[3] The Labor Commissioner's enforcement of the law led to personal managers forfeiting an estimated $500,000,000 in otherwise-owed commissions.
[5] However, Wood, Loving, Severance and Smith all hold that the only way an adjudicator has the authority to impair anyone's contractual rights is when there is a codified penalty provision.
"[7] “If the statute does not provide expressly that its violation will deprive the parties to sue on the contract and the denial of the relief is wholly out of proportion to the requirements of public policy or appropriate individual punishment, the right to recover will not be denied.” [8] “[I]t has been repeatedly declared in this state that ‘a contract made contrary to the terms of a law designed for the protection of the public and prescribing a penalty for the violation thereof is illegal and void, and no action may be brought to enforce such contract.’” Loving at 608.
As the Act has no codified penalty, following Wood, Loving, Severance and Smith, Buchwald was a judicial error: it should have held that no adjudicator has the authority to affect the contract of an unlicensed representative.
When the National Conference of Personal Managers, a trade association of talent agencies, sued the State and the Labor Commissioner in federal court to enjoin enforcement of the law in 2012, the organization did not know to use the 'no penalty' argument.