The following is a guest post by Ailbhe Rogers, an intern with the Digital Resources Division at the Law Library of Congress. She is a student of law and economics at University College Dublin in Ireland.
The 20th century saw the birth of child media celebrities. With this emergence came the critical question: what happens when a child earns more than both of their parents? Or, as was the case with Shirley Temple, what happens when the child is the main income earner for a family as large as twelve? The courts were thus forced to grapple with the question: when a child is earning enough money to buy not just doll houses, but Beverly Hills mansions, should the money belong to the employee (the child) or to their parents?
One major difficulty with employing minors is that it is assumed, by law, that due to their age they are incapable of understanding the contents of a contract. Therefore, under the common-law “infancy doctrine,” codified by California in 1872, children have the right to disaffirm contracts that provide for more than just their basic needs (i.e., food, clothing, etc.). This means that children have the right to break contracts (including employment contracts) without facing any legal repercussions. This is the reason why credit card companies, for example, refuse to sell credit cards to people under the age of 18. A child needs only to indicate that they wish to disaffirm a contract. Additionally, while the minor party to the contract has the right to disaffirm, the other party to the contract, i.e., the credit card company, is obligated to uphold their end of the deal.
The early film industry was desperate to recruit and invest time and money in young talent, but the minor’s right to disaffirm a contract discouraged them from doing so. By the 1920s, Hollywood was operating under the “studio system” – actors received long-term contracts from companies (approximately seven years), and were paid millions of dollars to star exclusively in that company’s movies. However, with child actors enjoying the right to disaffirm their contracts, they could jump ship to a competitor at any given moment. Production companies needed contracts that would prevent competitors from snatching child actors at the height of their fame and earning potential.
Therefore, in 1927, the California legislature responded to pressure from the film industry. An addition to the California Civil Code allowed for the removal of a minor’s right to disaffirm a contract once the contract was “approved by the superior court of the county where such minor resides or is employed.” Production companies like Metro Goldwyn Mayer (MGM) only had to find a judge to approve the contract for the minor to be legally bound by it. There was no standard that a contract had to reach before it could be approved, leaving children with no means of escaping them.
The problems with the law were exposed when one of the first and most famous child movie stars, who had grown up working under these laws, turned 21. As a young boy, Jackie Coogan was cast in the lead role of Charlie Chaplin’s hit movie “The Kid.” The movie brought Jackie global stardom; as he once stated, “I had the flu in New York and it pushed the President off the front pages.” Therefore, the news rocked the nation when it was discovered that Jackie’s mother and stepfather had spent almost all of Jackie’s $3-4 million income, leaving him financially destitute. In 1938, aged 23, Jackie sued his mother and stepfather and won, but after legal fees, Jackie was left with a mere $126,000 of his original fortune. The state of California rushed through legislation that became known as the Coogan Act. This granted judges the discretionary power to require that a contract set aside some of a child-actor’s income in a trust fund or savings account, only to be opened when the child reached the age of majority. In addition to this, the money that was put away was to be taken from a child’s net income, after any managerial fees and other fees had been subtracted.
However, the Coogan Act contained loopholes that left child actors financially vulnerable. For example, Judy Garland’s mother requested to be paid a stipend that came out of her daughter’s salary. In return, Judy Garland’s mother promised to chaperone Judy and ensure that she obeyed the studio’s demands. A similar arrangement was made for the mother of Elizabeth Taylor, who took 10% out of her daughter’s salary in exchange for being Elizabeth’s “manager.” Even parents who had their child’s best interests at heart found it difficult to manage their child’s wealth. When 22-year-old Shirley Temple asked her father (who managed, with difficulty, the money she earned as a child) how much money was in her bank account, he informed her that only $44,000 was left of the approximately $3.4 million she had made as a child star. From 1995, the parents of Macaulay Culkin (of “Home Alone” fame) wasted enormous sums of his income in a custody battle for their children, to the point where, according to Manhattan Supreme Court Justice David Saxe, there was “a real possibility of this millionaire and his family being evicted and left without any home.”
California’s Coogan Act remained unchanged for 61 years until revisions were eventually made in 2000. It is now necessary for a minimum of 15% of a child actor’s earnings to be placed in a trust fund (no longer at the discretion of the judge). Additionally, the 15% must come from the child-actor’s gross income, not their net income, protecting it from being reduced by “management” or “secretarial” fees. Finally, the income earned by a child actor is legally recognized as the child actor’s property. It is no longer the property of their parent or guardian.
Child entertainers are exempt from the federal labor laws created by the Fair Labour Standards Act (FLSA), which means that they are completely dependent on state law to protect them. Unlike California, 17 states have no specific laws for child entertainers, so child actors are protected only by general labor law in most of those states. In states where the laws are inadequate or incomplete, child actors may turn to trade unions such as the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) to protect them (for a fee).
Fortunately, current protections make it much less likely than it was in the 1920s for a child-actor to have Jackie Coogan’s experience. Contract law in states like California now recognize the power imbalance between vulnerable children and movie executives and the child actor’s experience has changed for the better as a result.
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