compiled by Jeff Burman

Sounding an ambitious tone, California Governor Arnold Schwarzenegger
promised to put the brakes on runaway production through tax incentives as he introduced a quintet of high-profile appointees to the California Film Commission (CFC), writes reporter Dave McNary (Variety, April 15, 2004).

“Until now, no one paid any attention in Washington to the entertainment industry, even though it is such a huge, successful export business,” said Schwarzenegger at a news conference in Sacramento. “But people kind of brushed it aside and never took it seriously. Now I will make sure that it is taken seriously, the whole thing, and that there will be tax incentives in the near future.”

Schwarzenegger welcomed Danny DeVito, Bill Duke, Clint Eastwood, Tom Werner and Lili Zanuck as new members of the CFC.

Schwarzenegger hopes to use the influence he and his celebrity appointees can exert to keep industry jobs in California, by lobbying Congress and the Legislature for tax breaks and other
incentives, and calling in personal favors from executives, who are considering
taking projects to other states or countries to save money, writes Capitol reporter Margaret Talev (Sacramento Bee, April 16, 2004). Efforts in recent years to pass such legislation have fallen short in Sacramento and Washington.

As with many other parts of the California state government, the CFC has been hobbled, adds Dave McNary (Variety, April 11, 2004). It was forced in the fall to cut its 20-person staff by half at its Hollywood headquarters after being allocated a 2003-04 budget of $1.2 million, compared with $12 million in 2002-03, with the proviso that operations be limited to permitting for shoots on state property. Those cuts effectively ended marketing and incentive efforts, including the Film California First program that subsidized fees paid by producers for government services during filming on public property, and allocated $19 million in rebates to productions as part of its goal to put the brakes on runaway production.

Senate Approves ‘Runaway Production’ Tax Incentive

After nearly a year of behind-the-scenes lobbying, the Senate approved a bill in May seeded with tax benefits for Hollywood. The show business benefits were quietly buried in the Senate version of the Jumpstart Our Business Strength bill (SB 1637), a corporate tax bill which, among many other things, contains a tax incentive for studios to film in the U.S. instead of going overseas. Overall, however, the movie business may wind up taking a hit of nearly $1 billion over 10 years, writes Susan Crabtree (Variety, May 12, 2004). The overarching legislation would give U.S. manufacturers tax breaks on their income taxes in exchange for giving up an export subsidy that the World Trade Organization has deemed illegal. Because of that ruling, the European Union has already imposed tariffs on most U.S. exports. At press time, the bill had yet to be reconciled in conference committee.

CEO/WorkerPay Ratio Is 301:1

After declining for the last two years, the gap in pay between average workers and large company CEOs surpassed 300-to-1 in 2003. In 2002, the ratio stood at 282-to-1. In 1982, it was just 42-to-1. According to Business Week’s 54th Annual Executive Compensation Survey, the average large company CEO received compensation totaling $8.1 million in 2003, up 9.1% from the previous year.

The average production worker fared less well in 2003. Their annual pay was $26,899 in 2003, up just 2.1% from 2002, according to the Bureau of Labor Statistics. The average worker took home $517 in their weekly paycheck in 2003; the average large company CEO took home $155,769 in their weekly pay (Common Dreams Progressive Newswire, April 14, 2004).

AFL-CIO Targets Steep CEO Pay

	“ Sadly, the Bush Administration is continuing its relentless assault on the rights of millions of hard-working employees across the country. In the altering Bush economy, workers must worry about losing their jobs, losing their pay, losing their health benefits, losing their retirement benefits, losing their unemployment checks and now losing their right to higher pay for working overtime,” said Senator Ted Kennedy, D-Mass., on April 20, in Washington. (AP/Wide World Photos)

As executive-pay packages rose dramatically over the last year despite well-publicized instances of poor CEO performance and declines in share prices, shareholders are increasingly withholding votes from so-called “derelict” directors to send a message that overly generous pay packages must stop.

To help restore accountability to the executive compensation system, the AFL-CIO has launched a vote “no” campaign targeting “derelict” directors at 10 companies where CEOs received over-the-top pay packages. “We are urging shareholders to take a proactive approach in stopping runaway CEO pay dead in its tracks,” said AFL-CIO Secretary-Treasurer Richard Trumka. “Irresponsible directors must be removed to rein in excessive CEO pay that
ultimately robs working families of their retirement security.” The campaign can be found on the AFL-CIO’s Executive Paywatch website: www.paywatch.org.

