Paying SAG-AFTRA Residuals & Health and Pension Under the Commercials Contract
When working on your upcoming commercial, you want the best talent in the business. Of course, this means working with SAG-AFTRA talent as they represent over 160,000 members, including actors, dancers, stunt performers, and other media professionals.
But when it comes to working with the best in the business… you get what you pay for. So, how much does it cost to hire SAG-AFTRA talent?
Under the SAG-AFTRA Commercials Contract, producers and advertisers are on the hook for SAG members wages, in addition to the cost of pension, health and residuals.
As you consider hiring SAG-talent, this blog will help break down all these costs before staffing for your upcoming commercial productions.
Defining SAG-AFTRA Residuals, Pension & Health
Under the Commercials Contract, SAG-AFTRA requires producers and advertisers to pay members pension, health and residuals, in addition to their daily wages. Let’s start out by clearly defining what these extra costs are and what they entail:
SAG-AFTRA Residuals: Also known as use or usage fees, residuals are fees compensated to the SAG-AFTRA actors for use of the commercial across different platforms beyond the use covered by initial compensation. For example, if you plan to use the commercial across social media, cable or in foreign countries, the usage will need to be tracked and paid out to the talent accordingly.
How do they work? Residuals are calculated based on a formula that takes into account certain factors of a talent contract. For example:
When and how often it airs
Where it airs
Talent’s role in the production
SAG Pension and Health (P&H): SAG-AFTRA offers entertainment industry professionals health insurance and retirement benefits. Producers must contribute to these benefits when working with SAG actors. In fact, they must pay an additional 20.5% on top of each SAG actor’s wage toward health & pension.
How to Pay Residuals Under the SAG Commercials Contract
When it comes to paying talent residuals, there’s a lot of factors that affect the pricing. Below, we’re going over the details of who to pay, and how much to pay based on the SAG-AFTRA Commercials Contract rate sheet.
Who is eligible for residuals?
First, it’s important to understand who SAG considers eligible to receive residuals. Residuals are due to principal actors and voice over actors only.This excludes extras or background performers; they are not eligible for residuals.
SAG-AFTRA Commercials Contract Rate Sheet
Residual payout is based on the talent type, usage format and usage frequency. And luckily, these costs are transparently laid out in SAG-AFTRA’s New 2022 Commercials Contract Rate Sheet.
Here is a breakdown of the usage types and the compensation structure of each:
Linear Domestic Use
Wild Spot
A Wild Spot is a commercial broadcast by non-interconnected single stations and used independently of any program or used on local participating programs.
Local participating programs are available to more than one advertiser and are not “sponsored” by any advertiser.
Compensation- Compensation for Wild Spot will fall under one of two Categories:
All Broadcast Markets
All Markets Excluding NY & LA
Class A Program Use
Class A Programs apply to commercials televised in more than 20 US cities.
Larger cities like New York, Chicago, and Los Angeles shall each count as 11 cities; any 2 shall constitute Class A.
Compensation: Class A Program use is paid on a per use basis.
Digital Subchannels
In broadcasting, Digital Subchannels are a method of streaming more than one independent program simultaneously from the same television or radio station.
These are a type of Program use:
ION TV
Bounce TV
MeTV
Laff
Grit
Get TV
Escape
Cozi TV
Antenna TV
This TV
Decades
Heroes & Icons
Start TV
Buzzr TV Comet
Charge
Stadium
Compensation: The compensation structure for Digital Subchannels is paid per use or on a $5,000 flat rate for unlimited uses during a 13-week cycle.
All Other North American Use
All Other North American Use is a new category under the 2022 Commercial Contract. Under the previous contracts, these were all separate use types, now you can group them together for a single fee rather than 3 separate fees:
ITN: These are “unwired” networks. In other words, a media buying method with a large number of broadcasters is bought as a unit unlike traditional media buying where you buy directly through tv networks.
Class B: Number of cities in which televised is between 6 and 20 cities.
Class C: Number of cities in which televised is between 1 and 5 cities.
These can all be combined into a single use type under the All Other North American Use category.
Compensation: These are payable on a fixed-fee basis for 4-week, 13-week, or 1-year cycles.
Cable - National Cable
National cable refers to purchased media from the network directly. Network examples might include MTV, ESPN, or Bravo.
The national cable rate will cover local cable, simulcast, and non-streaming VOD (i.e. VOD accessed via your TV provider).
Compensation: The compensation structure for National Cable is at a flat rate depending on the length of the cycle.
Cable - Local Cable
Local Cable use is purchased media from cable systems like Spectrum or COX.
Compensation: For Local Cable use, you pay at a flat rate depending on the length of the cycle.
Digital Use
Traditional Digital
Traditional Digital use consists of Internet and New Media use that are not on streaming platforms.
Compensation: For Traditional Digital, you pay at a flat rate depending on the length of the cycle.
Streaming Platforms
Streaming includes use on platforms like Netflix, Hulu, Amazon, or Disney+. Use for Streaming Platforms will be inclusive of all other digital uses. Exclusivity shall automatically apply to Streaming Platform use.
Compensation: For Streaming Use, you pay at a flat rate depending on the length of the cycle.
Gaming Platforms/Virtual Worlds/Augmented Reality/Emerging Platforms
A newer category in the SAG-AFTRA Commercials Contract, this bucket includes use on platforms like Xbox, Playstation, VR Headsets, or NFT Worlds.
Compensation: Compensation and exclusivity under Gaming Platforms/Virtual Worlds/Augmented Reality/Emerging Platforms are freely negotiable.
