BizParentz Foundation

Supporting families of children working in the entertainment industry

Residual Payments

Welcome to one of the most confusing and difficult aspects of the entertainment industry—getting paid! Residuals are the bread and butter of the working actor’s life. They are what keeps you going when things get slow (and they DO get slow…for everyone. This biz is one big roller coaster!). They are that wonderful surprise in the mailbox, just when you need it most.


In the industry, your payment for the day you work is referred to as a “session fee”. Any payment you get after that is referred to as a “residual payment”. Residuals are the cornerstone of an industry system designed to compensate actors for the continued use of their performance. It is the actor’s fair share of the revenue generated from the project.


Residuals are paid to union actors when their performance is used again. There are different pay scales for different types of work (TV, film, commercials) which are dictated by different contracts (low budget, made for cable, feature films made for the theaters, etc).


Non-union projects do not pay residuals, since there is no real infrastructure to track actors down (sometimes 10 or 50 years later!) to pay them. When you work non-union, your session fee is usually all you are going to get. It is a common practice to offer a one time “buy-out”, an upfront payment that covers all usage. Sometimes that buy-out is for a larger amount of money, but without a crystal ball, you never know if it would have been more a session fee plus residuals would have been. Of course, a project is produced as “union” or “non-union”, and the actor does not control that. Non-union producers are not bound by the residual system. Residuals are one of the great benefits of union work in SAG, AFTRA or ACTRA.


British and Australian/New Zealand unions do not pay residuals, so if you work on a project in those countries make sure to ask for a SAG contract (Global Rule One).

Why Do I Get Residuals?

In general, actors aren’t paid for the first exhibition of their work—that is included in the session fee (your work day wages). Residuals are paid to actors when their performance is used AGAIN, or in a new way that was not intended when you originally worked. For example:

  • A re-run of a television show
  • A feature film that was released in the movie theater, but is now being released on DVD
  • A television Movie of the Week that is now being sold on DVD
  • A second use of a commercial (or a third use, or 300th use!)
  • A TV series that is now being used on the internet as a “Webisode” (a.k.a. “new media”)
  • A TV series that is sold into syndication
  • A network TV show that gets shown again on a cable channel


In general, you get paid a session fee that allows the producer to show the film in one defined way. That is specified within your contract. For instance, the top of your contract will say whether a show is intended for Cable TV, Internet, or Network use. The contract will also say what union contract the project is being filmed under (SAG Ultra Low Budget, or AFTRA Uptown Agreement, for example). It is really important to know what union contract you are working with. If you don’t understand, call the union and ask! This type of contract determines your pay scale for the session fee, whether you get residuals at all, and in what circumstances you might get residuals. The unions now have so many different sub-contracts that it is really important for actors to ask questions! You can’t just assume you will be getting “union scale” because it is a “union project”.


This article contains basic information about residuals. For more detailed information, contact your union, SAG or AFTRA and ask for the residuals department.  

Why do I NOT Get Residuals? a.k.a. Pitfalls to Counting on Residuals

You might find yourself NOT getting residuals in a few instances:

◊ It wasn’t a union job.


You weren’t a principal performer (background players don’t get residuals).


They aired it only once. In other words, a commercial might be produced for the Super Bowl, shown once, and never shown again (quite common). The talent would have gotten paid their session fee and that was the end of it.


You were edited out of the project.


You signed a contract that involved “Deferred Pay”. There are union contracts that allow producers to pay you when they sell the movie. Sounds good, right? Share the profits, right? Wrong. Most of the time, “deferred pay” is really code for NO pay. Very, very few (as in, we don’t know any), actors actually received deferred pay on the films they worked on. Nothing wrong with being entrepreneurial, but know what you are getting into.


You signed an “alternative contract” within union jurisdiction. BEWARE! Examples of this include the newer shows on Nickelodeon and Disney where they are paid on a “special” AFTRA contract called the Uptown Agreement. That agreement is a non-standard agreement with AFTRA that allows them to pay less per session fee (some as little as $341 for two day’s work) AND show the episode many, many times before even starting to pay residuals (at least a year—sometimes never). This equates to extremely low pay overall. The situation is particularly deceiving to child actors because A) many of the same types of shows were SAG a few years ago, and B). We all know how those outlets run their episodes hundreds of times, so we assume that our child will make big bucks.


Another alternative contract is SAG’s newer clause that says series regulars on network TV don’t get residuals for the first few runs of the show. So if your series doesn’t go past the first season, you likely won’t get any residual benefit.


