Navigating SAG Micro Budget Agreements: A Filmmaker’s Guide

SAG Micro Budget Agreements Explained

SAG Micro Budget Agreements, as the name suggests, are Collective Bargaining Agreements primarily designed to apply to the creation of independent films produced on a micro budget that will be exhibited in a limited number of markets. While there is not an industry standard definition of a micro budget film, often these projects have production budgets of about $400,000 or less. These Agreements are the result of the collaborative effort of the SAG and Producers’ Alliance for Cinema and Television (PACT), an association formed by and on behalf of employers who produce and release independent non-studio projects. While the initial Agreement was effective on July 1, 2004, the SAG and PACT have entered into four renewals: December 31, 2006, December 31, 2009, December 31, 2012 and May 31, 2018. Although there have only been five iterations of the SAG Micro Budget Agreement, many of the terms , such as minimum salary, overtime and meal penalties have remained constant. Of course, over the years the various rates of pay and other financial consideration have changed over time.
The SAG Micro Budget Agreements exist to keep pace with the ever changing nature of filming and distribution. The term "Micro Budget Commercials" reflects the recent expansion of the Agreement to cover certain types of commercial production. In an effort to simplify the process for Union members, in 2010, SAG and the Alliance of Motion Picture and Television Producers (AMPTP), made available an alternate level of conditions for certain small budget commercials which use the same daily and weekly basic minimum salary standards set forth in the Micro Budget Agreement, but are subject to the Broadcast Internet Agreement (BIA) terms set forth in the SAG AFTRA Commercials Contract, among others.

Requirements for SAG Micro Budget Agreements

The production company must be a member of the SAG-AFTRA Producers Council and currently employ one or more individuals who hold a SAG-AFTRA signatory agreement. However, any production company can hire SAG-AFTRA members to work under the SAG Micro Budget Agreement if the production meets the budget and other requirements. For films (Feature, TV, Mini-Series, and Independent Animated Features) produced and/or distributed with SAG-AFTRA, the maximum possible compensation producers may pay or allow on any film produced under the SAG Micro Budget Agreement is $100,000, in total compensation. For episodic television productions, the maximum possible compensation producers may pay or allow on any episodic program under the SAG Micro Budget Agreement is $125,000, in total compensation. The budget restrictions for each type of production are outlined below:
• Feature Films: All budget figures refer to a Total Production Budget of the underlying source material, including but not limited to the screenplay, stage play, source book or any other literate work, budgeting not more than $1,500,000 in Total Production Costs. The Schedule A/Actor Contract minimum payment required for performers employed on features produced under a SAG Micro Budget Agreement is $125 per day, up to $1,000 total compensation. Those production companies employing performers for a fraction of the applicable daily minimum payments must employ a performer for a full 5 consecutive days, or more, including bump-ups.
• Short Photos: All budget figures refer to a Total Production Budget of the underlying source material, including but not limited to the screenplay, stage play, source book or any other literate work, budgeting not more than $500 in total production costs. The Schedule A/Actor Contract minimum payment required for performers employed on shorts produced under a SAG Micro Budget Agreement is $125 per day, up to $500 total compensation. Those production companies employing performers for a fraction of the applicable daily minimum payments must employ a performer for a full 5 consecutive days, or more, including bump-ups. No residuals are due for the following productions produced under a SAG Micro Budget Agreement; Radio Plays, Webisodes, Audio Books and Video Games.

Terms and Conditions of SAG Micro Budget Agreements

SAG Micro Budget Agreements comes with a host of terms and conditions that filmmakers need to be aware of. These first include "Budget Levels" determined by the film’s total budget. This then determines a minimum weekly rate for actors, as well as the minimum wages for day players and special performers. A $200,000 production must pay its principal performers a minimum of $600 per week, while productions costing $700,000 need to pay $1,400.
All other performers must receive the minimum wages set out in the SAG Basic Agreement. Whereas the minimum payment for a principal actor is $1054 per week ($484 per day), minimum payment for a day player is $853 ($318 per day). Special performers and stunt coordinators are paid based on the SAG Stunt Coordinator Agreement. Meanwhile, dancers are required to receive the minimum payment under the SAG Commercials Contract. Finally, health and pension payments are required to be made on any earnings over $2,500.
SAG Micro Budget Agreements also require that all productions be planned in a way that minimizes operating expenses, such as food or transportation. Additional producers must pay all costs associated with meals and accommodation provided to performers, over and above the guaranteed transportation, meals and housing that the producers have to provide. Producers are also compelled to provide a separate, private trailer for each principal performer, while additional trailer fees can be negotiated for special performers and signature performers above the minimum.
The Agreement also imposes a strict 12 hour day, broken down into an 8 hour work period, with a meal period of 2 hours. A turnaround period of at least 10 hours enforce is places between one 12 hour period and another, with no more than one audition and one wardrobe fitting per day (which can be scheduled within the 10 hour period). Finally, the Agreement stipulates that ADs cannot call upon extras without providing sufficient notice.

