Retail Did you know?
April 12, 2022
Dear Retail Customers and Friends,
This edition of Retail Morgan Lewis Did you know? is reviewing the pending New York Fashion Workers Act, which, if passed by the state legislature, would create new compliance requirements, including licensing and compensation obligations, for design and design management companies.
The bill (S8638/A09762) seeks to amend New York’s labor law. It requires “model” and “creative” management companies to register with the state within one year of the bill’s effective date and post a $50,000 bond, subject to with a few limited exceptions.
Who is covered by the law?
A “model” or “creative” management company is defined as any person or entity that “(a) is in the business of managing models [or creatives] participate in entertainment, exhibitions or shows; (b) procures or attempts to procure, for consideration, employment or engagements [for] models; or (c) provides professional guidance or counseling services to models [or creatives] for a fee” in New York.
Interpreted broadly, this could have massive implications not only for traditional models or creative management companies using paid structures, but also for retailers who directly hire models and creatives for studio photo shoots and campaigns. advertisers.
The bill applies specifically to models, classified as employees and independent contractors, as well as creatives such as photographers, stylists, casting directors, makeup artists and hairstylists. A “model” is further defined as a person who “performs modeling services for a client or consents in writing to the transfer of their legal right to the use of their name, likeness, photograph or likeness, for publicity or for business purposes.” A “client” is defined as “a retail store, manufacturer, clothing designer, advertising agency, photographer, publishing company, or any other person or entity that receives modeling services from a designer , directly or through intermediaries”.
duties and responsibilities
Registration must be renewed each year. The bill further sets out the duties and responsibilities that companies owe to their models and creatives. They include:
- Fiduciary duty: The Company has a fiduciary duty to any model or designer that the Company “manages, procures or attempts to procure…or provides professional guidance or counseling services.”
- Health and security: The company must conduct “reasonable inquiries” of clients, recruiters and engagements to ensure the health, safety and well-being of models and creatives.
- Reasonable Efforts: The company must make “reasonable efforts” to secure employment for the model or designer.
- Exclusive representation: The Company cannot enforce Exclusive Representation clauses where the Model or Design has not obtained employment or contracted a Client through the Company within the previous 60 days.
- Explicit content: If the pledge requires nudity or other sexually explicit material, the company must comply with Section 52(c)(3) of the Civil Rights Act, which requires the individual to knowingly and voluntarily sign an agreement describing the requested sexually explicit material, which may also be waived.
- Contract Copies and Disclosures: All contracts and agreements involving rate of pay and scope of work must be provided to the model or creation. The company must also provide a plain language summary and disclose “any relationship” between the company and the client or recruiter.
- Payment: If the business receives payment on behalf of a model or design, it must be immediately escrow and paid (less commission) within 45 days from the date the services were rendered .
- Disputes: In the event of a dispute with the principal, the company must pay for the model or the creative, and then retain the payment from the client once the dispute has been resolved.
- Publication requirement: The company must display its certificate of registration in a conspicuous place in the office and post a digital copy on its website.
- Registration number : The business must include its registration number in all advertisements, including social media profiles.
- Shapes: The company must submit, and the state must approve, its contract or employment form. The state will not withhold approval unless the form is “unfair, unjust, and oppressive.” The company must also provide all documents, including financial statements, agreements and contracts to the model or creation in a language that they sufficiently understand.
- Prohibitions: The Business may not require a fee as a condition of entering into a contract with the Business, charge more than the daily fair market rate for hosting the Model or Design, or deduct from the Model’s payment or commission any costs or expenses, including visas or visa-related costs, other than those previously agreed.
- The duration of the contract: The contract between the company and the model or designer cannot last longer than two years and cannot be renewed without affirmative consent.
- Commissions: Commission charges cannot exceed 20%.
- No Retaliation or Discrimination: The Company may not retaliate or engage in discrimination or harassment.
In addition, the bill includes additional obligations for clients and recruiters, including:
- Payment: All fees, payments or compensation must be paid within 30 days of employment or engagement.
- Over time: The client must pay an hourly rate at least 50% above the contractual hourly rate for any employment or engagement that exceeds eight hours in a 24-hour period.
- No Discrimination or Harassment: The client may not discriminate or harass the model or creative.
Penalties for Violations
A model management or design company or a person claiming to be a model management or design company that fails to comply with the registration will be deemed to have violated the law. Failure to comply in a timely manner, including renewal, constitutes an additional breach. A customer or principal may still be in breach of the law by entering into a contract with a company which the customer knows or ought to have known that he failed to register or renew his registration or that his registration has been revoked.
Civil penalties include up to $3,000 for the initial violation and up to $5,000 for each additional violation. Willful non-compliance with registration is a class B misdemeanor.
Finally, a model or designer aggrieved by a violation of this law may file a complaint within two years with the commissioner. The complaint will then be forwarded to the company for an opportunity to respond. The commissioner will review the response and may then advise the model or creator of their right to take legal action.
The bill was introduced in the New York State Legislature by Senator Brad Hoylman and Assemblywoman Karines Reyes in late March 2022 and was referred to committee. The committee may schedule a hearing to discuss the bill and solicit additional public opinion.
During its consideration, the bill may be amended or rejected entirely by the committee. The committee may then report the bill back to the full senate or assembly for consideration, where it may again be amended or rejected. If passed without a veto by the governor, the bill will go into effect 19 days after it takes effect.
The practical implications
If passed, the bill imposes significant compliance requirements on all businesses in the fashion and modeling industry, including the modeling and creative agencies themselves and those who hire from them. agencies. Companies should review their existing policies and practices and conduct a risk assessment to determine if they are fulfilling their duties and responsibilities, particularly those related to payment and overtime.
That said, the bill is expected to undergo at least some review and debate in the coming months. Interestingly, failure to comply with the aforementioned duties and responsibilities does not constitute a violation of the law in its current form; however, this could have implications for a company’s ability to register in the future.
If or when it passes, further guidance is expected from the state, including the forms required to meet registration and publication requirements.
How can we help you
Morgan Lewis can help luxury and fashion clients understand the New York Fashion Sustainability and Social Accountability Act and its impact on current and future business practices. Morgan Lewis has experience advising retailers on social compliance and sustainability issues, including ensuring responsible labor practices in supply chains.
If you have any questions or would like more information about the issues covered in this Retail Did you know?please contact your Morgan Lewis contact, the authors of the article or one of our retail team leaders:
Fashion and luxury team leaders
Leni D. Battaglia (New York)
Melissa C. Rodriguez (New York)
Retail Team Leaders
Nick Bolter (London)
Anne-Marie Estevez (Miami)
Christina Edling Melendi (New York)
Gregory T. Parks (Philadelphia)