You were working on a soap opera (AFTRA has jurisdiction over most of these). Many of them only show on the network once (with repeated airings on Soap Net). The pay structure for day time TV is very different and you might not make as much as you might expect from a primetime show on the same network.


◊ MANY (if not most) films don’t make it to theaters, even the union ones. They never get distributed anywhere. Maybe they make it to a festival, but that’s it (you don’t get paid for festivals). For you, that means no residuals. MOST pilots do not get picked up. They never make it to TV. That means no residuals. Some (not most) commercials never get put on TV. That means no residuals.

Moral of the story - Make sure you get as much as you can for a SESSION FEE. Don’t count your chickens before they are hatched. Don’t count on getting ANY pay later. Residuals are gravy.

Commercials

Usually SAG holds the jurisdiction for commercials. In the case of the SAG contract, you get paid for a session fee (for the days you worked). That session fee allows them to show a commercial ONE time for free. Beyond that, there is a sliding scale for each showing. You will get paid different amounts for each type of use.

Here are some notes that might help:


21 months total use is allowed from the day you first work. That’s how long they can hold your image if they want to. If a commercial is still running (lucky you!) at 18 months, you need to remind your agent to renegotiate. Do not sign letters sent directly to you by the ad agency (it is usually an attempt to avoid negotiating with you. Renegotiations are where the big money is. Often renegotiations (meaning they get to use your commercial past the 21 month mark) involve 10x the session fee. That’s a lot of money. But it is also very, very rare to get a chance at renegotiations. When is the last time you saw the very same commercial on TV 2 years later?


Commercials run in 13 week cycles, and then residuals start over with a new holding fee. Mark it on your calendar! Most commercials run two 13 week cycles or less.


After you see the commercial on TV, residuals are paid about every two weeks. Since your agent or manager might have to process them as well, you can probably expect your first residual check about a month after the commercial airs.


A holding fee is the amount paid to you to “hold” your image. It also ensures that you can’t take a job for a conflicting product (i.e. if you do a commercial for Coca –Cola, and they pay you holding fees, you can’t take a job for Pepsi or any other soft drink company). A holding fee is the same amount of money as your original session fee and is paid every 13 weeks as long as they choose to run or hold the rights to air the commercial.


If they don’t pay you the holding fee, you are “released”. That means they aren’t planning to run the commercial any more. No more residuals for you - bummer. The good news is, you are “released” from that nasty conflict and you can look for a new job.


Enlist friends and family to watch for you: time/date/station/city


Keep notes on where and when the commercial was shown. That really helps when you find yourself in a dispute about the way you were paid. Commercials are paid incorrectly a large percentage of the time. Why? Because advertisers know that you can’t watch TV and monitor it all over the country. So they take advantage.


Types of use:
    • Holding fee—same amount as a session fee, paid every 13 weeks
    • Wildspot (by unit)
    • Dealer A - 6 month cycle which might be outside the 13 weeks
    • Cable – (by unit) max: $2,581.00 *This is what most commercials pay now
    • Class A Network – the big money, when the commercial is shown at the same time, same station, all across the networks (ABC, CBS, Fox, NBC). Paid for each use, getting smaller and smaller the more the commercial is run.
    • Internet Use


Lifts vs. Edits – when a commercial has more than one version. Generally, one 15 second and one 30 second version are allowed for no additional pay. If the commercial seems to be different (and not just a shorter version) call SAG at 323-954-1600. You might be owed more $$.


Some products, like fast food kid’s meal toys, or holiday toys only run for a month or so.


The payroll company is your employer—usually it is Talent Partners.


Problems getting paid? Call payroll first, then the ad agency. NOT the production company. The production company is who you may have had most contact with when you were filming, but they produced the commercial and then SOLD it to the ad agency. They are done with it, so they can’t help you anymore.


The average pay for a union commercial, according to Backstage: $6,000

Myths and Legends

Be realistic! Get your session fee, and be happy. Don’t count on any more money. Don’t make decisions for the future (like buying a car, or using credit cards) with the assumption that you will be getting residual money for years down the road.


It is NOT TRUE that one commercial will pay for your child’s college education. Or pay for your pilot season trip. Those are myths. Lately, we have heard repeatedly about a Burger King Kids Meal commercial where the child reportedly made $75,000? It is simply mathematically impossible. Once in a blue moon a commercial will get cut into 10 different spots, each of which would pay as individual commercials. If some of those commercials ran for 3 years—that is the only way you could make 6 figures.


