Writers Guild of America Strike Averted with Health Care Conciliations

Guild’s health plan was in danger of going under without action

Allen Smith, J.D. By Allen Smith, J.D. May 3, 2017
Writers Guild of America Strike Averted with Health Care Conciliations

Film and TV writers—they're just like us! One of the main sticking points in the recent negotiations between the Writers Guild of America (WGA) and the Alliance of Motion Picture and Television Producers (AMPTP) was health care—a common bone of contention in labor disputes.

Negotiations 'Challenging'

The WGA said a strike planned for May 2 had been averted and noted in a statement that contribution increases to its health plan should ensure its solvency for years to come. The deal's details are expected to be revealed to members on Thursday, but the union already highlighted this and other victories.

Other wins for the union included a 15 percent increase in pay TV residuals, roughly $15 million in increases in high-budget streaming or video on demand residuals and, for the first time, residuals for comedy-variety writers in pay TV. The union also secured job protection for parental leave.

Union members were particularly interested in the health care provisions, and some are betting the union had to make some concessions on them.

 "The WGA's health plan has been unusually generous—no employee premium and only a $50 per month dependent premium; low deductibles and out-of-pocket maximums—and as a result it has had unique funding issues," said Scott Witlin, an attorney with Barnes & Thornburg in Los Angeles.

"The management of the plan has been monitoring the reserves, which were seen as declining too rapidly to be sustainable," he noted. The studios were willing to put in more money but were insisting that the union agree to having the writers share costs so that the plan would be more in line with most health care plans. This made negotiations "challenging," he said, but "the truth of the matter is that the current situation was unsustainable and the entire WGA health plan could have gone under if the plan was not reformed."

Making health care solvent isn't an issue typically subject to much disagreement, but rather who pays  what is controversial, noted Bradley Kafka, an attorney with Polsinelli in St. Louis.

"Health care is a major issue that most employees and organizations are grappling with," agreed David Smith, Ph.D., professor of economics with Pepperdine Graziadio School of Business and Management in Los Angeles. "Clearly, it's a key part of compensation, and there are inherent trade-offs between overall compensation, wages and cost-sharing."

As for the guild members' additional compensation, Smith said, "The entertainment industry is going through a significant transformation in terms of how revenues flow to the industry, based on changing consumer behavior and advancing technology," as streaming TV and movies becomes more popular. "Labor union agreements lack the flexibility to change in this uncertain environment, creating a need for renegotiation when the contracts expire."

Could the Writers Have Been Replaced?

Had there been a strike, the writers in theory could have lawfully been replaced. "Writers are not necessarily irreplaceable, even on a series," said Ivy Kagan Bierman, an attorney with Loeb & Loeb in Los Angeles. "For example, the writers on 'Fashion Police' walked off and were permanently replaced. However, writers on ongoing dramatic series and comedy series are more difficult to replace."

[SHRM members-only HR Q&A: Are all types of strikes protected under the National Labor Relations Act?]

Smith noted, "When you have exceptional talent, it is better to look for ways to achieve common ground, rather than assuming there is an endless supply of a scarce resource."

'Upfronts' Coming Soon

The timing of negotiations was in the WGA's favor as the producers were preparing for "upfronts," where the studios go to New York City to try and dazzle advertisers into buying advertising spots on upcoming shows in the fall season. Had there been a strike, it would have been difficult to know what shows would be ready in time for the fall season, so advertisers might have been reluctant to buy, said Jerry Glover, an attorney with Leavens, Strand & Glover in Chicago.

The tentative deal that was struck in the wee hours of May 2 are "a good result for the industry," Kafka said. Entertainment creators don't need a strike or the competition of viewers reading, conversing, going outside to exercise or attending sports events instead of watching TV shows or movies, he noted.

The WGA and the AMPTP did not respond to requests for comment.


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