Revised Overtime Rule ‘Reforms’

The Bush administration has revised its new overtime rules, saying that they would guarantee overtime protection for more workers and take it away from less than it had initially proposed last year. The administration has estimated that about 107,000 workers, now earning more than $100,000, will lose overtime protection. Critics contend that the regulations, set to take effect in August, could actually cost millions of workers overtime pay – although likely not as many as the eight million they had earlier predicted. Organized labor and Democrats vowed to make it an issue in the November election (New York Times, April 21, 2004).

In addition to raising the ceiling for protected overtime workers, the new regulations would also boost the floor. Under them, white-collar workers earning less than $23,660 a year would be guaranteed overtime protection, up from the current $8,060. The previous ceiling was $65,000 (S.F. Chronicle, April 20, 2004). The changes marked the first comprehensive revision of the 1938 Fair Labor Standard Act regulations on overtime rules in five decades. The original Act codified the 40-hour workweek by guaranteeing overtime pay for each additional hour worked. It exempted administrative, professional and executive workers based on job duty tests, which the new rules revise and update.

Senator Tom Harkin (D-Iowa), a critic of the proposed rules, said “The Bush administration simply is not trustworthy on this issue, and I am beyond skeptical about these so-called revisions. This President has gone out of his way to undercut working families’ right to overtime pay for overtime work.”

The Senate, in early May, voted to block the Bush “reforms,” approving an amendment authored by Senator Harkin, which would prevent any overtime reductions. At press time, the bill still had to face several further legislative hurdles (New York Times, May 5, 2004).
Meanwhile, organized labor took Harkin’s argument further, warning that the President’s so-called reforms are riddled with loopholes, which may result in a significant rollback of overtime (S.F. Chronicle, April 27, 2004).

“A close reading of the Bush administration’s new overtime regulation finds that under the new restrictions,” said AFL-CIO President John Sweeney, “many middle-income working families are at risk of losing overtime pay at a time when wages are already flat or falling for millions of workers. While the administration has apparently abandoned its efforts to strip overtime rights from workers in a few high-profile occupations, as a result of intense pushback from working families and a public relations fiasco, it has now decided to target overtime rights for many middle-class workers who have received less attention. Cutting overtime pay and weakening overtime protections discourages job creation and encourages businesses to overwork their existing staff rather than hire new workers.”

Overtime Rules & Media Workers

	“The rules are riddled with loopholes and calculated ambiguity designed to give employers leeway to exempt employees from overtime,” said Senator Tom Harkin, D-Iowa, on April 28, in Washington. “Working families are fed up with the administration’s schemes and spin. They have a simple request: ‘Give us an iron-clad guarantee that our overtime rights are safe.’ ” (AP/Wide World Photos)

President Bush’s new overtime exclusions will not affect those of us working under a collective bargaining agreement. Collective bargaining agreements that guarantee overtime, as does the IATSE agreement, will still prevail. But the new rules could be a threat if they are used as a bargaining lever against us in future contract talks.

With that firmly in mind, many workers who earn between $23,660 and $100,000 may still lose their eligibility for overtime pay if their work falls under any of several new categories. If an employee leads a team of other employees assigned to complete major projects for the employer, that employee may lose overtime rights, even if he or she doesn’t have direct supervisory responsibility. This clause allows management to disqualify workers from overtime simply by appointing them “team leaders” (New Section 541.203).

Another new rule that could exempt overtime for media workers falls under a category called Independent Judgment and Discretion. This rule would deny overtime if the primary duty of an employee “includes” the exercise of discretion and independent judgment. The primary duty no longer needs to occupy 50% of the employee’s time for the employee to be exempt, as it did previously. (New Section 541.200(a)(3)) These are just a few of the myriad ways overtime eligibility may be denied under Bush’s new rules.

“The Bush overtime changes will take money directly out of the pockets of workers and put it into the hands of the President’s corporate campaign contributors. This has to be one of the biggest pay cuts in American history - special delivery to American workers straight from the White House. It is a huge windfall for large corporations,” said AFL-CIO President Sweeney.