# Deferred pay

Source: https://storiara.com/glossary/deferred-pay
Last updated: 2026-09-14
Author: Charles Hirschhorn, Storiara

> Deferred pay is compensation that a cast or crew member agrees to receive after production, usually out of the film's revenues at a defined point in the recoupment order, instead of in cash during the shoot. It reduces the cash budget but still counts as a cost, including toward SAG-AFTRA low budget caps, and it can't replace minimum wage for employees.

## How deferments appear in the budget

Keep two columns: the full cost and the cash portion. Here's the above-the-line on a $280,000 indie where the key creatives defer part of their fees:

| Acct | Line | Full fee | Cash in production | Deferred |
|---|---|---|---|---|
| 1200 | Writer | $30,000 | $10,000 | $20,000 |
| 1300 | Producers (2) | $40,000 | $0 | $40,000 |
| 1400 | Director | $35,000 | $15,000 | $20,000 |
| | **Total** | **$105,000** | **$25,000** | **$80,000** |

Cash needed for these lines is $25,000. The cost of the film includes all $105,000. If the rest of the budget is $250,000 in cash, the total production cost is $250,000 + $105,000 = $355,000, which is over the $300,000 limit for the SAG-AFTRA [Ultra Low Budget agreement](https://storiara.com/glossary/ultra-low-budget-agreement) even though only $275,000 of cash is being raised.

## Where deferments get paid from

A deferment agreement should say exactly when it's paid. Common positions in the [waterfall](https://storiara.com/glossary/waterfall):

1. After sales agent fees and expenses, but before investors (rare, and investors resist it).
2. After investors recoup their principal (common).
3. After investors recoup principal plus a premium, such as 120% (also common).
4. Pro rata with, or before, [backend points](https://storiara.com/glossary/backend-points).

If several people defer, the agreement also needs to say whether they're paid in order or pro rata. A crew member deferring $2,000 and a producer deferring $40,000 shouldn't find out after the sale that the producer goes first.

## The legal floor

Deferred pay works for fees that aren't wages: producer fees, a writer's purchase price, a director engaged through a [loan-out company](https://storiara.com/glossary/loan-out-company), or a vendor. For people who are legally employees, the FLSA and state laws require at least minimum wage and overtime on the regular payday. A deal memo offering a grip "$0 now, $250 a day deferred" doesn't solve that, and payroll taxes are owed when wages are paid, deferred or not.

## Deferment problems that surface at the sale

Budgets that leave deferments out entirely, which misleads investors about the film's cost. Deferments with no defined trigger, so no one knows when they're due. And assuming union scale wages can be deferred; check the agreement and ask the union before offering that to a performer. Record each deferment in the [deal memo](https://storiara.com/glossary/deal-memo) and in the budget so the [production accountant](https://storiara.com/roles/production-accountant) can carry it into the final cost report.

## Frequently asked questions

### Is deferred pay legal for film crew?

Deferring fees for people working as owners, producers, or true independent contractors is common. Employees, though, are owed at least the federal or state minimum wage, plus required overtime, on the regular payday under the FLSA and state law, so wages below that floor can't simply be deferred.

### When does deferred pay actually get paid?

When the film earns enough money to reach the deferment's position in the recoupment waterfall. On many indies deferments come after investors recoup, and many films never reach that point.

### Do deferments count toward the SAG-AFTRA budget limit?

Yes. The Ultra Low Budget and Moderate Low Budget agreements both define total production cost as all above-the-line and below-the-line costs, including any deferred compensation.

## Sources

- [U.S. Department of Labor, Wage and Hour Division: Minimum wage](https://www.dol.gov/agencies/whd/minimum-wage)
- [SAG-AFTRA Ultra Low Budget Project Agreement (sample, rev. 3.21.23), qualification](https://www.sagaftra.org/sites/default/files/Ultra%20Low%20Budget%20Project%20Agreement%20(UPA)%20Rev.%203.21.23%20SAMPLE.pdf)