Kevin Owens is a man who fights for one reason: to earn money to take care of his family. But in pro wrestling, as the families of Darren Drozdov and Owen Hart can unfortunately attest, that ability can be taken away in an instant. What happens to Kevin Owens and his family if he suffers a terrible injury at WWE Money in the Bank? That new main roster contract he signed likely features a small downside that he will continue to earn but there will be no future house show income. Pay-per-view income, now cannibalized by the WWE Network, will be gone too. As a guy who hasn’t had the time to pad his bank account with WWE money, how does Kevin Owens take care of his family?
For most people, an injury suffered on the job is not ideal but there are protections. You could file a workers’ compensation claim to provide a portion of your pay until you can work again. If you were injured due to an unsafe working environment or if you were fired as a result of your injury, federal law might provide you with remedies. But if you are a pro wrestler, you have none of those protections. And that is by design. Wrestling promotions have long classified their wrestlers as independent contractors instead of employees to avoid having to provide those protections.
To date, most wrestlers have not challenged their classification as independent contractors. But what if they did? This article addresses what the independent contractor versus employee issue is, what has actually occurred in legal proceedings surrounding the issue and what those legal proceedings say about the future of this issue.
The Law on the Independent Contractor/Employee Classification
If you are not a lawyer, involved in labor issues, or a laborer who has been affected by the difference between being an independent contractor versus an employee, you may not have any reason to know what all of this means even if you have vaguely heard about it.
Generally, the difference between an employee and an independent contractor is determined by how much control the employer has over the laborer’s work. Different courts look to different factors to make the ultimate determination of whether a laborer is an independent contractor or employee, but all of it comes back to the employer’s right of control over the laborer.
To assist employers, laborers and courts in making this determination, the IRS identified 20 factors as a guide. Those factors include whether the employer sets the laborer’s schedule, whether the employer sets when, where, and how the laborer works, and whether the laborer works exclusively for the employee.
Even the best lawyer would have a hard time analyzing the IRS’ 20 factors, or any other set of accepted factors, and coming to the conclusion that wrestlers who are exclusively contracted to WWE, Ring of Honor, TNA, or any other wrestling promotion, are not employees. However, these wrestling promotions (primarily WWE) have been spectacularly successful at largely avoiding legal challenges to their classification of all wrestlers as independent contractors. And when there have been legal challenges, WWE has nearly universally avoided a legal determination on whether its wrestlers are employees.
So Why Does This Matter?
If you are a wrestling fan, the employment classification of wrestlers is unlikely to ever make a difference in your life. But if you are a pro wrestler, the implications are of paramount importance. If exclusively-contracted wrestlers were classified as employees, wrestling promotions would be required by law to provide an option for health insurance, to make contributions on each employee’s behalf to Social Security and Medicare, to provide workers’ compensation benefits when a wrestler is injured while on the job and to provide unemployment insurance.
There are a host of other protections under federal law that apply only to employees. For example, employees are protected by Title VII of the Civil Rights Act, the Occupational Safety and Health Act (OSHA), the Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act (ERISA), and the Family and Medical Leave Act (FMLA), among others. How different would life be for wrestlers if they could be paid workers’ compensation benefits while they are injured or take time off with pay if their spouse or child is ill, without fear of losing their job as a result? Federal law also protects employees from certain types of discrimination in the workplace and requires certain standards for safety. Realistically, WWE might have avoided many of the worst public relations scandals it has endured if its workplace had been governed by federal law. Of course, independent contractors are not subject to any of these protections.
What Have the Courts Said?
Basically, nothing. Perhaps the most famous challenge to WWE’s independent contractor classification regime was undertaken by Raven, Kanyon, and Mike Sanders. In 2008, the three former WWE wrestlers filed suit against WWE for breach of contract and unjust enrichment. Both of those claims were based on the wrestlers’ assertion that they had been improperly classified as independent contractors. The wrestlers argued that WWE’s control over their work, which was explicitly spelled out in their contracts, showed that they were employees, and not independent contractors.
Interestingly, WWE did not spend a single sentence in its court filings arguing that the right of control weighed in its favor and therefore the wrestlers were independent contractors. Instead, WWE focused on the fact that the wrestlers’ contracts stated that the wrestlers were independent contractors. Additionally, WWE shifted the court’s attention to other arguments that favored WWE over the wrestlers, including that the wrestlers had filed suit after the period of time provided by law in which to bring suit.
Many wrestling fans seem to believe that the court in the Raven case ruled that the wrestlers were properly classified as independent contractors. However, that is not true.
