Payroll companies are entering 2026 with more legal risk than at any other point in the modern entertainment era. The combination of aggressive state enforcement, the rapid expansion of streaming production, the fragmentation of collective bargaining agreements, and record levels of wage-and-hour litigation has created a landscape where payroll providers must be significantly more proactive. At the same time, studios and production companies are shifting liability downstream, pushing payroll companies to shoulder more responsibility for guidance, compliance support, and clean data workflows.

For executives leading payroll providers, the question is not whether legal exposure has increased. It is how to reduce that exposure while maintaining quality, supporting clients, and preserving margins. The most successful companies in 2026 will be those that invest early in compliance infrastructure, formalize internal processes, and treat labor relations as a core operational function rather than an accessory service.

Below is what leadership teams should be prioritizing as they navigate the 2026 environment.

Strengthen Compliance Infrastructure Before the Surge of 2026 Productions

Production volume is expected to rebound in 2026 after a slow ramp following the 2023 labor disruptions. This increase will strain payroll teams across the industry. Payroll companies that rely on informal knowledge or unstructured workflows will feel the impact first. Legal exposure grows any time compliance depends on institutional memory or individual expertise rather than clearly defined systems.

Executives should be assessing whether their current workflows can handle an influx of projects, new contract terms, and rapidly changing client expectations. This includes questions such as:

• Are there documented SOPs for every major payroll workflow?
• Are SOPs updated regularly as CBAs change?
• Does the company maintain a central repository of union rules that all staff can access?
• Is training standardized or dependent on individual managers?
• Are new hires onboarded into compliance expectations from day one?

Inconsistent internal practices are one of the biggest sources of risk for payroll providers. High turnover compounds that risk. Building compliance infrastructure before the surge of 2026 productions protects the company and increases client trust.

Implement Contract-Specific Workflows Instead of Generalized Guidance

The entertainment industry has moved far beyond a one-size-fits-all approach to union payroll. Every major union now has multiple layers that apply differently depending on production type, budget tier, platform, location, broadcast method, and distribution window. Executives who entered payroll leadership even five years ago are often surprised by the current level of complexity.

Legal exposure increases whenever payroll companies provide generic guidance that does not match the specific agreement covering the project. This includes:

• Overgeneralizing rest-period rules
• Providing overtime guidance that does not match the sideletter
• Applying national rules when a project is covered by West Coast studio locals
• Treating SVOD as a subset of theatrical instead of a distinct category
• Ignoring new tier structures or recent MOAs
• Consolidating night premium rules in ways that misstate local requirements

In 2026, payroll companies can reduce risk by creating agreement-specific SOPs, cheat sheets, and logic trees that guide payroll staff. When a paymaster or coordinator references internal material, it must reflect the exact agreement for that production, not a general industry standard.

Hold the Line on Client Education and Clarify Boundaries

Traditional payroll providers often shoulder the burden of explaining union rules, verifying client assumptions, and correcting improper practices. As the complexity of the entertainment landscape has increased, this dynamic has become unsustainable. Helping clients understand their obligations is important, but payroll companies must define boundaries to avoid being treated as a labor relations department.

Legal exposure grows any time clients rely on payroll companies for interpretation or application of contract language beyond the provider’s defined scope. In 2026, executives should revisit how they communicate boundaries to employers. This includes updating service descriptions, client guides, and marketing materials to clarify:

• What payroll companies can legally advise on
• What falls under labor relations or legal departments
• How payroll teams handle conflicting client instructions
• When payroll companies escalate issues rather than interpret them
• How the company documents guidance and maintains audit trails

Executives who manage these boundaries effectively reduce risk by ensuring clients clearly understand the division of responsibility.

Shift From Reactive to Preventative Compliance

The industry has historically relied on reactive problem solving. A paymaster notices a missing meal penalty, identifies a crew member misclassified as on-call, or sees a sixth-day premium applied incorrectly. The correction is made and the issue disappears into a single email thread.

