No Business in Show Business – Legal Implications of the Hollywood Strikes

Disclaimer: This article is written by Thea Schirvanian. Any views and opinions expressed in this article are those of the writers and do not necessarily reflect the views or positions of the team editor nor any entities they represent.

On July 14^th this year SAG-AFTRA (Screen Actors Guild – American Federation of Television and Radio Artists) joined WGA (Writers Guild of America West) in a strike, which has led Hollywood productions to grind to a halt. The industrial action follows the failure of these unions and AMPTP (Alliance of Motion Picture and Television Producers) to reach a collective labour agreement before their respective contract expirations. These strikes mark the first time in 40 years that both unions have walked out together and has instigated a critical impasse in the Film and Television industry.

The most prominent sticking points include the payment of residuals from streaming media and the increasing use of AI within the industry. Writers and actors have expressed their discontent with the poor compensation via residuals for television programmes and films on streaming services. AMPTP, however, have not agreed with the proposed increase in these payments. Additionally, AMPTP’s “groundbreaking AI proposal that protects actors’ digital likenesses for SAG-AFTRA members” is a great source of concern for the unions. With the rise in deepfakes and AI generated art, members of the industry are concerned that AI will undermine their work and even replace working actors with scanned digital counterparts. WGA members have expressed concern that the use of AI in screenwriting would undermine their authorship. WGA put forward a proposal that AI would not be used to rewrite literary material and would not be used as source material. However, AMPTP rejected this proposal.

This article will look at the legal fallout of these historic strikes, and the effect on the entertainment industry.

How is the law involved in this issue?

As trade unions, WGA and SAG-AFTRA represent and protect the labour rights of writers and actors. The representatives of these unions discuss the terms and conditions of the members’ employment with the employer’s union, in this case, with AMPTP. Workers and employers have the right to negotiate collective bargaining agreements (CBAs) and to take strike action if there is a conflict of interests. Back in April, 97.85% of WGA members voted in favour of authorising a strike if a new CBA was not made with the trade association before the WGA-AMPTP contract expiration deadline on May 1^st. The proposals made by the WGA were either rejected by AMPTP or countered with offers the former deemed unsatisfactory. SAG-AFTRA were in similar negotiations with AMPTP and did not reach a collective deal before the expiration of their existing CBA in July. Subsequently, both unions are striking and refusing to work until negotiations with AMPTP reach a mutual deal.

How will the strikes affect the industry?

The current strikes are the biggest halt in film and TV production since the COVID-19 pandemic. The strikes have stalled a vast range of productions, from blockbusters and late night talk shows, to the upcoming Emmy award broadcast. SAG-AFTRA’s and WGA’s global reach and vast membership (SAG-AFTRA represents 160,000 actors, WGA represents 11,500 writers) means that a high number of large-scale productions have been forced to be postponed.

The economic consequences of the delays are already manifest. For example, Forbes projects that this strike could cost California’s economy $3 billion. Wider businesses, such as catering companies, set builders and florists have also been negatively impacted. Both unions have strict rules and guidelines, in order to lead the most effective strike. Withheld services not only include writing and acting for AMPTP productions, but the strike guidelines also state that members must not participate in any press or promotion for any productions they are involved in. Therefore, not only are current productions affected, but films premiering during the strike will receive no publicity from their stars and subsequently may result in a smaller audience.

Thus, it is not just those on the picket lines or the studio executives who will be affected. The deadlock in such a global and far-reaching industry will subsequently leave wider businesses in stagnation.

How does this affect the UK industry?

With the UK and US film sectors so intertwined, inevitably the strikes have halted any productions involving members of the US unions. However, it is notable that SAG-AFTRA’s British sister union, Equity, has advised its members to continue working. A statement On Equity’s website details that “we [Equity] have been advised by SAG-AFTRA that its strike is lawful according to United States law but we have been advised by our UK lawyers that it is not lawful under United Kingdom law”. While Equity have been organising rallies and demonstrations in solidarity, they are legally not able to go on a formal strike. Section 224 of the Trade Union and Labour Relations (Consolidation) Act 1992 dictates that ‘secondary action’ (sympathy strikes) is unlawful. Therefore, if members of Equity were to join the strike they would risk being sued by their employer for a breach of contract. Thus, Equity has stressed in their advice for members to continue to work. UK labour laws are stricter than their US counterpart. Paul W Fleming, the General Secretary of Equity, described UK industrial relations laws as ‘draconian’ and perhaps ‘the most restrictive in the Western world.’ New acts of legislation have made it increasingly difficult for unions to go on strike. The Trade Union Act of 2016 tightened the ability to strike. Under the act, 50% of union members have to vote for strike action in order for it to be valid and legal and a minimum of two weeks’ notice of strikes to the employer is required.

Consequently, as there is no foreseeable end to the strikes in the US soon, actors who aren’t members of SAG-AFTRA have no choice but to work within an extremely disrupted industry. Some productions have been forced to shut down due to the strike action, leaving non-SAG actors out of work, and some have chosen to continue filming the most they can without a percentage of their actors and writers. The global scale and multilateralism of the Entertainment sector means that the strikes will have a disruptive effect across countries and sectors.

This is a high stakes course of action by WGA and SAG-AFTRA and we are now approaching the second month of the unions’ collective strike action.  Amid the strikes Netflix has advertised for an AI product manager role, as have other studios, which indicates studios may seek to develop AI capability to mitigate industry disruption, in addition to its inclusion in a more general new technology strategy.

WGA and SAG-AFTRA have explicitly stated that they will not settle for anything less than their proposals; AMPTP are similarly unwilling to concede. Without a re-negotiation, the parties will not be able to reach a CBA and a new labour contract. Until an agreement is made, this stalemate will continue.