If you’ve ever worked on a film set or had to pay a crew member, you probably know that most film professionals have a common favorite phrase: “What is my day rate?”
Everyone wants to know their day rate because day rates are the most critical factor in determining how any crew member receives their financial compensation on any film, TV, or commercial production. In that very important sense, day rate pay makes the entire world of professional filmmaking go round.
…Or does it?
In this post, we’re taking a closer look at the complex world of production payroll and maybe- just maybe- busting the myth of day rates once and for all.
Let’s hop into this rabbit hole.
What is a day rate? What do “day rates” really refer to? And how do they work? On the surface, these are simple questions.
The answers, however, are slightly more complicated than you might expect.
Let’s start with the basics.
Speaking from a purely colloquial perspective, the answer to “What is a day rate?” is relatively self-explanatory. Day rates are simply a method of calculating an employee or contractor’s rate of pay according to the number of days that they’ve worked.
For instance, if you hired an employee- let’s call him “Kenny”- at a day rate of $350, you would pay Kenny $350 for each day that he works. It doesn’t matter if he works one hour or eight hours or sixteen hours, if Kenny worked one day, he’s getting paid $350 for that day.
And if day rate pay is working as it should, it really is that straightforward.
When it comes to casual conversation in the lingo-ridden universe of film production, day rate pay is often thought of as the standard method of determining a crew member’s earnings. Crew members joining a production negotiate their future earnings by keeping minimum day rates and preferred day rates in mind, occasionally calculating for the addition of a negotiated kit fee when such offers are on the table.
But here’s the thing…
Crew members definitely aren’t paid like Kenny. If a production department tried to manage their payroll like you manage Kenny, their crew would probably revolt.
And if a crew would revolt over receiving true day rate pay, what exactly does that say about the nature of day rates in the film industry?
Day rates aren’t that different from sasquatches, the loch ness monster, or the “real” Paul McCartney. Conceptually, they make plenty of sense, but in actual reality?
The evidence is inconclusive.
The fact of the matter is that so-called day rates in the film industry aren’t actually based on days at all because the law quite literally says they can’t be.
Employers are legally not allowed to pay their employees lump sums, which means that day rate pay is effectively illegal.
So what is a day rate?
It’s a lie.
In reality, what we commonly call “day rates” in the film industry are actually determined by an estimation based on crew members’ hourly rates.
We take our crew members’ hourly rates, add them up individually according to how much each crew member can expect to earn in the span of a normal workday’s worth of hours, and label the resulting sums of our crew members’ “day rates.”
You might be tempted to think that the flat rate vs. hourly rate debate is irrelevant. After all, who cares about hourly rates if each employee is being paid, more or less, by a day rate anyway? I mean, what’s the difference, right?
Well, if you care to ask a production accountant, they’ll tell you that the difference is massive.
Crew members are classified as non-exempt employees. And if you know the difference between exempt and non-exempt employees, you know that this classification has a huge impact on how crew members’ total earnings are calculated.
Non-exempt employees are required by law to be paid according to hourly rates and legally mandated hourly rates come with a few features that do not apply to true day rates.
Can you guess which feature matters most in an industry where workdays last between twelve and sixteen hours each on a regular, normalized basis?
Overtime laws can vary from state to state, but the gist is that employees eligible to receive overtime will receive significant bumps in their base hourly rates after they exceed a certain number of hours worked in a given day and/or week.
Overtime can dramatically increase an employee’s earnings, a reality that significantly complicates the flat rate vs. hourly rate conversation.
But you’re a smart producer. You’re seeing the word “employee” all over the place, and that’s got you thinking…
It is possible that day rates may be applicable to contractors in certain situations because, on a fundamental level, contractors have greater flexibility in determining their method of payment.
In other words, yes, contractors technically could make their living via true day rate pay.
But before you say “Ha! Told ya so,” and attempt to reclassify your crew members as contractors, you might want to take a moment to read the fine print.
When it comes to contractors in the film industry, there’s just one little problem.
It’s called Assembly Bill 5.
Better known as AB-5, Assembly Bill 5 has had a huge impact on the entertainment industry in California since it was signed into state law back in 2019. You can read the bill’s full text here, but the basic point of AB-5 is to protect workers by making it more difficult for employers to deny them benefits via a contractor classification.
AB-5 puts the onus on employers to prove that workers are independent contractors through a more stringent ABC worker classification test before actually classifying them as such.
And what does that mean for having contractors on your crew?
Let’s just say it’s unlikely you’ll have to pay day rates anytime soon.
After all, what is a day rate if no one on your crew is eligible to receive it?
AB-5 only applies to California, but contractors face similar worker classification tests in other states as well. To learn more, check out our complete list of worker classification tests by state.