In 2026, this reactive model creates unnecessary exposure. Wage and hour claims increasingly rely on evidence of repeated errors, inconsistent rule application, or weak internal oversight. Studios and producers are increasingly pushing liability for incorrect pay downstream. Regulatory audits and private litigation often review historic payroll data, not individual pay periods.

Executives can reduce exposure by investing in preventative systems. These include:

• Standardized union compliance checks
• Automated logic where possible
• Checklists for review at every step
• Internal quality control audits
• Training that focuses on pattern recognition and root-cause prevention

When payroll companies build systems around preventing errors rather than fixing them, legal exposure declines dramatically.

Invest in Leadership-Led Training That Keeps Pace With Contract Changes

Most internal payroll training programs fail for two reasons. They rely too heavily on informal knowledge sharing, and they do not update fast enough to keep up with new MOAs or union changes. Executives cannot reduce legal exposure unless their teams are trained at a high level of accuracy and consistency.

Training must become both standardized and dynamic. This means updating internal training materials at least quarterly, refreshing content immediately after major CBAs are ratified, and providing staff with ongoing contract-specific learning.

Payroll-company leaders should be asking:

• Is our training library current with all 2024 and 2025 MOAs?
• Are we preparing for the 2026 negotiation cycle across multiple unions?
• Do our trainers have a labor relations background?
• Are new employees trained on union logic and payroll workflows, or only on systems?
• Do we have a defined process for updating training as agreements change?

Executives who prioritize accurate, current training reduce risk by ensuring that mistakes do not originate from outdated knowledge.

Create a Proactive Labor Relations Strategy Rather Than Outsourcing Risk to Coordinators

One of the most significant risk factors inside payroll companies is expecting coordinators and paymasters to manage labor relations issues informally. Coordinators who answer client questions, advise on penalty structures, or guess on gray areas can unintentionally create exposure. These employees are not trained labor relations professionals, and they should not be put in the position of interpreting rules that impact legal compliance.

Executives can significantly reduce exposure by:

• Centralizing labor relations support within a defined leadership role
• Creating a standardized protocol for escalation
• Training staff on what they can and cannot say
• Providing approved language for handling client questions
• Documenting all escalations and resolutions internally

Leadership must set the tone that coordinators process payroll and identify issues, but they do not interpret agreements or provide labor guidance beyond the company’s defined scope.

Bring in Fractional Labor Executives to Support the 2026 Negotiation and Compliance Cycle

Many payroll companies do not have an in-house labor relations department. Others have one or two people covering an entire organization, leaving very little capacity to update SOPs, train staff, interpret new agreements, or prepare for the next contract cycle. This gap in capacity is one of the largest sources of risk entering 2026.

Fractional labor executives provide a scalable solution. They allow payroll companies to access senior-level labor expertise without hiring full-time leadership. A fractional labor relations executive can:

• Update internal processes and compliance workflows
• Build contract-specific training for staff
• Create executive-level guidance for upcoming union negotiations
• Review client-facing materials for risk
• Provide on-demand escalation support
• Strengthen the company’s internal compliance infrastructure
• Train managers on how to enforce workflow boundaries
• Reduce dependency on coordinators for labor-related decisions

For many payroll companies, fractional support is the fastest way to reduce exposure and bring the organization into alignment with current labor expectations.

The Companies That Win in 2026 Are the Ones That Treat Labor Relations as a Core Function

Payroll providers are essential partners in the entertainment industry. As regulation expands and union contracts grow more complex, the companies that excel will be those that invest early in compliance systems, training, labor strategy, and executive-level oversight.

Legal exposure will not disappear. But companies that understand their risk, standardize their processes, and build a proactive labor strategy will enter 2026 with more confidence, more structure, and stronger client relationships.

If you want to build a compliance-first payroll organization or need fractional labor relations leadership for the 2026 cycle, FTV Consulting provides the expertise to strengthen internal systems, update workflows, and support your executive team.