Why Do You Get Paid What You Do in Hollywood? Thank (Or Blame) This Man

Payroll Illustration - H 2016
Illustration by Miss Lotion

Eric Capogrosso talks about writing the bible of the payroll industry business in 1981 and what it’s like cutting checks for movie stars.

This story first appeared in the May 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Ronald Reagan was serving his first term as president. Harrison Ford was cracking a whip as a new action hero named Indiana Jones. And in Hollywood in 1981, a young, ambitious attorney named Eric Capogrosso was completing the bible of the payroll industry business, the companies that cut the checks for everyone from best boys to lead actors and just about anyone else you'd find on a movie or TV set. Capogrosso, now 65, is the author of The IDC Hollywood Labor Guide, the first authoritative handbook to outline exactly how much employees should get paid in the entertainment business.

The 1981-82 edition was published and distributed as a book by The Hollywood Reporter and still is published today (see sidebar, page 126) and consulted on by filmmakers and TV producers (along with Paymaster, a more recent wages guide put out by Entertainment Partners). "It took me two years to write the book," says Capogrosso proudly. "It was the first time anybody put together a chapter on how residuals work in the union." Capogrosso retired five months ago from his job as CEO of CAPS Payroll, the company he founded in 2001, which today handles about $1 billion a year in Hollywood paychecks. Below, he chats with THR from his Beverly Hills home about his 40-some years in the business.

What was it like working with Hollywood in the early days of the payroll industry?

It was less sophisticated but still a detail-oriented business. The payroll companies were initially created to service the independent production community — to provide an infrastructure for the companies that didn't have their own. It evolved from there because people saw the wisdom of outsourcing.

Was there resistance?

Oh sure. We had to market ourselves as providing an infrastructure to handle a task related to your core business so that you could focus on production. There wasn't much inter­­action between the payroll company and the client back then. You handed in your time cards; you got your payroll.

Do actors use time cards as much as production workers?

They do, except the very principal actors. We pay them according to what their contract says. The $1 million and $10 million checks — they're out there.

Can you share any memorable anecdotes about cutting checks for movie stars?

I could tell you, but you couldn't write them.

You have done a lot of research for your guidebook. With whom did you talk?

Joseph Bernay was the Hollywood representative of [labor union] IATSE, the umbrella organization that represents the craftsmen and technicians that work on film and television production. I met him at his office to interview him for the Hollywood Labor Guide. This was sometime in 1981. He was one of the first of many interviews I conducted for the book with labor and production people. He was a colorful char­acter. The interview concluded with him jumping to the floor and demonstrating his considerable physical prowess by doing one-handed push-ups. That interview was my introduction to the wonderful, crazy world of the film industry.

It was a rougher labor environment back then. Did you have a lot of dealings with union bosses?

We used to hammer out our differences over martinis. I remember a couple of really crazy situations. We were doing a picture on location in Detroit, and it went under halfway through the project. We had 100 crewpeople, including locals from Los Angeles. I was kind of the guru back then, and my client said to me, "We want you to settle this thing with IATSE for 5 cents on the dollar." So I go to union headquarters, into the biggest conference room I have ever seen, and make the offer. And Gene Allen, one of the union bosses, says: "You must be a stupid liar." I said, "You can't f—ing talk to me like that," and I walked out. I believe we lost. But it was a teaching moment for me because a friend told me to never again lose my focus.

What are the biggest changes between then and now?

For so many years, it was relationship driven, and to some extent today it's clinical. There was a [IATSE] Local 80 guy [during the 1980s] who, every month, would file a slew of grievances about the timely payment of wages. At the time, there was no specific penalty for late wages. So we'd sit down with him and say, "We'll pay this and that," and we'd just pick a number. The law is much more clear now. In the '70s and '80s, people were just winging it. It was like the Wild West. They're days gone by.

Any other changes?

Technology is a game-changer. The amount of transactions for payroll companies is just enormous, and there's no margin for error. You've got to deliver, you've got to get answers to the clients quickly, so everything is going digital. There was a seismic shift in the 1980s, when we developed our

first production accounting systems instead of spreadsheets. In the days of mainframes, we had gigantic machines in air-conditioned rooms that we'd monitor around the clock, and we'd process payroll in the evenings. Now the client accesses programs from anywhere in the world on their phones. The cloud was made for the production business, and we've been in the forefront of that.

California is upping its minimum wage to $15 an hour in a few years. Does this impact your business?

No, because most people in production make more than that already and, if they don't, in my opinion, they ought to.

And what about other new regulations?

The biggest challenges are mat­ters involving taxes — federal, state, local — they change all the time. There's all these laws requiring paperwork. It's detailed and cumbersome every time someone new is hired, and the Affordable Care Act adds

a whole new level of complexity. We're much more like HR departments now.

What does that mean?

Look at the Affordable Care Act: You have to track hours just for the purpose of eligibility. When laws are passed, they don't take into consideration the casual employment market, where people are paid from project to project. We have to figure out what makes people full-time employees so we know if they're entitled to health coverage. There's also the Wage-Theft Protection Act, I-9 immigration forms, and on and on. These things weren't created with the entertainment industry in mind. But they can be good for business.

Good for business? How so?

Production companies don't want to deal with this stuff. The challenge to the entertainment industry is how to comply with their obligations as employers, not only with respect to their full-time staff but also with respect to the large casual labor pool who work as technicians, craftsman and talent. That makes the payroll companies crucial. The payroll industry provides the infrastructure to collect and process the information necessary to ensure compliance.

You sure you don't have any good stories about movie stars' paychecks?

I know, you want to hear about the [stars'] biggest checks, or where their money went, or how they behave, or mistakes that might have happened. I can't get into any of that.