Do I keep my profit participation if I sign a severance agreement?

Your profit participation on projects you worked on should survive your departure. Make sure the severance agreement explicitly confirms that your backend points remain intact. If the agreement is silent on this issue or tries to modify your participation, that's a critical negotiation point.

Can my entertainment severance agreement override my deal memo?

Your existing deal memo or employment agreement may guarantee certain terms that the severance agreement cannot reduce. If the severance tries to override pre-negotiated provisions, the deal memo terms generally take priority. Have an attorney compare both documents carefully.

Does my guild membership affect my severance agreement?

Yes. If you're a member of WGA, DGA, SAG-AFTRA, IATSE, or another entertainment guild, your collective bargaining agreement may set minimum separation terms, protect residual rights, and limit what you can waive. Guild-covered work carries protections that survive your departure.

Entertainment Industry Severance Agreements in LA: What's Different

The entertainment industry in Los Angeles operates differently from almost every other sector when it comes to employment relationships and severance. Whether you're a studio executive, a network employee, a production company staffer, or working in the business side of entertainment, your severance agreement involves issues that most employment attorneys rarely encounter.

The Deal Memo and Employment Agreement

Many entertainment industry employees have deal memos or employment agreements that include specific severance provisions. These pre-negotiated terms may guarantee a minimum severance amount, specify what happens to profit participation and backend payments, address credit obligations, and define how your departure is communicated to the industry.

If you have an existing deal memo or employment agreement, your severance agreement must be evaluated in the context of those pre-existing commitments. The company can't offer you less than what your deal already guarantees. And if the severance agreement tries to override terms in your deal memo, that's a negotiation point.

Profit Participation and Residuals

In entertainment, compensation often includes backend payments tied to the performance of content you developed or worked on. Your severance agreement needs to clearly address:

Ongoing profit participation. If you negotiated backend points on projects you developed, those rights should survive your departure. The severance agreement should explicitly confirm that your profit participation remains intact.

Credit. Your credit on projects you worked on is both a professional and financial issue. Credit determines residual eligibility in many cases. Make sure the severance agreement doesn't strip or modify your credit on completed or in-progress projects.

Development projects. What happens to projects you developed that haven't been produced yet? Do you retain any rights? Does the company owe you a payment if they produce the project after your departure? These are entertainment-specific issues that require entertainment-specific knowledge.

Guild and Union Considerations

If you're a guild member (WGA, DGA, SAG-AFTRA, IATSE), your guild membership creates additional protections:

Your guild's collective bargaining agreement may set minimum severance or separation terms. Guild-covered work carries residual obligations that survive your departure. You can't waive guild-protected rights in a severance agreement. Your guild may have resources to review the agreement or advise you.

Even if you're not a guild member, understanding whether any of your work was guild-covered matters for residuals and credit purposes.

Non-Disparagement in a Small Town

Hollywood is a village. LA's entertainment community is tight-knit and everyone knows everyone. The non-disparagement clause in an entertainment severance agreement carries more practical weight than in most industries because your reputation is your career.

Negotiate for mutual non-disparagement (they can't trash you either). Negotiate the specific language they'll use when people in the industry ask why you left. In entertainment, "she left to pursue new opportunities" versus "she was let go" can determine whether you get your next job.

Remember that under SB 331, they cannot prevent you from discussing harassment, discrimination, or illegal conduct, regardless of what the non-disparagement clause says.

The Transition Period

Entertainment departures often involve a transition period where you're technically still employed but no longer performing your role. During this period, you may be winding down projects, transitioning relationships, and managing your departure narrative. The severance agreement should address your compensation, title, and obligations during this transition clearly.

Confidentiality and NDAs

Entertainment companies are particularly sensitive about confidentiality. You may have knowledge of unreleased projects, talent deals, content strategies, and competitive intelligence. The confidentiality provisions in your severance agreement may be more extensive than in other industries.

That's not unreasonable, but the scope should be defined. You can keep secrets about unreleased content without being prohibited from discussing your employment experience, your compensation, or the conditions of your workplace.

Get Industry-Savvy Representation

Entertainment severance agreements require an attorney who understands the industry. Profit participation, credit, guild rights, deal memo interpretation, and the informal networks that drive hiring in Los Angeles entertainment are all factors that a generic employment attorney might miss.

Contact our team for a free consultation. We serve entertainment professionals throughout Los Angeles and understand the industry-specific issues that affect your severance.