Producer's Guide: SAG-AFTRA Residual Pay

In 2023, SAG-AFTRA secured a groundbreaking contract with the AMPTP, locking in $1 billion in new compensation, including updated SAG-AFTRA residual pay. This contract significantly benefits performers, especially in streaming, where they now receive bonuses on top of standard residuals.For most actors, these residual checks are their main source of passive income. 

As a producer, you need to stay on top of the new SAG-AFTRA residual pay guidelines. When drafting your production agreement’s fee schedule, it's crucial to know the exact payments you'll owe. 

This guide covers common questions about residuals but always check with an entertainment lawyer to ensure your contracts are watertight and that every detail is aligned with the updated rules.

Main points

• Residual pay is crucial for performers, especially in streaming platforms, as it provides ongoing income beyond their initial compensation.
• Residuals for TV shows kick in after the first airing, while for high-budget streamers it starts after 90 days.
• For theatrical films, actors receive residuals for DVDs, downloads, and new media after the initial theatrical run.
• The amount of residual pay depends on the project type, runtime, budget, and the performer’s role.

What is SAG-AFTRA residual pay? 

You have to pay union actors for their time on set. However, residual pay is a form of financial compensation paid to on-screen performers who are members of the Screen Actors Guild. It goes beyond that original compensation. 

For a TV show, the original compensation covers the first broadcast airing of a show and time on set. Residuals kick in for free television after one airing and a week of AVOD. On HBO and other pay TV, residuals can occur after 10 exhibition days. With high-budget subscription streaming on platforms like Disney+, performers can begin to earn residual pay after the first 90 days of a program going live.

In theatrical films, the session fee covers a performer’s work during production plus the theatrical run of that project. Film actors then receive residuals for DVDs, downloads, and other new media.

How much are residual payments? 

Figuring out how much you can expect to pay in residuals is almost like asking a riddle. The exact amount depends on many factors, including:

• What type of project and where it’s airing
• Your project’s runtime and budget
• Contracts in place at the time of the release
• Performer’s role in a production
• The amount of revenue a project makes when sold or licensed for reuse

Bottom line: Since SAG-AFTRA rates can be complicated, make sure your payroll solution facilitates compliant payments to SAG and other unions. 

Do actors get paid for reruns?

That’s the million-dollar (or one dollar) question. Like most things in Hollywood, it’s all about negotiations. The one thing that’s consistent is that unless the actor negotiates a larger percentage of the gross receipts, how much actors get paid for reruns decreases every time the program airs.

The Brady Bunch stars don’t receive any type of residual pay. On the flip side of the coin, each cast member of Friends made $20 million per year as of a few years ago just off syndication. Not that Warner Bros. is losing sleep over it. They’re making a reported $1 billion per year between all their Friends-related deals. 

Do actors get SAG-AFTRA residual pay from Netflix?

Yes, actors get SAG-AFTRA residual pay from Netflix and the latest SAG-AFTRA contracts significantly bumped up the residual pay performers earn for subscription-based streaming. View a summary of the latest SAG-AFTRA TV/Theatrical contracts.

For example, 2020 SAG-AFTRA contracts cap the residual rates for performers in high-budget programs made on subscription streaming services at 45% for the first residual. The 45% residual rate covers the year immediately following the first 90 days of exhibition. The year after is 40%, and the residual percentage decreases to 35% for year three. 

When are residuals due? 

Like most aspects of SAG residuals, the due date depends. 

For TV programs, residual pay to SAG-AFTRA is due:

• Network prime time: Thirty days after the air date
• Non-prime time network: Thirty days after the air date
• Syndication: Four months after the air date
• Foreign free TV: No later than 30 days after the producer obtains knowledge of the first foreign telecast and never later than six months after that first telecast
• Basic cable: Quarterly when the producer receives revenue
• Supplemental markets: Four months after the initial exhibition, the quarterly when the producer receives revenue

With theatrical releases then released elsewhere: 

• Network prime time: Thirty days after the initial broadcast, then quarterly when the producer receives revenue 
• Free TV, non-network: Four months after the initial broadcast, then quarterly when the producer receives revenue
• Supplemental markets: Four months after the initial exhibition, then quarterly when the producer receives revenue

What do you as a producer need when paying SAG-AFTRA residuals?

