Trust Accounts

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Trust Account Language Does Not Protect Child’s Earnings & Creates Confusion Increasing Missing Trust Account Earnings

The DOL proposed rule does nothing to protect the child’s earnings and only creates confusion increasing the likelihood of missing Trust Account Earnings.  Trust account payments are not a benefit, or additional pay.  They are a portion of the child’s earned wages.   All workers, regardless of age, deserve to have 100% of their pay in a timely manner.

Trust Account Foundational Issues Prior to Proposed Rule Change

Currently, the earnings of child performers in New York are legally the property of the head of household and are not protected as there is no provision in NY law establishing those earnings as solely those of the child performer. In other words, parents in NY cannot “steal” what is legally theirs. Unlike the California Coogan Accounts, the New York UTMA/UGMA Trust Accounts are not blocked accounts so that parents have the right to use the funds at any time, as long as it benefits the child.   Therefore, there is no guarantee any funds will be available when the child reaches the age of majority. This is contrary to the Purpose and Scope of Subpart 186-1:

“The purpose of this Part is to protect the safety, health, and well being of child performers, to ensure that child performers who work or reside in the state of New York are provided with adequate education, and to ensure that a portion of the child performer’s earnings are kept in trust for the benefit of the child performer until such child reaches the age of majority.”

The Missing Trust Account Earnings Problem

The Comptroller of the State of New York has become the dumping ground for employers who find it easier, cheaper, and more efficient to send one check to the State and avoid the labor intensive task of individually transferring wages to hundreds of children. The proposed rule does nothing to alleviate the issue of what California has dubbed “missing Coogan.” The NY Comptroller has been complaining about this issue several years.  In fact, the rule creates a complicated system of payment dates that will guarantee more of the children’s earnings will go missing or be dumped in the Comptrollers’ already over-burdened office as the Department of Labor and the Comptroller do not share information.

In 2004, California addressed the issue of missing Trust Account earnings or “missing Coogan” when it passed SB210.  Now law, this legislation closed loopholes within the Coogan system which had seen millions of dollars go missing in just a few years.  There still remains $2 million dollars in the Unclaimed Coogan Fund in California representing over 22,000 children due to years of loopholes.

Confusing Payment Dates & Requirements Will Add To The Problem Of Missing Money

The Trust Account system, whether UTMA/UGMA or Coogan is uniquely burdensome and complicated for employers, allows the employers to hold a portion of the performer’s earnings creating interest income, and increases the possibility that children’s earnings will be lost.

The proposed rule creates an even more confusing matrix of possible payment dates depending on the length of the child’s employment:

186-4.5 Trust account transfers by the employer.

(1) If the performance contract is for a period of thirty days or less, the employer, or payroll service company, is required to transfer not less than fifteen percent of the child performer’s gross earnings to the custodian of the child performer’s child performer trust account within thirty days following the final day of employment…..”

(2) If the performance contract is for a period longer than thirty days, the child performer’s employer, or payroll service company, shall transfer (by check or electronic means) not less than fifteen percent of the child performer’s gross earnings to the custodian of the child performer’s child performer trust account every payroll period…”

Solutions To Solve The Problem of Missing Earnings

Require Trust Accounts be established prior to issuance of temporary permits.

Establishing Trust Accounts prior to issuance will reduce the volume of unclaimed Trust Account money and make it easier for employers to comply with the Law.

Valid permits should require attached Trust Account information.

This recommendation is consistent with California law so producers are familiar with this process. This ensures that the employer, who needs to pay the child, receives the information on the first day of production along with the work permit.  It also eliminates the common excuse that parents failed to provide the employer with the child’s Trust Account information.  Failure to obtain a copy of a Child Performer Work Permit prior to the child’s performance carries it’s own legal consequences.

Payment to the Child’s Trust Account should be made concurrent with regular pay.

Do not allow employers to hold the earnings of a worker.

Allow The NYS Comptroller To Access Work Permit Information

Currently, the Department of Labor and the Comptroller do not share information.  Allow the NYS Comptroller to access the work permit information so that they can deliver these monies owed directly into the child performer’s Trust Account or to the child, if he or she has reached the age of majority.

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