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21st Century Fox v. Netflix . . . Will This Lawsuit Determine the Value of Employment Contracts?

A heated lawsuit between 21st Century Fox and Netflix reveals a great deal about the inner workings of Hollywood while also providing useful insights for employers in California and across the country. This high-profile case is a helpful reminder about the necessity of consulting with employment attorneys to cement formal contractual agreements with workers.

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The lawsuit was filed by Fox in September 2016. In their complaint, they cite a “brazen campaign” by Netflix “to unlawfully target, recruit, and poach valuable Fox executives.” Mainly at issue are two former Fox employees who now work for Netflix. One of these employees is Marcos Waltenberg, a 10-year veteran at Fox who was a vice president of promotions. The other was Tara Flynn, a vice president of creative affairs who was hired by Fox in 2012.

Waltenberg is a legal alien who needed employer sponsorship to maintain his green card status. In 2012, he asked his supervisor at Fox for a raise. The human resources department responded by saying that they were not required to sponsor Waltenberg’s green card renewal. When Waltenberg dropped his request for a raise, Fox helped him get his green card.

Flynn says she was pressured to take a three-year contract at $75,000 per year even though the compensation was well below the $250,000 annual salary that was typical for her position. She knew that her salary was well below that of two male executives who formerly held the job. When Netflix approached her with a better offer, she let her supervisors know that she was leaving, and that’s when things got ugly.

Waltenberg and Flynn were under contract with Fox when they gave notice. In a response to the complaint, defendants argue that the contracts that are forced on rank-and-file employees at Fox are too reminiscent of the studio era when the lives of actors were micromanaged by executives. The response further contends that these contracts unlawfully constrain employee mobility.

This lawsuit serves as a reminder to all California employers. Companies and HR departments need to regularly review their employment contract practices to ensure that they are keeping up with changing laws.