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A new California law that bans employers from asking potential hires about their salary history is meant to be a step toward closing the gender pay gap — but many Hollywood reps feel the legislation will complicate negotiations and could impede that goal.
“This represents a pretty fundamental change in how negotiation has traditionally transpired in the entertainment industry,” says corporate attorney Bob Darwell, who represents companies like Amazon Studios. “The first step to cutting a deal was to call the talent representative and ask for quotes and then to verify those quotes.”
Under the law, which became effective Jan. 1, an employer can’t seek salary history information about a potential hire either directly or indirectly — but there’s nothing that stops a candidate from volunteering that information.
Attorney Linda Lichter, who reps both talent and executives, says the change is already creating a buzz across the industry. “All of the business affairs people are incredibly freaked out about it,” she says. “We as lawyers are too. Everybody’s talking about it.”
While it’s a state law, labor and employment attorney Jack Schaedel says entertainment companies operating outside of Hollywood should still take notice. “California is a real trendsetter in the area of employment law,” he says, adding that when the Golden State makes a change legislators and activists in other states often think, “That’s a great idea. Let’s do that here.”
Female execs seeking to make a move seem the most likely to benefit. If a lower starting salary and fewer raises than male counterparts have deflated a woman’s earnings, the law offers a clean slate on which she can negotiate. “It might mean that somebody wanting to hire an executive is going to be willing to pay what they think she is worth,” not simply what she’s been paid, says Lichter.
But Wendy Lane, head of Greenberg Glusker’s labor and employment group, adds that the law alone may not be enough to change behavior in negotiations. “Men, according to many studies, historically have been more comfortable in asserting themselves and demanding a higher salary,” she says. “Only time will tell whether the new law will give women more confidence to ask for what they feel is fair rather than feeling constrained by their past salary.”
The effect on female talent also isn’t easy to predict.
“When applied to this particular industry, the new law makes it more challenging to address the outrage over the disparity in compensation between men and women,” says Darwell. “If the information isn’t flowing as freely, there’s less information available to try to address that gap.”
Reps will now need advance permission from clients in order to disclose past pay — and the top agencies and law firms have already begun sending letters asking for just that. “Assuming our clients agree, we have the choice of whether to share a quote,” says lawyer Joel McKuin, whose clients include Kristen Stewart and Noah Hawley. “If a quote is going to help the client, we’re going to use it. If it’s not, presumably the market forces are going to result in the artist getting the deal that he or she should get.”
Also complicating matters, it remains unclear whether an employer can take steps to verify a quote or salary that has been volunteered.
While some fear the law could encourage studios to lowball anyone who doesn’t offer a quote, McKuin says it could help talent whose quotes are artificially low because they had focused on indie projects or TV. However, “if the market is unfair because it’s imposing disparity on people’s income based on gender, it’s up to all of us to keep fighting, quote or no quote.”
Another aspect of the law likely to frustrate employers hiring both talent and executives is a vague demand that they, upon “reasonable request,” provide the “pay scale” for a position to an applicant. Neither of those key terms is defined, nor is there any instruction as to how the information must be provided and whether it includes only pay scales that already exist.
“There’s nothing in the statute that says a company has to create a pay scale,” says employment attorney Adam Levin, whose clients include producers and talent agencies. “In my experience, companies don’t have pay scales for positions like actor, director or writer.”
Lane says she believes it would be fair for employers to create a wide salary range that allows it to factor in variables like experience, talent and profitability — but says the lack of guidance in the law could be a recipe for disaster.
“There is nothing in the law that accounts for entertainment industry concepts such as backend deals, residuals and profit participation, for example, and one might argue that a request for a ‘pay scale’ in such a situation might not be a ‘reasonable request’ because of those very individualized variables,” says Lane. “When an industry and its pay practices do not fit into the ‘cookie cutter’ requirements of the law, it is a recipe for confusion and, ultimately, litigation.”
A version of this story first appeared in the Jan. 17 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
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