The legal argument for WWE Superstars as employees, not contractors

For as long as I’ve been into professional wrestling, the independent contractor issue has loomed. It makes sense to be labeled as an independent contractor for smaller promotions since wrestlers will come in, work a couple matches then will bounce out, free to go as they please. However, the bigger companies are labeling their wrestlers as independent contractors when it appears they meet the legal definition of employee. We shall be focusing on WWE here since they are still the biggest wrestling promotion and the ones who have drawn the most criticism.

So, legally, what is the difference between an employee and an independent contractor? Is WWE right to classify wrestlers as independent contractors? Let’s look at a couple different aspects of the law.

A brief side note though for this conversation about law: This is by no means anywhere near even the start of a comprehensive list of all matters involving this legal issue. It’s the broadest of broad strokes. Briefs and rulings are often over a hundred pages long and they simply cover a single case. All good? OK, let’s start.

Federal Law

First off, we have some basic federal guidelines from the IRS (not that IRS). Overall, this is a good starting point as it provides a good overview. The IRS’s test is derived from common law, going more off general precedent, cultural norms, and court rulings. All three points in the guidelines center around the idea of how much control does the employer has over the individual in question. More control amounts to a greater likelihood they would be classified as an employee.

1. Control over behavior is the first point the IRS takes into account. That is, how much control the employer has over things like the person’s work, including things like assessments or how closely they micromanage the individual’s work, such as work schedule.
2. The second point the IRS looks at is financial control, such as how the employee is paid or who buys/owns materials needed for the job.
3. The last point is more nebulous, looking at the understood relationship between both parties; that is, how much each party benefits from the other party, the understood relationship between the two, and benefits that are offered.

How does this apply to WWE?

Behavioral control: we can clearly see a large amount of control WWE has over the wrestler. WWE will (depending on the wrestler) sometimes put language in its contracts giving them control over where the wrestler is booked, whether that be NXT or Ohio Valley Wrestling, allowing them to move wrestlers around at will. WWE has fired people simply for attending other promotions’ shows, and there are multiple reports that talent needs to show up to shows even if not used.

When you include things like WWE’s very clear strict scheduling, things look bad for WWE’s case. Slap on dress codes when at certain events, morality clauses, and a whole host of other things and WWE has a pretty tight control of their talent.

Financial control:  Wrestlers pay for their own transportation, gear, insurance, and other expenses. No doubt WWE wants to stress these points as they make the case for their classification stronger. This is where their argument is the strongest, but even then, employee/employer relationship dynamics creep into the financial aspect.

All WWE Superstars are paid a flat salary in much the same way as a typical employee. True, they usually get extra if working house shows, but employees are often subject to bonuses beyond their current salary as well. Also (and I will stress this point a lot shortly) WWE has tight control over how much they let their talent seek outside work.

Employee/employer relationship: An argument could be made that the wrestlers benefit from their exposure, but in an employee/employer relationship, the employer nearly always benefits more. And here we have WWE benefiting a lot.

WWE has strict control over all intellectual property, names, likeness, and a whole host of things. The wrestler receives a small cut and the rest goes to WWE. WWE also benefits because, well, they are a wrestling promotion. If there were no wrestlers, they would have no company. Wrestling is the very product WWE sells, and with no wrestlers they cease to exist.

Southwest Appraisal Group, LLC v. Administrator, Unemployment Compensation Act

I did have a couple court cases to go over, but for the sake of keeping this article relatively short I will just pull out one that A: I think summarizes one of the most important parts of what I mean to be an independent contractor, and B: is from Connecticut, where WWE is based. Thus, if a lawsuit were ever filed in a state court, it would likely at least be attempted to be filed there.

Southwest Appraisal Group, LLC v. Administrator, Unemployment Compensation Act is a court case from the CT Supreme Court in 2017. One of the things that clearly defines independent contractors is being independent and being able to take on other work. In this case, the court gave a list of things to look at to help determine the overall picture, once again grounded very much in common law.

Just like with the IRS, this is not an exhaustive list of all the things to consider when deciding if a person is able to take on extra work. More so, this test is an overall vibe check (sorry about the super complicated legal term there) to help make a determination. The list is as follows.

