Actors are paid a per-episode fee. It is a mutually agreed-upon amount. If, for example, you agreed to $1,000 per episode, some contracts stipulate that there is a minimum number of episodes per year that you are guaranteed. Let’s say that number is 50. So your contract would guarantee you $50,000 for that year. The show may (and they can, and often do) use you more than that, and still pay you $1,000 per episode. So if they end up using you in 100 episodes, your actual income would be $100,000. But your guarantee is $50,000, and even if they don’t use you in 50 episodes, you still make $50,000.
Recurring characters also get paid per episode. The difference is that they are not guaranteed a certain number of episodes per year. It is open-ended. And of course, both you and the show can quit any time. So the recurring (or non-contract) actor might also have a per-episode fee of $1,000 but they have no way of predicting how much or how little they might actually make in a year. A recurring character who is paid less per episode but is used more throughout the year could actually end up making more money in that year than a contracted actor with a low number of guaranteed episodes.
Still with me?
If an actor does not have a guaranteed number of episodes, or a “limit” then they are on a recurring basis. So the show can use him or her in as many or as few episodes per year as they want or can afford. Technically they still have a contract. It’s just a different kind of contract.
That’s why you hear that some actors are “recurring” and some are “on contract” and the occasional reference to someone being “over their limit”.
If your per-episode fee remains the same, but you appear in fewer episodes, it may result in a “pay cut”. You may earn less in total this year than you did the year before, and that is, for all practical purposes, a pay cut.
Most of the time, when an actor refers to a pay cut or pay raise, they are referring to their per-episode fee. However, some actors look at the total year’s salary and say they had a pay cut or a pay raise. Some actors don’t want to take a cut in their per-episode pay, knowing that their show might use them in fewer episodes in order to comply with a budget cut but that is a risk they are willing to take.
The advantage – to the show and the actor – to having an actor agree to a pay cut per episode is that the network or studio can say “See! We are tough negotiators and we are making people take pay cuts to meet our budget.” While the show can say, “That’s nice, but we can juggle things around so that we can still have them as often as we want them.” And the actor, who is now more affordable, can be in more episodes and say “I did my part and took a pay cut for the good of the show.” But at the end of the year he still made more than he did last year, (or the same), so that ‘pay cut’ didn’t really affect him or her.
Of course, the contracts are generally written in favor of the studio, so if you agree to a per-episode pay cut, and they don’t use you more throughout the year, you earn less. Or if you stand your ground and refuse a per-episode pay cut, they may also use you less throughout the year. Which is also a pay cut. In one scenario, however, it looks like you are cooperating and helpful (and might be rewarded for that) and in the other scenario it looks like you are unyielding and difficult (and you might be punished for that).
Also, by the time an actor pays SAG dues, an agent, a manager, a publicist and the crazy taxes in California, their take-home pay is half or less than half of what they get paid. At the end of the day, the vast majority of them are not wealthy.
These bits of arcane knowledge about actors’ contracts are public information, but I also have a friend in the industry who works with this stuff all the time (not for CBS). And I have picked her brain
This does not mean that my explanation above is all there is to know about it or that it applies in every case. It just seems timely every now and then to dust off the discussion to try to clear up a few misconceptions.