this 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.”

But a subsection added to the Code in 1987 effectively bars artists from taking advantage of the clause to duck out of record deals after seven years. Presently, these individuals – and specifically all persons contracted “to render personal service in the production of phonorecords” – must provide “written notice” to their employers. (AB 1385 would have axed the written-notice requirement outright.)

These employers (i.e. record labels) “have the right to recover damages for each phonorecord,” the law states, that “is, or could contractually be” required from the artist at hand. Thus, musicians would open themselves up to expensive litigation and liability by trying to nix a deal under the Labor Code.

Of course, the subsection – which the major labels are continuing to support and rally around – was designed in part to stop contracted persons from taking advances and then bailing on the related agreements after seven years.

Interestingly, the legislation’s current draft has done away with much verbiage relating to renegotiating pacts – and quietly gained a clause centering on the repayment of advances for unreleased albums as part of contract exits. The key sections of this requirement are emboldened below.

“(c) Notwithstanding subdivision (b), any music talent who is a party to a contract to render personal service in the production of phonorecords in which sounds are first fixed, as defined in Section 101 of Title 17 of the United States Code, may invoke the provisions of subdivision (b) by doing both of the following:

(1) Giving written notice to the party to whom such personal services are rendered that the music talent will no longer render service under the contract by reason of subdivision (b).

(2) Paying the third party an amount equal to the contractual advances actually paid by the third party to the music talent that are directly and solely related to phonorecords that have not been received by the third party, provided that the amount shall be credited to the music talent’s existing royalty account.”