1. The existence of state licensure or specialized skills;
2. Whether the putative employee holds himself or herself out as an independent business through the existence of business cards, printed invoices, or advertising;
3. The existence of a place of business separate from that of the putative employer;
4. The putative employee’s capital investment in the independent business, such as vehicles and equipment;
5. Whether the putative employee manages risk by handling his or her own liability insurance;
6. Whether services are performed under the individual’s own name as opposed to the name of the putative employer;
7. Whether the putative employee employs or subcontracts others;
8. Whether the putative employee has a saleable business or going concern with the existence of an established clientele;
9. Whether the individual performs services for more than one entity; 
10. Whether the performance of services affects the goodwill of the individual rather than the company for which he or she is performing services.

Essentially, by answering these questions, the goal is to determine if the broader picture shows specifically if the contractor is able to take other work, and thus if they are actually independent.

How does this apply to WWE?

While the contractors lost their suit due to these rules that the court looked at, WWE Superstars seem to fit the bill pretty well when looking at things overall. Wrestlers don’t advertise for services while working at WWE, they have no separate place of business, and the wrestlers don’t have any other clientele.

In fact, wrestlers don’t perform services for more than one entity because they are pretty much completely barred from doing so. WWE contracts are hard to come by and are kept extremely secret, but sometimes they do get leaked. We can dive into some of that language.

Depending on what year and who the contract is with, WWE oscillates between extreme and absolute exclusivity in their contracts. For example, one of Triple H’s contracts has the following language:

“During the Term, WRESTLER acknowledges and agrees that he shall not work or perform in any capacity for any other martial arts or wrestling organization and/or entity not owned or controlled by PROMOTER or any affiliated or subsidiary company thereof, including without limitation appearances in live events, pay-per-view or other televised events.”

https://www.sec.gov/Archives/edgar/data/1091907/000120677412000891/exhibit10-6.htm

There usually is other language in contracts (including this one) that allows for the possibility of the wrestler to be in movies. However, the wrestler is not free to just dip out for a bit and film a movie without approval.

“In the event WRESTLER desires upon reasonable notice to PROMOTER… to participate in movies, films, commercials, product endorsements, videos, television programs or similar activities, whether or not procured by PROMOTER (collectively “Permitted Activities”) and promotional events for the Permitted Activities, WRESTLER may do so subject to PROMOTER’s approval… It is further agreed that PROMOTER shall receive from WRESTLER a management fee to reimburse PROMOTER for its reasonable administrative costs incurred in connection with WRESTLER’s participation in each such Permitted Activity”

https://www.sec.gov/Archives/edgar/data/1091907/000120677412000891/exhibit10-6.htm

Essentially, wrestlers are able to do TV shows, movies, and commercials as long as WWE permits it. WWE also takes out a management fee even if they themselves did not help find the opportunity in question. This is hardly independent, as outlined by the Southwest Appraisal Company lawsuit.

And of course, we have the most recent troubles of WWE taking away other sources of income for wrestlers in the form of Twitch, OnlyFans, Cameo, and other such websites. Compare this to the workers in the Southwest Appraisal lawsuit. There the workers merely showed they didn’t work for anyone else. Here, the employer is actively stopping their “independent contractors” from working outside of the WWE, a lot of them using their own actual name.

One may argue that other elements of the test outlined in the court case show a different story, such as WWE requiring employees to get their own liability insurance and pay for their own transportation. However, the point of the test is to help frame a picture overall. And the picture being framed here is Vince is taking all the benefits an employer gets by labeling someone an employee and sticking all the responsibilities for an independent contractor on the wrestler.

He essentially wants nothing that would be considered as downsides for the employer; he wants to shove all responsibility off on the wrestlers.

To Summarize

The IRS says on their website that the employee relationship should be considered when: “services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company.”

WWE is a wrestling company. Without wrestlers, WWE does not exist. End of story. This is honestly all I had to say. I guess I could have just said that at the start and not made you read 1700 words. Sorry about that.