The Production Company's Guide to Coogan's Law

April 02, 2020

Outside the world of production, employing children is generally not allowed. However, on a film set, employing children is sometimes necessary. Because of this exception, there are many rules set in place to protect children from being taken advantage of.

The first thing to note is that as with most regulations in the film industry, the requirements for minors vary wildly from one state to the next. Generally speaking, regions in which a lot of productions take place have stricter rules than the rest of the country.

What Is Coogan's Law?

The “Coogan Act” is one of the earliest measures created to protect children working within the film industry. It is named after Jackie Coogan, who played the role of the child in Charlie Chaplin’s “The Kid”. Jackie Coogan’s mother and stepfather famously squandered their child’s earnings from the movie, which prompted Jackie to sue them when he turned 21. It’s estimated that Jackie’s family spent what would be worth between $3 - 4 million dollars in today’s day and age that should have belonged to him.

The legal battle brought attention to the disadvantages child actors faced and resulted in the 1939 enactment of the California Child Actor's Bill, often referred to as the "Coogan Law" or the "Coogan Act". To this day, the Act requires that a child actor's employer set aside 15% of the earnings in a trust account, and regulates the actor's schooling, work hours, and time off.

What To Consider When Hiring A Minor

The first step when hiring a minor is to make sure that their parents have set up a “Coogan account” for their child. Coogan accounts are specific to the entertainment industry and not provided by every banking institution. Some states also accept alternative types of trust accounts, such as UTMA, UGMA and Blocked Trust Accounts.

Once the account is open, the bank can issue a letter of proof that the trust is established. This document usually contains the following information:

The bank’s name
The type of trust account
The minor’s name
The account number
The routing number

Sample Coogan account letters:

Coogan Law Contract 3 Coogan Law contract 5

Coogan Law Contract 2 Coogan Law Contract 4

How To Process Coogan Payments

When a minor gets paid, 15% of the total amount must be deposited into the setup trust account, which becomes accessible once the child reaches 18 years of age. As with any other payment, there are 2 options:

#1 - Processing payment through a payroll company

First, reach out to your paymaster to inquire about their payment processes. Most likely, they will ask you to provide two additional documents along with the usual start packet:

A copy of the minor’s Coogan or Trust account statement
A copy of the minor’s work permit (we will cover this document in a future post)

It is necessary that the Coogan or Trust account statement feature both the routing and account numbers. From there, your payroll company will use this information to issue 2 payments:

75% of the wages will be paid in the minor’s name and mailed to his/her guardians.
15% of the wages will be paid via direct deposit into the Coogan or Trust account.

Note: Parents can choose to adjust this breakdown in favor of the child. Up to 100% of the minor’s payment can be set aside in the Coogan account.

#2 - Processing payment through accounts payables

If the minor hired has on set obligations that don’t require to be paid via payroll (ex. social media promotion), that part of the payment can be processed without a payroll company. In that case, however, it is still necessary to comply with Coogan law and set aside 15% of the payment.

If this method of payment is chosen, your accountant will require a copy of the Coogan or Trust account statement. The production will use it to disburse the funds via direct deposit and keep on file to support any audits.

A Practical Example

Jane Doe, age 13, is a popular social media influencer. She is hired to appear in a commercial for a day and is also contractually required to make 3 social media posts in the weeks following the release of the video.

Jane’s payment is broken down as follows:

$2,500 fee to appear on set
$2,500 fee per social media post, totaling $7,500

When the project starts, the production team reaches out to Jane’s guardian. They request the following document:

A copy of Jane’s Coogan account statement
A copy of Jane’s work permit

As with any other freelancer, Jane must be paid via payroll while she’s on set in order to be covered by the payroll company’s worker’s compensation insurance. For this purpose, Jane’s parents will have to fill out:

A payroll start packet
A time card

When Jane’s parents receive a check in the mail from the payroll company, the pay stub will show the various deductions applied to the gross pay amount, including the 15% set aside to comply with the Coogan Law:

Coogan Law Deduction Example

However, Jane’s social media obligations will be performed from home, on her schedule. Social Media posts are different enough from the production company’s main activity (producing videos), which allows Jane to be treated as an independent contractor rather than as an employee when it comes to this portion of her contract.

This means that the $7,500 remaining on Jane’s contract will be processed through accounts payable. To issue this payment, Jane’s parents will be asked to provide:

A copy of Jane’s Coogan account statement (already provided above technically)
A W9 form
An invoice

When Jane’s parents receive the check for her social media posting obligations, 15% will have been deducted and transferred via direct deposit into her Coogan account.

Coogan I Love Paperwork Gif

If you are starting to feel overwhelmed by all the paperwork required, it’s important to remember that good tools and processes can alleviate this sort of administrative headache.

Everyset's software comes with a built-in forms manager, meaning you can send fillable documents to your entire cast and crew, including a variety of forms dedicated to minors within a few clicks.

Coogan Castifi Forms

Once signed, forms remain attached to the users who signed them, and can be downloaded or sent to payroll individually or in batches.

Tax Implications

We can’t wrap this article without stressing the tax implications of a Coogan Account. As with most types of income, earnings deposited into a trust account will likely need to be reported to the Internal Revenue Service. We suggest that you consult your Certified Public Accountant to take the right actions by the end of the fiscal year.

We know the industry can be a hard and confusing landscape to navigate. It is Everyset's mission to provide a helping hand, but we need your help when it comes to making our community more knowledgeable and safer for all children. If you found this post helpful, please share it with others and subscribe to our newsletter for more content like this, as well as upcoming events, product updates, and new product features.

Coogan Law: Full Text

At SagAftra.org

At Leginfo.ca.org