The Fashion Workers Act: Closing the Regulatory Loophole in the New York Fashion Industry

The Fashion Workers Act: Closing the Regulatory Loophole in the New York Fashion Industry

While the outside world sees a polished and meticulously stylish depiction of fashion and beauty, the images belie the realities of the people involved. Models are increasingly speaking out about the difficulties they face; from sexual harassment,^[1] to working for free or paid only in trade,^[2] to never receiving payments at all,^[3] to getting caught in a seemingly endless cycle of debt to their modeling agencies.^[4] This is largely a result of the unique inner workings of the fashion industry. Unlike the heavily unionized motion image sector of the entertainment and media industry,^[5] the non-unionized fashion industry is currently akin to the Wild West.^[6] A number of factors contribute to this issue, such as artists’ independent contractor statuses,^[7] the insufficient statutory regulations of the various actors who control the workings of the fashion industry,^[8] and the unequal bargaining power in those relationships.^[9]

The individuals responsible for controlling the careers (and essentially lives) of artists largely fall to managers and agents.^[10] These two occupations have distinct yet often overlapping roles. “The talent agent’s primary function is to market the artist’s talent to buyers within the entertainment industry… In essence, ‘the primary function of the personal manager is that of advising, counselling, directing and coordinating the artist in the development of the artist’s career.’”^[11] Talent agents will also advise talent about their career, however, they do not typically ‘sign’ (contract) talent that do not have experience.^[12] This which is where the manager steps in as they will invest time and money into developing the talent.^[13]

The existing regulatory schemes for talent agents—and their effects on how talent managers may operate—are markedly different between California and New York. In California, agents are regulated primarily by the Talent Agency Act.^[14] Under the act, managers are prohibited from procuring any kind of employment procurement unless working in conjunction with a licensed talent agent.^[15] In New York, agents are regulated under the general agency statutes.^[16]

Artist managers, however, do not have a regulatory scheme like agents do and therefore often slip under the regulatory radar.^[17] The fashion industry in New York takes advantage of what is known as the “incidental booking” exception to the existing New York agency regulations.^[18] In New York, modeling agencies stretch this incidental booking exception beyond its max by performing the same duties as agents but labeling themselves as managers.^[19] As a result, they operate largely unchecked.^[20] Together with the Model Alliance,^[21] the New York state senate has proposed a bill, entitled the Fashion Workers Act, with an aim to fill this regulatory loophole.^[22]

The Fashion Workers Act is separated into two sections: the first regulates model management and creative management companies,^[23] while the second regulates clients.^[24] While there are a number of issues regarding who is currently included under the umbrella of the bill, this blog post will focus on the model management companies.^[25] The below charts compare provisions between the existing California statutes and the existing New York statutes with the proposed Fashion Workers Act to help assess what changes may need to be made to ensure the bill is equitable for the parties involved.

Figure 1. Affirmative Duties of Management Companies Compared to Agents in California and New York^[26]

As seen in Figure 1, the affirmative duties in Fashion Workers Act are more like the TAA than requirements for agencies under the New York codes. This will likely create pushback from managers who will argue that the regulations should match the New York codes more closely in order for the regulation to be fair. For instance, the $50,000 surety bond amount for management companies under the Fashion Workers Act compared with the $10,000 surety bond their agent counterparts pay may be cost prohibitive. Further, requiring modeling agencies and creative management companies to pay out funds regardless of the client payment status would require them to operate like banks by fronting they money owed to them. Additionally, imposing an affirmative duty of reasonable efforts to procure employment would be contradictory to the incidental booking exception, as procuring employment would (facially) no longer be incidental, thus, nullifying the existing regulations. These are just a few examples of the numerous issues with the currently proposed legislation that will need to be addressed to ensure there is equity between the affected parties,^[27] however, many of the provisions are necessary to effectuate the needed widespread change.

A number of issues specific to the fashion industry, such as those described above, are addressed in the prohibitions section of the proposed bill. These issues are outlined and compared to existing laws in California and New York in Figure 2.

Figure 2. Prohibitions^[28]

While the prohibitions outlined in Figure 2 are necessary to address the specific difficulties faced by those in the fashion industry, nuanced drafting will be required to ensure the provisions adequately capture the entities intended to be regulated and leave out those who should not. Because the proposed bill will affect a wide variety of players in the industry,^[29] some of which have already spoken out,^[30] a special commission should be created, comprised of individuals representative of the varying parties, to survey the industry and issue a report to the legislature with findings and recommendations for changes in the bill.^[31] Once these issues are addressed, this much needed bill will provide the protections long overdue to those in the fashion industry while ensuring that the remedy is equitable.