SAG Micro Budget Agreements: Advantages and Benefits

Many independent filmmakers are unaware of the benefits of opting to use one of SAG’s micro budget agreements when hiring union performers. A union performer is not only bound to work according to the terms and conditions of the collective bargaining agreement between SAG-AFTRA and the employer, but more importantly, the employer and the guild member are automatically bound to the terms and conditions of the Basic Agreement, without having to give it a second thought. In this way, early non-union performers are brought into the orbit of SAG, the community of professional actors, receiving the protections afforded by the Basic Agreement. Although it appears simple, what is achieved in this small step has great meaning to the film industry. Obtaining an early SAG-AFTRA micro budget agreement allows for the immediate access to the professional labor force that makes up the SAG-AFTRA roster; a ready supply of skilled and experienced personnel, many at entry level rates, who have achieved mileage here in California and have proven their mettle in small lots, episodics and independent features. Along with the labor force there is an entire WP/benefit component embedded in a slot B contract, which provides for the monetary allocation of the residuals delivered to the performer at a later date. An ongoing problem that has rarely been addressed is how to provide real SAG scale when there is no audience (internet, DVD, etc.) and no subscriber leakage. As soon as the Micro Budget Contract is signed, and the work begins, the film is then registered in the SAGAY Database, allowing the SAG daily payroll company to take payroll and issue the residuals to the artists as the project moves forward. If the employment date and termination date fall within the time parameters of a release (signatory) when the CD releases, and if the performer goes into union status prior to the cost effective release, then SAG’s plan will issue the residuals immediately upon shelf date. No waiting for the DVD to sell or for the pay TV subscriber to be counted. It is common for self-funded projects to have revenues that exceed that of the budget. Clearly, a set rule of not exceeding the budget is moot. A SAG-AFTRA micro budget contracts allows for a 100% increase to the budgeted payroll. So if the budget is $200,000, the gross income can be as high as $400,000, and the monetary recovery can still be counted as a micro budget project for the period specified in the contract. Thus, if the revenue is larger than anticipated, the residual investments can be funded out of the new cash flow and not out of a new "bank loan." This is one of the true advantages of the micro budget contract: it works seamlessly in the internet world. It does not require a final distribution advance to kick in like a minimum that belongs to the movie theatre system.

Applying for a SAG Micro Budget Agreement

To apply for the contract, production companies/filmmakers just have to answer a few questions online and provide documentation related to the project and its financing. The information requested is generally the same for non-union and union cast, although the non-union cast would use the Non-Union Micro Budget Agreement, rather than the SAG Micro Budget Agreement (SAG-AFTRA will assist during the application process with this). This process will result in one of three things: an Approved Micro Budget Agreement letter, a Request for Additional Information, or an initial denial.
If you receive a Request for Additional Information, you need to respond within 48 hours (weekends and holidays excluded) and submit the requested documentation online . Timing is critical; if you don’t respond to the Request for Additional Information within two weeks from the date you receive it, it’s considered an automatic denial. If the information is sufficient, an Approved Micro Budget Agreement letter will be issued. You will then have until the last day of principal photography to submit the executed contract and remaining documents.
If you are denied, you will not have the ability to appeal. You should then contact the Contracts Desk within SAG-AFTRA to find out why the application was denied and if/how you can remedy the situation. The Contracts Desk will make a good faith effort to offer guidance, but the decision is in the hands of the SAG-AFTRA Contracts Department. The Foreign Language Dubbed Version Agreement and the Low Budget Contract Agreements do not require an application.

