Report regarding investigation directed to be made by the President in his Executive Order of November 27, 1933, approving the Code of Fair Competition for the motion picture industry (July 1934)

11 tunity to negotiate for the continuation of the services of the affected employee. This latter provision is designed to guarantee that the bidding for services shall take place in the open and that the employing producer shall have an opportunity to meet any offers made by a competing producer, thus being able to retain the services of the affected employee under an open competitive situation. Employee. — Two factors apparently are designed to guard the interests of the employee: (1) He has the full right under its operation to decide which offer he will accept. He is not compelled to remain with his present employer nor is he compelled to accept the offer of the competing producer, even if it is a higher offer. He is therefore given full opportunity in open competitive market to command the highest offer made for his services under terms which are attractive and agreeable to him. (2) The employee is protected against the possibility of loss of both offers. The code compels the competing producer to make his offer firm and hold it open in order that the artist may take advantage of it if he so desires. The employees affected object to the provisions in their entirety, however, claiming that in practical operation the results are directly opposite to those which apparently would be achieved. Competing producer. — Opportunity is given to a competing producer to bid on any basis he sees fit for the services of the desired artist. There is no limitation upon the generosity of his offer either in terms of compensation or period of employment. His offer would naturally tend to be higher than that of the then employing producer. Employing producer. — No substantial restrictions are placed by the provisions of this section on the freedom of the employing producer to negotiate with an employee under contract and to offer as attractive terms of employment as he desires. It should be noted, however, that under the terms of this provision the employing producer is allowed a maximum of only 3 days in which to negotiate for the continued services of the artist, and that this maximum term may be further reduced in the discretion of the registrar. Such a provision places a somewhat arbitrary power in the hands of the registrar — one which conceivably might be used to restrict the employing producer in effectively negotiating with the artist who has received a competing offer. One other restriction is placed upon the freedom allowed the employing producer in meeting the offer of a competing producer for the services of employees under written contract for a period, inclusive of options, if any, of less than 1 year, who receive $250 per week or $2,500 per picture, and employees under written contract for 1 year, or at least 3 pictures, inclusive of options, if any, who receive $250 per week or $2,500 per picture (section 2 (b) and (c)). With respect to such employees a competing producer need give notice of an offer only in cases where an artist is under written contract and where the employing producer has made an offer to renew or extend this contract prior to the last 30 days of its term. However, the same considerations as previously enunciated with respect to the employees' contentions, and those which the public interest has weighed, would apply. It is therefore recommended that article V, division B, part 5, sections 2 and 3, be indefinitely suspended. Offers of Employment Subsequent to Expiration Date of Contract The remaining sections, article V, division B, part 5, sections 4 and 6, are designed to preserve in some degree even after the expiration date of a contract the so-called "goodwill" value which a producer has built up in an artist. This section provides that if the last employing producer has made a bona fide firm offer for the services of an employee who has received from $500 to $1,000 per week, or from $5,000 to $10,000 per picture, the last employing producer shall have notice of offers made by competing producers within a 3-month period subsequent to the expiration of the employment. In cases where the compensation of such employee was more than $1,000 per week or more than $10,000 per picture, the last employing producer shall be entitled to receive notice of offers made by competing producers within 6 months subsequent to the expiration of the contractual relationship previously existing. Further provision is made with respect to the determination by the Code Authority of the good faith of offers so as to entitle producers to notice of subsequent offers, and procedure is also devised whereby, after notice has been given to the last employing producer, he shall be allowed a reasonable time, not to exceed 3 days, within which to conduct negotiations designed to meet the offer of the competing producer. Machinery is also provided designed to furnish safeguards for the exercise by the former emplo}Tee of his free choice for accepting or rejecting any offers made. The theory of prior repute forms the basis for the provisions of this section dealing with the control of competitive bidding for the services of artists prior to the expiration date of their contracts. This theory, supported by producers, contends that employees engaged in artistic and creative work have been enabled to a substantial degree to secure large compensations by reason of the efforts and the facilities furnished by their producer-employers. Moreover, it contends that by reason of such circumstances the producer-employer possesses an ethical and moral right to be made acquainted with offers made by competing producers for the services of former em