Deal Memos

So for the benefit of some of our younger and less combat experienced readers, here are some personal views on how to survive as an up and coming free-lancers.

Note that most of this article is written relating to nonunion shoots. Employment on union shows is not so risky, since there are strict guidelines for the producers to follow, along with the recourse of union intervention if crew members are mistreated.

Deal Memos are the term that independent producers use for employment contracts. Since the word "contract" implies something legally detailed and binding, the term "memo" is used to suggest an agreement somewhat less formal. Do not be mislead; a Deal Memo is a contract and is binding.

The problem is that it is usually not worth the effort and legal expense to try and enforce it.

Many of the deal memos that have been handed to me by Producers are nothing more than hastily rewritten Model Releases. Why a Producer would want me to sign away rights to my voice and photographed image I cannot imagine! (Behind the scenes documentaries not withstanding).

But a Deal Memo is the employment agreement that states what you are being hired to do; what you will be paid; terms of employment; and misc. details.

Make sure that the wording is specific and relevant! Do not be afraid to cross out paragraphs left over from the actors' contracts.

The memo should clearly state who the employer is. If it is a bona fide, long-standing production company—that is okay. But if the name of the production company is the name of the film, expect the production office to shut down forever on the last day of shooting! Get the real name of the producer, including actual address (verify it) and social security number. If the producer refuses his/her real name or address, be wary!

The memo should have your name on it, of course. It should detail your job function on the set, such as Production Sound Mixer, Boom Operator, etc. That way you do not end up hauling lumber around.

Salary.
How much are you being paid? For what period of time: hourly, daily, or weekly? Define that period of time, such as an 8-hour workday, excluding an off-the-clock lunch break of not less than 30 minutes but not more than one hour. Or perhaps a 10 hour workday, or even a 12 hour day.

When will you get paid?
State laws usually require paychecks not more than 7 days after the pay period, but check your local laws. Most crews like to be paid on a weekly basis, beginning not more than 7 days from the first day of work. Do not accept any deal where you won't be paid until the end of a lengthy shoot; that is a sure sign that the producer does not have any funds!

Do not be nice about not getting paid.
If you were promised a paycheck on Friday, and that check is not there, then make it very clear that it had better be there by the next morning. Holding back your roll of dailies can help make the point; even if it means accidently turning in a blank roll... oops. And if the check still is not there the following morning, well, time to take evasive action. Leave the set, and make sure to take your equipment with you!

Overtime
Overtime traditionally means at least time and a half for any hours beyond 8 per day, 40 per week, or seventh consecutive workday. In the movie biz, these rules often get bent. Figure in your basic overtime to your rate when you agree to (or define) a long working day, or weekly rate. Your deal memo should state that you expect overtime compensation for all time beyond your basic 8, 10, or 12 hour day; as well as for weeks extending longer than the defined week.

Producers will counter with the statement that no one is getting paid overtime because no day will go overtime! To that, I point out, if we do not go into overtime—then you will not have to pay me overtime. But if you do not agree to pay me overtime when the day goes into overtime, then I will simply pack up and go home at the end of my shift and the rest of the crew can shoot M.O.S. (Of course, I never leave my equipment behind for someone else to use!)

The deal memo should cover areas such as meals (who pays?), travel expenses, gas, tolls, parking.

Travel days should be compensated, at least partially.

Airfare should be prepaid, and round-trip tickets are given to each crew member before departure. Make sure you have a return ticket in your possession, just in case the production falls apart while you are on distant location.

Hotel accommodations are to be of reasonable quality (clean, no bugs) and private room/bath. No dorms or sharing of facilities. You are entitled to your privacy and rest. Rooms should be prepaid or secured with the Producer's credit card; never your own.

Are you an employee or an independent contractor?
Low budget producers will often try to entice you into being an Independent Contractor so that you will not have taxes deducted from your meager paychecks. But the IRS does not consider you to be an Independent Contractor unless you are working independently of the crew, such as an Editor in their own offices. If you work under the direct supervision of the production company, then you are not independent. If you use your own equipment or facilities, determine your own hours, choose your own locations & working conditions—then you may qualify as an Independent Contractor.