Social Media Waiver
This use type includes Internet and/or Social Media commercials produced for use on social media platforms (including but not limited to, Facebook, Instagram, Snapchat, Tumblr, Twitter, LinkedIn, and TikTok and YouTube).
Producers may film multiple commercials for the same product, service or advertiser in a single session for a single session fee that may not be credited. Each commercial shall have a 30-day use cycle and a one-year maximum period of use (MPU).
Compensation:
The fee per commercial for each 30-day cycle on social media platforms shall be 15% of a session fee.
The fee per commercial for each 30-day cycle on YouTube shall be 15% of a session fee, either separately or in addition to social media payments.
There will be no exclusivity and no holding fees due, and the Editing of Commercials section of the Commercials Contract will not apply.
Foreign Use
Foreign Use
Foreign Use is considered exhibition of a commercial outside of the US, Canada, and Mexico.
Compensation:
U.K- 3 Session Fees
Europe- 2 Session Fees
Asia- 2 Session Fees
Japan- 1 Session Fee
Rest of the World- 1 Session Fee
Worldwide- 9 session fees
Term- 21 months (through the MPU)
Theatrical & Industrial Use
Theatrical
Theatrical Use applies to commercials used in theatres.
Compensation is based on term:
30 Days
21 months (through MPU)
Industrial
Industrial Use applies to commercials used in stores, corporate offices, museums, classrooms, airplanes, taxis, churches, conventions, and seminars.
Compensation is based on term:
30 Days
21 months (through MPU)
Keeping Track of Residual Payments
Your media buyer will keep track of usage and communicate with your SAG payroll company about usage so payment can be on time. Usage fees are due within 15 days of the first use. If they are paid beyond that, there are late fees:
$4.49 per day up to a maximum of $112.25
If you receive a claim notice from SAG-AFTRA, there would be another $112.25 due, following 25 days after the notice was received you will be billed $12.47 per day until paid.
CMS Pro Tip: As a producer hiring extras, you don’t have to pay them residuals, but you do have to pay them a session fee. You can either pay them for 13-weeks of usage or unlimited usage. We suggest paying them the unlimited rate; this way, you can use them for the total 21-month maximum without any additional payments.
How to Submit Pension and Health Under the SAG Commercials Contract
To submit pension and health payments, you have to work with a payroll company that will make P&H payments directly to the SAG-AFTRA plan, or you can use a signatory company who can submit P&H reports to the SAG-AFTRA Pension and Health Plan with payment.
P&H is paid on top of all wages: session fees (work day rates), and residuals.
You must pay P&H initially on the session fee. You will then pay more P&H once the residuals are calculated. Once residuals are calculated, P&H is due to the SAG P&H Plan within 30 days of payment to talent. And if your payment is sent to the plan after that date? You guessed it… penalties!
Late fees are as follows:
30-60 days: 10% of P&H amount
60+ days: goes up to 20% of P&H amount
CMS Pro Tip: Work with a qualified SAG payroll company to manage the process as they will review time cards, pay actors and ensure pension and health is paid- among many other things.
Top Cost Savings Tips from a SAG-AFTRA Commercials Contract Expert
With years of knowledge on the SAG-AFTRA Commercials Contract, CMS Productions has a few tips that will help you save on costs as you structure your agreement!
Plan Multi-Service Contracts Upfront
If your SAG-AFTRA talent is providing both SAG-covered and non-SAG covered services, save by planning their contract up front. In other words, if they are doing a variety of services such as photoshoots, commercials, social posts, media interviews among other services not covered under the SAG-AFTRA contract, only 50% of total compensation is subject to the 20.5% P&H rate.
In the contract drafting stage or even negotiation- negotiate to include non-SAG-covered services in addition to SAG-covered services in order to get this break in pension and health that gets reported to SAG.
Take Advantage of the Pension & Health Cap
There is a P&H cap of $1M per contract year- So, if an actor was paid $5M on a 1-year term, you only pay P&H on $1M, not the entire $5M.
Conclusion: Streamline Your SAG P&H and Residual Payout Process
A clear understanding of how SAG-AFTRA Residuals, Health, and Pension rates will apply to your next commercial contract will heavily contribute to your overall cost. Working with a qualified group of experts to properly process these contracts will guarantee your production can save at every corner while getting the most out of your contract.
Don’t let a complicated contract make your commercial production any more complicated.
As a back-office production support specialist and third-party signatory to SAG-AFTRA Commercials, Corporate Educational / Industrial & Interactive Media contracts, we’re happy to assist you hire the best talent for your upcoming production. Contact us today to set up a consultation.
FAQs
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A SAG-AFTRA signatory refers to an individual, entity or company that has signed an agreement with SAG-AFTRA. The signatory must then comply with the terms of the contract until its expiration. This means that the signatory cannot hire any non-union performers
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A company that is SAG-AFTRA signatory is signed to one or more SAG Contracts, and only works with SAG talent on all of their productions. They are bound to the terms of these contracts.
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SAG-AFTRA signatories are advertisers, advertising agencies and networks.
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In order for a corporation to become a SAG signatory there are certain actions they must take to do so:
The Corporation must agree to comply with SAG-AFTRA rules and regulations by entering into an agreement. In California, they will also need shareholders and directors approval for the corporation to enter into an agreement.
Complete SAG Company Information Sheet
To begin, submit a preliminary information form to the SAG-AFTRA organization.
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Remember, if one actor is a SAG AFTRA member, then all performers - including voiceover - need to be SAG-AFTRA members and paid accordingly.