It is NOT TRUE that a kid became a millionaire as a result of their first job on a feature film or their luck in booking a pilot. Most kids working on TV and film projects get scale, plus 10% for their agent. Their residuals add up over a lifetime, yes. And that’s wonderful. It’s why we love the residual system. But you would have to do a few films and work your way toward Dakota Fanning status, or be the star of a TV series for a few years before you are financially secure.

Theatrical (Television and Film)

It is pretty common to think you hit the big time when you book your first day on a TV series or your first feature film that shows at your local theater. It IS pretty big time! Congratulations! Unfortunately, the money may not be big time at first. And you have to wait awhile for it. Here are some notes on theatrical residuals:


No residuals for first showings, including all box offices. Residuals start when it is shown again anywhere in the world, any medium. For example: You got paid for your week’s work on Tom Cruises’ next film. Good for you! A year later, the film goes to the theatres. Woo hoo—it’s #1 at the box office! Sadly, you are getting paid for that—it is part of your session fee (what the film was created for, a.k.a. ‘first use”). A year after that (2 years after you worked), the film goes to DVD. About 6 months after that, you’ll get your first residual check! You’ll get paid again when it shows on Showtime, HBO etc. Then you’ll get paid again when they show it on regular TV and cable. Those will trickle in, year after year.


The really great news? This process goes on FOR LIFE. You will continue to get paid smaller and smaller amounts each time the film is shown, forever.


How do they figure out what you should get paid on a feature film? It’s a formula made up of the following factors:

  • Your rate of pay in the session fee
  • How many days you worked
  • How many other people were in the film? SAG takes those factors and assigns a value to you, called “units”. All the actors split up the piece of the pie according to the number of units they have. The “pie” is this: DVD/video = 4.5% of distributors gross, up to $1M, then 5.4%


Tip: Working a lot of days in a successful film with a small cast can really pay off. The more cast members, the less your cut of the pie is going to be. For a tip on where you are in the hierarchy of your film, look at the Day of Days sheet.


Unofficial rule of thumb: you can expect the residual earnings in that first year to be AROUND what you got for the session fee when you worked. Give or take. Just to give you an idea. It seems to work out that way most of the time. Don’t hold us to it.


Residuals on TV shows are much better on primetime network (Fox, CBS, NBC, or ABC), than they are on cable. Much!


For TV shows on DVD, a similar formula is used: Actors split 3.6% of the distributors gross, based on units of time and salary (5 days work = 1 unit, 15 units max). So imagine…you worked a week guest star on Desperate Housewives. They release a season compilation DVD. Your cut of that is TINY, because it will include all the series regulars, and every other actor who every appeared in the show all season. You might be able to buy yourself a Starbucks coffee with that residual check.


Theatrical residuals are paid quarterly to SAG. They “process” them (no one knows exactly what they do) and they send them out to talent several weeks later. SAG does have a residuals tracker on www.sag.org, but it is not very timely. Make sure SAG has your correct address!


Check www.sagph.org (the pension and health) for a more up to date listing of checks issued.


Studios withhold 25% standard taxes on residuals. Coogan may or may not be with held (it is supposed to be, but often is not) so parents are responsible for depositing.

Where Do They Send the Money?

Commercial residuals are usually sent to your agent, then forwarded to a manager (if have one). They each take their percentage and send you the rest.


TV/Film project residuals are usually sent to the union. The union processes them, and then sends them on to you (often weeks or months later). You are responsible for paying any agent or manager commissions, as determined by your contracts with them.

 What Do I Pay My Agent?
 
That is a loaded question!  The answer depends on what contract you signed with your agent.  If you signed a General Service Agreement, the agent will likely commission all your residuals (which can add up to tens of thousands of dollars over a lifetime, a significant disadvantage to GSAs).  If you signed a SAG agreement with your agent,  the union limits which commissions are "commissionable".   Here is SAG's Commission Chart (PDF) of what is commissionable under their rules.

MISC Tips

Unemployment in California: The good news is that residual payments count toward your earnings in determining the amount of unemployment you might get. But you can’t use residuals as work days. And you must report any residual payments on your UE claim form (see article on Unemployment on this site).


When you turn 18, make sure to notify all your employers, so they don’t keep with holding Coogan from your residuals. Lots of Coogan money goes missing this way, since the residual system is not set up to track children and their Coogan payments. If you think you might be missing any Coogan money as a result of getting residuals, check www.unclaimedcoogan.org


Unclaimed Residuals. Since residual payments happen over a lifetime, lots of money gets lost in the shuffle. Check here to see if you might be missing money:

  1. SAG Missing Actors
  2. AFTRA
  3. State of California Unclaimed Property
  4. Other States