And now that we’ve cleared the red herring, let’s talk about how day rates actually work.
No matter how far down the rabbit hole we go, the reality is that crew members are still most likely going to talk about their earnings in terms of day rates.
Not unlike Lieutenant Daniel Kaffee, some people just can’t handle the truth.
With that in mind, how do you translate day rates into hourly rates? What is a day rate when you break it down into something meaningful?
Let’s take a look. There are four basic steps.
How many hours does an employee have to work to earn their pay? Eight? Ten? Twenty-four? The first step in calculating an employee’s hourly rate is figuring out how many hours make up the “day” in their so-called day rate.
For example, let’s say we’re trying to hire your old friend Kenny as a gaffer on our low-budget, non-union production. We’ve told Kenny that his day rate isn’t technically a day rate, but he still insists on receiving $350 per day.
How do we handle this situation?
We begin by negotiating the expected length of Kenny’s workday.
Fortunately, this is usually the easy part. Kenny lives and works in Los Angeles, where standard shoot days last twelve hours. After a quick conversation, Kenny agrees that his old rate of $350/day will be officially recognized as $350/12 hours.
Once that’s settled, we get to do some math.
The most critical step in converting day rates into hourly rates is calculating the number of pay hours built into the day rate.
And what are pay hours?
Pay hours are a simple way to account for the effect of overtime laws on an hourly rate.
Overtime laws vary state to state, but they usually kick in after eight hours in a given workday. After eight hours, an employee’s hourly rate begins to be multiplied by a factor that increases as more continuous hours are worked.
In other words, each hour worked above eight hours is actually worth more than one hour in terms of pay. It’s worth more than one “pay hour.”
To clarify, let’s return to Kenny for an illustration.
Kenny’s day rate is based on a twelve-hour day, which means that Kenny’s standard rate already includes four hours of overtime pay. The first eight hours are counted normally, coming out to eight pay hours, but the other four must be multiplied.
In California, overtime pay starts at a factor of 1.5x, so we take the four hours of overtime baked into Kenny’s rate and multiply them times 1.5 to get six pay hours.
We then add these six pay hours to the eight initial pay hours to get a grand total of fourteen pay hours. In essence, we’re paying Kenny for fourteen hours of work at his base hourly rate per day.
Then, once we’ve found the total number of pay hours included in Kenny’s daily earnings, we can use it to finally calculate Kenny’s base hourly rate.
With the total pay hours in hand, calculating an employee’s hourly rate is an easy task.
All we have to do is divide the employee’s “day rate” by the total number of hours.
In Kenny’s case, we divide a rate of $350 by a pay hour total of fourteen.
Kenny’s effective hourly rate is $25.00 per hour.
But there’s still one more step to go before we’re finished.
When converting so-called day rates to hourly rates, there’s a chance that the resulting hourly rate might not meet a state’s minimum wage requirements.
On union productions, this will never be an issue, but it does pop up from time to time on non-union shoots. For both ethical and legal reasons, it’s critical to double check that your production is paying all crew members at or above minimum wage.
Kenny’s hypothetical hourly rate of $25.00 puts him well above the minimum wage requirement in California.
Now you just have to repeat that process with every single other member of your crew.
Unless, of course, you’d prefer to handle payroll the smart way…
Wrapbook is a comprehensive payroll and production insurance platform that can calculate all of your day rates, hourly rates, overtime wages, tax requirements, and much more, with minimal effort.
With built-in features like Quickbooks integration and automatic calculations of LA IATSE and Teamster timecards, Wrapbook is constantly innovating to streamline entertainment payroll and maximize your production’s efficiency.
For better or worse, the myth of day rates in the film industry isn’t likely going anywhere anytime soon.
So we better learn to live with it.
The easiest way to shift the conversation about day rates and hourly rates is to be more specific with our language. Whenever discussing a crew member’s rate in any official capacity (and especially in writing), it’s important to specify an agreed upon number of work hours.
Instead of describing Kenny’s rate as “$350 per day,” it would be better to describe it as “$350 per twelve hours.”
Most experienced crew will be familiar with this particular choice of words. In fact, many production professionals prefer it and know to double-check that they’re being hired on for a “guaranteed” twelve-hours of pay.
Being more specific is better for everyone involved in the payroll equation.
In truth, the myth of day rates is harmless, but producers everywhere need to be aware of the payroll facts that swim just below its surface.
At Wrapbook, we're all about providing the very best free resources to producers and their crews. However, this post is not a substitute for professional legal advice. Answers do not create a company-client relationship, nor is it a solicitation to offer legal advice. Seek the advice of a licensed attorney in the appropriate jurisdiction before taking any action that may affect your decisions or rights.
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