But the biggest problem that you face as an Independent Contractor is not taxes, but insurance coverage. What happens if you get sick or injured on the set? What if disaster strikes your equipment? Independent Contractors are self-insured. Employees are covered by Workman's Comp and Liability provided by the Producer.

Equipment and expendables
. Is the producer renting an equipment package from you and paying you weekly for it? Is the equipment totally your own, or is it from a rental house? Whose account is it under, yours or the producers? Who is providing insurance coverage against loss or damage? Is the company purchasing expendables and providing them to you, or are you bringing the expendables and billing the company on an as-used basis?

If you are engaged to act as a middleman in arranging for equipment, make sure that the rental house understands that you are acting on behalf of the producer and not for yourself. They may be willing to entrust their gear to the producer because they trust YOU, but then they will want to hold you RESPONSIBLE. Make it clear that they must be comfortable with the producer's credit app and insurance, and that you are not personally vouching for your client.

By the way, never put up front money or your credit card to cover company bulk purchases. If you have to front for expendables, then they belong to you until the company reimburses you, at a profit!

Term of employment
The deal memo should state the start and completion dates of the project. Are you being hired for the duration of the show, weekly, or on a day-to-day hire? How many days prior to the start date does the production company need to notify you in the event of postponement or cancellation? After all, you are turning away other work being offered to you because the producer has booked you! Will you be compensated for delays? What about compensation for prep days, location scouting, and travel days?

Deferred Salary.
Read free. Do not seriously expect to be paid any real money after the picture is completed and "sold". You have better odds of winning the lottery! Whatever compensation you are going to get, you will receive at the end of each shooting week. After that, forget it.

So make sure you that you are willing to settle for whatever is offered to you up front.

But if you feel lucky, and decide to gamble on a Deferred deal, then play it for as much as you can get. Do not defer straight salary; if you have to wait and gamble, then it should be for at least double or triple your normal rate. Expendables, expenses, and equipment rental are not deferrable!!

Priority of deferred payment.
Your deal should state that you get paid as quickly as anyone else. Investors who put up cash should not be paid off any sooner than professionals who put up their time and skill. Your services are equal to cash, since the producer would otherwise have to PAY for them.

The few times that I have had to accept a partially deferred deal, I have added a clause stating that all of the soundtracks that I record are my property and copyright until my contract is paid off in full—only at that time will the ownership and rights to the sound recordings revert to the producer. The producer is prohibited from entering into any agreement with any outside party that constitutes sale or transfer of ownership of the sound recordings until my contract is paid in full. That prevents a producer from legally selling off the film to a distributor, and then claiming that the amount of the sale was insufficient to pay off the deferred debt. The distributors purchasing the rights to the film always claim that any deferred contracts are between the crew and the producer.

I also record a copyright claim at the head of every tape.

Ownership of the sound recordings serves as mechanic's lien and may give you a little more leverage to insure payment. But don't count on it. Lawyers usually only take your case if really big money is involved.

Most importantly in your deal memo, pay attention to who signs it. An approval by a production assistant is not considered binding by the producer. It must be signed by the producer if deferred payments are involved. The producer or a senior production manager must sign any deal memo. Make sure that the production manager is, in fact, empowered to make the deal.

The issue of deal memos is a complicated one, and this article should not be used in lieu of consulting with an attorney. Many fine line legal issues are involved, and the laws vary widely from state to state.

Be careful in what you sign and what you agree to! Make sure that the deal memo covers not just what the producer expects from you, but what you expect from the producer! The more specific, the better. If you are not using the services of a lawyer, then write everything out in plain, common day English. A judge is more likely to rule in your favor if the intent of the agreement is clear, even if it is not in legalese. When your agreement starts sounding like it was written by a lawyer, then legal loopholes are more likely to be applied.

Always get a signed copy of the agreement, including initialed pages and initialed cross-outs. Better yet, ask to take an unsigned copy of the deal memo home for a couple of days to look over. Explain that you never sign any contract without consulting with your lawyer. Even if you do not have a lawyer, that will give you a chance to show the agreement to a couple of seasoned professionals who might spot something fishy or badly misworded.