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Will California’s Fair Pay Act Make the Difference for Women in Hollywood?

California Gov. Jerry Brown recently signed one of the country’s strongest equal pay laws — a measure that gained momentum after Patricia Arquette talked about gender pay disparity in her Oscar speech.

But there are doubts as to how the law will apply to the entertainment industry, particularly compensation for top-tier stars. There is also a question of how studios and production companies will defend themselves if hit with litigation.

“This is the bottom line: The old Hollywood can no longer exist,” State Senate President Pro Tem Kevin de Leon told Variety, after the law was passed last month. “Women have to be treated with the respect they deserve. They should not be discriminated against based on their gender. If you have women talent in the film and TV industry who are doing comparable work, they should receive comparable pay. No industry should be exempt.”

The California Fair Pay Act, set to go into effect on Jan. 1, maintains that employers cannot pay male and female employees differently for doing “substantially similar” work. The legislation was a revision of current law, on the books since the 1940s, that has been interpreted by courts to mean that equal play applied only to workers who hold exactly the same jobs.

Still, the legislation has a number of exceptions, allowing for pay disparity if earnings are measured by the “quantity and quality of production.” Another exception is if an employer has a “bona fide” reason other than gender for disparate pay, such as education, training or experience, and if the pay differential is out of “business necessity.”

Those may seem like significant loopholes, but the new law does not explicitly mention that oft-stated reason for pay disparity among Hollywood stars: precedent — that a performer’s quoted rate is often based on past box office performance or more intangible factors that drive fame.

“The law certainly should make it easier for … actors to make the argument that for similar roles, there are pay disparities between gender.”
Cheryl orr, partner, drinker,
biddle & reath

Cheryl Orr, partner and chair of the labor and employment practice group at Drinker, Biddle & Reath, notes that the new law “certainly should make it easier for those working in the entertainment industry, e.g. actors, to make the argument that for similar roles, there are pay disparities between genders,” and thus enable them “to pursue their claims with the state or a private cause of action.”

Studios and production companies face a heightened level of scrutiny, says Seth Neulight, partner at Nixon Peabody in San Francisco. “They are going to have to critically look at their pay structures and be prepared to explain the differentials based on legitimate and rational criteria,” he explains.

Lisa Callif, partner at Donaldson and Callif, which specializes in representing independent filmmakers, said, “At first blush I am happy that this type of legislation is happening and the discussion is happening. But when I dig down and get into the actual language of the legislation, I am not sure how helpful it will be.” She praised provisions she says will provide more transparency, but wonders how the new law can be applied in an industry where there are so many varying, often subjective factors that go into determining compensation.

Uri Fleming of Kleinberg, Lange, Cuddy & Carlo believes the law will have a nominal effect on star salaries, given the exceptions allowed. “Where this might have more of an impact is further down the line, with below-the-line workers or even with studio executives,” he says.

Still, one transactional attorney suggests the new statute could make agents more “ballsy” in seeking higher pay for clients. Another posits a narrower fit — for instance, an indie ensemble film in which everyone works below their quoted rate.

Because a number of terms in the language of the law were left vague, it could be very well be up to the courts to provide more clarity.

Predicts Neulight: “I think it is going to cause a fair amount of litigation in the application of the new standards.”

The law is taking effect just as Hollywood’s hiring practices are coming under a new level of scrutiny. Last month, the Equal Employment Opportunity Commission began interviewing female directors as part of an investigation into the great gender disparity in employment.

Maria Giese, a director who made the initial inquiry that led to the ACLU of Southern California’s call for an investigation, wrote in an email that “this is a byzantine industry in which pay oversight is complex.  Indie companies are often created for the duration of the production and then, when the film is complete, close their doors forever. Studios often set up subsidiaries and independently-owned producing entities that allow them to deny control over decisions (like a director’s pay) and step away from legal liability.

“That said, Hollywood’s failure to hire women is very likely going to result in forced industry regulation that will make executives lament the entrenched, long-standing discrimination.  The very secrecy that has allowed Hollywood to get away with keeping women directors shut out, and underpaying them, is going to result in forced transparency and regulation.”

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