Issues and Solutions with SAG Micro Budget

The most common challenges when negotiating a SAG Micro Budget Agreement are:

• Lack of understanding. Many filmmakers do not remember the importance of utilizing the SAG Micro Budget Agreement. To many, an Independent Film Agreement for a low budget film appears to provide the same coverage, but nothing could be further from the truth. Chapter 8: The SAG Micro Budget Agreement has an entire section devoted to the reasons why the SAG Micro Budget Agreement is invaluable to filmmakers and performers alike.
• There are deadlines that must be met. Many producers forget to send the material out within the time outlined in the SAG Temporary Contract for Initial Studio and Recording Use pursuant to the terms of the SAG Micro Budget Agenda. It is important for the Producer to become familiar with the specific dates for each stage outlined in Chapter 8: The SAG Micro Budget Agreement.
• Pricing Guide. It is important to understand that costs are subject to change. Chapter 10: The SAG Micro Budget Agreement outlines any changes in the pricing. It is also important to note, that there can be additional fees for music, sound design, voiceovers, proofreading, etc. Chapter 11: The SAG Micro Budget Agreement attaches the Sample Agreement and if the Performer is entitled to a "Cost Statement", the Sample Section 5: The SAG Micro Budget Agreement is attached.
• Contract terms are set in stone. It is important to always be negotiating your contract to cover new ways in which you may wish to use your film, but you must be aware that deadlines continue to move and once all parties sign it is expensive, time consuming and difficult to renegotiate. Chapter 12: The SAG Micro Budget Agreement covers the process and reasoning for the SAG Producers Association’s fees.
• Be prepared. The SAG producers Association and its members negotiates heavy under a license agreement for the SAG Micro Budget Agreement. When a Producer seeks compensation for distribution, it is not uncommon for the unions and guilds to hold all funds in escrow until the negotiations are finalized. It is imperative that you understand the reasoning behind the SAG Producers Association’s escrow and attorney fees for the SAG Micro Budget Agreement, and how to finalize the agreement prior to distributing the funds. Chapter 13: The SAG Micro Budget Agreement.

SAG Micro Budget Success Stories

Over the past several years, many independent productions have embraced the SAG Micro Budget Agreements as a way to have their projects "union." Like many filmmakers, they have also found the flexibility and advantages of using the SAG Production Partner Program over the traditional SAG Low Budget Agreement. Here are some real world examples of how the SAG Micro Budget Agreements have worked to the advantage of filmmakers:
Some examples in the film space are these: The popular 2012 psychological thriller Compliance was finalized under the SAG Micro Agreement, which allowed then director Craig Zobel’s devilish story about the spiral of compliance to authorities to be an all-union cast.
A "very" low budget 2015 horror film – Which Way to Adana was produced in Portland, Oregon under the SAG-AFTRA Micro Budget Agreement became an underground success with film fanatics. The director of photography on the film – an Oregon native – was an experienced SAG-AFTRA member and helped arrange the union deal.
From the world of streaming media are the following SAG-AFTRA Micro Budget success stories: The hit Comedy Central show "Review" features SAG-AFTRA Member Andy Daly as a hapless critic who spends each episode reviewing a different endeavor (like horse ownership, infidelity, a life without consequences, etc), that would be as deleterious as possible (as you might have guessed from the title of the series) . The show produced by the brilliant mind behind "The Daily Show" is yet another Project produced under the SAG-AFTRA Micro Budget Agreements.
The NFL Network has produced many union projects over the years viewable on its cable network and online. The Program is currently expiring as of January 1, but in the meantime, many network shows/shorts and commercials have been produced for the NFL Network under the SAG Micro Budget Agreements.
The 2016 Sundance Film Festival winner for directing, "The Birth of a Nation." Talented writer director Nate Parker tells the story of a literate enslaved slave who leads an uprising in Virginia in 1831 in his first feature film. He received a standing ovation, but the film was not exempt from controversy for his portrayal of the slave rebellion and also for a 1999 criminal case against the actor. The film was also controversial because of the bad behavior that followed the festival awards, with two distributions pulling out and its critics calling the film a "slave "rape revenge fantasy." It was produced under the SAG-AFTRA Micro Budget Agreement and won the coveted audience award even in the midst of the controversy.