Your payroll provider can walk you through any documentation they need to process residuals on your behalf. For many projects, you have to provide the following:

• An allocation for reuse markets; total distributors’ gross receipts or licensing fee revenue (your SAG-AFTRA agreement may have a default allocation for residual markets) 
• The Collection Account Management Agreement (CAMA), if one is in place 
• A final cast list and your production’s starting/ending credits

What on-screen talent is entitled to residual pay? 

Most often, non-union projects do not pay residuals, as there is no regulated system in place to track someone down decades later (much less years) and compensate them. 

However, SAG-AFTRA performers hired under (or upgraded to) a principal performer whose performance remains in the final product require residual pay. All of the following are also entitled to residuals:

• Professional singers
• Stunt performers
• Stunt coordinators
• Pilots
• Dancers employed under Schedule J 
• Puppeteers

Up until 1960, SAG actors didn't make a penny beyond what they made during production. That’s when SAG members went on strike, opening the doors to a compromise. 

Ronald Reagan, then an actor and the temporary SAG president, negotiated a settlement with producers and the heads of major studios. The guild earned residuals for actors on any projects starting 1960 and onward. Plus, a $2.65 million payment that covered the television rights for pictures made between 1948 and 1959. The money went towards the guild’s first pension and welfare plan.

What is a residual bond? 

SAG-AFTRA may require residual bonds to guarantee residual payments after releasing your project. That way, guild members get residual pay even if your project is a bust. 

You can factor the residual bonds in your budget or negotiate the requirement be waived in a CAMA. Read on to learn more about this agreement. 

Why you should chase waterfalls

In film production, a waterfall shows how money is distributed after revenue comes in. It outlines who gets paid first and the order of payments. For instance, if a bank invests, they receive their payment first, followed by guild residuals, salary deferments, and then profit participants and producers.

These waterfall provisions are usually in the financing agreements or collection agreements investors sign during pre-production. The amount that producers and investors will recoup before an investor's equity is paid in full depends on the recoupment schedule in your financing agreement.

Along with the waterfall schedule, CAMA also defines the bank and third-party rights manager and royalty company (such as Fintage House) that administers and distributes profits on a project to all parties. 

While setting up a collections company can cost four figures or more, you can avoid paying that as a producer upfront. Talk to your lawyer about whether listing the setup fees as a line item in your budget that instead comes out of the revenue (after money comes in) makes sense for your project. They can also discuss with you the pros and cons of specifying this in your agreements.

Wrapping up

Navigating residual pay, much like other budget planning, requires a ton of legwork. As you’re putting together your production budget, check out our guide on how to budget SAG-AFTRA payroll.

‍Reach out to us if you have any entertainment payroll questions.

Final FAQ

What is SAG residual pay?

SAG residual pay is ongoing compensation paid to Screen Actors Guild (SAG) performers for the continued use or rebroadcast of their work beyond its initial airing or release. It ensures that actors receive additional payments when projects like TV shows, films, or streaming content are distributed or sold across various platforms.

How does SAG-AFTRA residual pay work?

In the Producer's Guide on SAG-AFTRA residuals, actors get paid upfront for their work on set and the first broadcast of a TV show. After that, they start earning residuals for free TV once it airs again and a week of AVOD. The rules for streaming platforms, though, work a bit differently.

What is the residual rate for SAG-AFTRA?

In the first year after the initial 90 days of airing, performers get a 45% residual rate. This drops to 40% in the second year and then down to 35% by the third year. So, when do residuals need to be paid? It varies depending on the project, but SAG-AFTRA residuals are typically due after the first airing of TV shows.

Who receives SAG residuals?

Only principal performers are eligible for SAG royalties, while background actors don't get residuals. Principal performers and a few other vital roles receive these payments. Are you curious about when SAG residuals are paid? They follow a specific schedule set by SAG-AFTRA, depending on whether the project was made for TV or theatrical release and where it's distributed afterward.