Thursday, August 4, 2016

CONTRACTING WITH MINORS IN THE ENTERTAINMENT INDUSTRY - JUDICIAL APPROVAL A NECESSITY FOR BUSINESSES FROM MODELING AGENCIES TO TECH COMPANIES

Contracting with minors in the entertainment industry can be a legal minefield. From talent bookers and modeling agencies to technology start-ups and other computer software companies, the predicament of employing or contracting with a party under the age of eighteen has become an increasing problem. The minor is not bound by the contract and may disaffirm the contract at any time during minority or within a reasonable time after reaching majority. Without a valid written agreement the employment is “at will” under the law of most States which means the minor can depart at any time. The dilemma created by a minor’s ability to disaffirm a contract is that it may seriously jeopardize the employer’s financial investment in the services of the minor whether it is the ongoing efforts of an agency to develop the career of a young talent or the technology company’s expectation that is owns the copyright in the code created by the teenage whiz kid it employs.

The mere exercise of having the parent or guardian of the minor co-sign, approve or “guarantee” the contract does not resolve the problem. The minor may still repudiate the contract on the ground of infancy, asserting that the parent or guardian lacked authority to make the contract. In some jurisdictions, Courts deem it against public policy to even enforce such guarantee language against the parent or guardian since it would subvert the purpose of the laws concerning the judicial approval of contracts with minors. So-called “working papers” under State law might work for purposes of a fast food chain or similar hourly wage employment but are probably insufficient for talent agent, modeling agency or technology company purposes.

Several States, including New York and California, have laws specifically concerning judicial approval of contracts with minors. New York's Arts and Cultural Affairs Law §35.03 provides for judicial approval of certain contracts for services of "minors" under the age of 18. The procedure involved can be somewhat arduous to navigate, and may prove to be a difficult gauntlet to run for a lawyer inexperienced in this area. However, a company employing minors or contracting with minors should investigate the efficacy of pursuing court approval to protect their investment. Once the Court judicially approves the contract, the minor is held to a standard of adult responsibility for its contractual obligations assuring the employer company that it will get what it bargained for and that the contract is legally valid.

As a practical matter, a proceeding for judicial approval of a minor's contract in New York is commenced by the filing of a verified petition. It can be filed by a parent, the guardian, a relative of the minor or any interested person or entity such as the employer. The petition must contain a statement of the length of the employment term, compensation, and all other relevant, material terms of the agreement. A complete copy of the proposed contract must be annexed to the petition together with affidavits from the parents and/or guardians that consent to the petition and support the facts.

In addition to identifying the details of the nature of the minor's employment and the compensation to be paid, the petition must also contain a statement of who, other than the minor, is entitled to the minor's earnings and facts regarding the property and financial circumstances of the parent or parents so entitled. The petition may nominate a person to be appointed as limited guardian solely for purposes of establishing a trust account for the proceeding and should set forth the reasons why the person nominated would be proper and suitable. Although a lawyer is usually appointed, a parent or other petitioner is not precluded from being appointed as limited guardian by reason of his or her interest in any part of the minor's earnings or in the contract provided such interest is disclosed. The Court will designate how much is to be set aside and saved for the minor under guardianship until the minor becomes 18 years old. The court also has the option to appoint a special guardian to represent the interests of the minor at any time after the petition is filed.

As directed by the Court, before the time at which the petition is noticed to be heard, certain persons (other than the petitioner and anyone who has joined in the petition) must be served with an order to show cause why the petition should not be granted: (1) the minor; (2) the parents of the minor; (3) the minor's guardian(s); (4) each party to the contract; (5) any person having the care and custody of the minor; (6) the person with whom the minor resides; and, (7) the minor's spouse.

An order granting judicial approval of a contract for the services of a minor will rarely be granted on the papers alone. Usually a hearing is conducted at which the minor, the parent(s) and the various other interested parties may be questioned by the Judge regarding the contract. A Judge may require provisions in the Court’s order concerning how many hours the minor can work and may require that the employer provide tutors if regular schooling will be disrupted by the employment. Most terms and conditions of each arrangement will be affirmed as long as they are found by the Court to be reasonable and not contrary to the best interests of the minor. Once the court does grant approval, an order will be issued which will, in effect, declare the minor an adult for purposes of fulfilling his or her contractual obligations.

California law concerning the judicial approval of minors' contract for artistic or creative services (Ca. Family Code §6750, et seq.), although similar, differs in certain respects. For instance, under California law there is no limitation on the length of the term of a minor's contract where in New York the limit is seven years. A hearing is usually required in California as in New York but under California law a maximum of only 50% of net earnings will be set aside until the minor becomes 18 years old whereas New York has no limit on what portion the court can direct to be set aside.

Once a Court does grant approval, an order will be issued which will, in effect, declare the minor an adult for purposes of fulfilling his or her contractual obligations. Then all the results of the minor’s services, including commissions due on the bookings by a talent agent or modeling agency and any copyrights in code or apps created by a minor during employment by a tech company, will be properly transferred as bargained for by the employer.
 

WALLACE E.J. COLLINS III, ESQ. (Tel: 212 661 3656) is a New York lawyer practicing primarily in the areas of entertainment and intellectual property law with more than 30 years of experience. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. T: (212) 661-3656; www.wallacecollins.com