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Model Louisa Raske is leading a fight against New York City's top modeling agencies as the lead plaintiff in a large class action. Her claim is that the agencies defrauded model clients and took their money.
The lack of financial transparency in modeling agencies isn't a new issue. In the current suit Raske and the other plaintiffs are claiming that agencies had inaccurate financial statements, concealed funds belonging to models, and improperly used models funds. The agencies named in the suit are Ford Models, Next Management and Wilhelmina
While the suit targets the modeling industry, the issues could come up in any business.
The problem starts with the way models work with agencies. Generally a model will sign on for a few years with a given agency and then switch to new representation, reports ABC News.
The plaintiffs claim that when a model leaves one of the agencies named in the suit, the company may continue to sell her images to advertisers without compensating the model. The women generally only discover this when they see unauthorized publication of images.
In the meantime, the funds they've earned for their images are held by the agencies and co-mingled with agency funds, according to the claim. That means the agencies are essentially making the model's money into an interest-free loan.
A modeling contract is like any other employment contract and it generally specifies what percentage of profits a model will get from jobs.
Unlike traditional jobs where a worker creates something that is used by the company or that is sold to a third party once, modeling images can be sold multiple times. Every time the image is sold, the contract about how much the model makes should apply.
Comingling an employee's money with company funds is also a problem if the company is holding onto the money for any period of time.
Technically if any money is kept from the employee, it should be paid with interest when it's actually turned over. If the company can't figure out the interest it is effectively stealing from the employee.
Money is a touchy subject in any circumstance so be sure that your employment contracts are clear about who gets paid and when. Then make sure you and your employees stick to them.
If you aren't sure about how the details of an employment contract affect your use of employee work employees, run the question by your attorney. Guessing may backfire and you could find yourself mired in an expensive lawsuit.
The damages claim in Raske's suit is a cool $20 million in lost wages which amounts to a lot of unauthorized pictures. Whether the models get their money back will play out as the suit unfolds.