Contractually Speaking

In 1980, I signed my first agreement. It was not a real contract per se that had paragraph after paragraph stipulating performance objectives, duration and compensation. It simply stated that I was to receive ten dollars an hour working eight hours a day for three days a week at a company that maintained power regulation equipment. For several weeks I was to receive two hundred and forty dollars per week to write inventory control software on a very early model small business computer.

Back in the golden era of the Hollywood Movie Studio system, an actor was evaluated by the studio chief and given a take it or leave it type of offer: The deal was that the studio would pay fifty or one hundred fifty or whatever dollars a week. The length of the contract was for five or seven years with increments after each six months that could sometimes double the previous salary. The catch was that the studio considered each six months a renewable option that was one-sided. If they felt that the “talent” was not worth the investment, he or she was out of there upon the end of the six month’s duration. Sometimes, if the bosses could not stand to see the person hanging around the studio before the six months were up, they were told to stay home and the checks were mailed to their residence.

This worked out well if the talent was essentially a bit player in the big scheme. But, if an actor or actress got lucky and was in a couple of hit movies, he or she was stuck in an unfair contract. Nor could he quit unilaterally if he had a better offer from a rival studio or independent source. If a contract had three years left, even though based on six month options, it was favored to the studio and not the performer. The actor was indentured for the length of the contract. Some performers with extra cash bought out their contracts. One purportedly paid two hundred thousand dollars to get out of a bad deal but it was well worth it because of a couple of million in potential income available elsewhere.

On Broadway, some stage actors would agree to sign “run of the play” contracts when they were relatively desperate for income. Then when the play would be a huge hit, the producers might want to take it on a national tour. Not all actors liked traveling and some would also find Hollywood beckoning but were stuck in these duration type contracts unless they were able to buy themselves out of it.

Kathryn Hepburn once paid thirteen thousand dollars to a greedy producer to buy herself out of a “run of the play” contract for a production that was a stinker. The producer knew he had a dog of a play but he wanted to milk her name recognition out in the hinterlands as much as he could. Hepburn acknowledged she was the fool for signing it despite being told by friends to stay away from the nefarious boob.

The movie studio system is gone. Indentured servitude has long been phased out. After the Curt Flood lawsuit attempt and the Andy Messersmith successful case law in the mid-1970’s, athletes were also removed from the specter of being tied to an employer against their will. Today, a baseball or basketball player who signs a multi-year contract usually gets more than ten million dollars totaled into the deal. And if he should get hurt or lose his prowess before the end of the contract, he still gets paid.

Even though it was for a short time span, my first contract established an hourly rate, which was in retrospect not much. But at the time, I was trying to ingratiate myself to prospective businesses and was grateful to get a foot in any door. I was an independent contractor who would get a 1099 form instead of a W2 at the end of the year and was responsible to pay my own taxes. It mean I would also pay a higher share of social security tax being self-employed. But it also meant I was working for myself.

Not having any taxes taken up front also taught me the discipline of putting aside money in anticipation of needing to use it to pay the taxes at the proper time. And since the client would pay to a company name in order to avoid suspicion that I was an employee, it also meant that I would need to register for an assumed name as well as open a business checking account.

At the age of 29, I had arrived.

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