The court never reached the issue of classification. Instead, the court held that the wrestlers had not filed suit within the required period of time. Further, the wrestlers had focused their case on whether WWE should have withheld taxes from their pay. Analysis of that issue is outside the ambit of this article but, simply, the court held that the law did not provide an avenue for the wrestlers to sue WWE for that claim.
There have been no notable challenges to WWE’s independent contractor classifications since the Raven lawsuit. However, there have been several legal disputes between wrestlers and WWE that shed light on where this issue might be heading.
In 2004, Brock Lesnar left WWE to pursue an NFL career. He was in the second year of a seven-year exclusive contract. That contract did not contain a clause prohibiting him from working for a company that competes with WWE for any time after the expiration of his contract with WWE (a “non-compete”). However, in exchange for releasing Lesnar from the remainder of his contract, WWE required that Lesnar enter into an agreement containing a non-compete clause that extended through the rest of his original seven-year contract.
After Lesnar didn’t catch on in the NFL, Lesnar eventually entered into a contract to work for New Japan Pro Wrestling. Around that same time, Lesnar filed a lawsuit against WWE that sought to have the non-compete clause declared unenforceable. As you might recall, Lesnar continued to work for New Japan and eventually worked for UFC during that six-year period, both of which were considered competing companies under WWE and Lesnar’s non-compete agreement. Without diving too deep into non-compete law, a six-year worldwide non-compete clause is generally unenforceable. Lesnar and WWE settled Lesnar’s lawsuit under the court’s threat that it was likely to rule in Lesnar’s favor.
While most WWE contracts are unavailable to the public, apparently sometime after the Lesnar lawsuit, WWE inserted a one-year non-compete clause into its contracts. Those clauses came to light recently after the company fired CM Punk and Alberto Del Rio. Both wrestlers intended to work elsewhere within that one year (Punk in UFC and Del Rio in every wrestling promotion on the planet) and both were willing and financially able to take the legal fight to WWE. The details are not known but WWE appears to have been forced to settle with Punk and Del Rio due to the likelihood that the non-competes were unenforceable. Parties settle for all sorts of different reasons, but as vindictive as WWE often is in court, and especially as they were in all things CM Punk-related, I find it hard to believe they would not have stuck it out if they believed they could have scored a major win in these cases.
WWE is not the only wrestling promotion to face a legal challenge to its classification of wrestlers as independent contractors. Shannon Spruill, known in TNA as Daffney, filed a lawsuit against TNA in 2011 alleging that she was entitled to workers’ compensation benefits as a result of an injury she sustained while performing for the company. Again, TNA settled with Daffney on the eve of a promised ruling from the court on whether Daffney had been appropriately classified as an independent contractor.
The Future of the Independent Contractor/Employee Classification
While the legal challenges of Brock Lesnar, CM Punk, Alberto Del Rio and Daffney do not speak specifically to the independent contractor/employee classification, I think they highlight the likelihood that a motivated, financially-able former wrestler could be successful in challenging the independent contractor classification. WWE and TNA are concerned about legal rulings of which every current and future wrestler would be aware. And they should be: the law is on the side of the wrestlers.
However, the future of this issue also depends on the likelihood that someone will challenge the classification. At the time, I thought CM Punk was the best vehicle for such a challenge. He made a ton of money in wrestling, is viewed as someone who stands on principle, claims to be done with wrestling and clearly had a motivation to try to exact some revenge on WWE. But he wanted to go work for UFC and likely did not want to deal with years of litigation and appeals.
Any wrestler who still wants to work in the business has ample motivation not to undertake one of these challenges. Since Jesse Ventura attempted to unionize the WWF locker room in 1987, it has been clear that the industry will not treat attempts at disrupting the labor/management status quo kindly.
However, the current state of the professional wrestling business makes it more important than ever that the status quo be changed. WWE wrestlers who feel they are being treated unfairly can no longer jump ship to WCW for similar money. And while the indies and ROH are experiencing a resurgence, many WWE and TNA wrestlers are not the kind of performers who could make a living without WWE and TNA the way, for example, The Young Bucks have. WWE contracted wrestlers are in an even worse place now that the WWE Network has displaced pay-per-view revenue, which was formerly a major income source. And yet, even with the law on their side, it seems impossible to imagine that one of them will step up and demand that their grievances be addressed. But if one of them does, the business of professional wrestling is likely to be altered forever.
The information provided in this article is meant for educational and entertainment purposes. It is not an advertisement for legal services nor does it contain legal advice. This article does not create an attorney-client relationship between you and Aaron Bentley. If you need legal advice, you should contact an attorney that practices law in your state.