Worker's rights: Sasha Banks and Naomi dustup could result in challenge to WWE's contracts

I haven't posted in a good while, but a recent comment I made on a YouTube video (hat tip, JDfromNY206) about an interesting case involving long-standing misclassification of workers -- the classic independent contractor vs employee situation, debated and legislated long and hard here in California in recent years re: AB5 (see my numerous posts about it here; ironically on the side of certain indy contractors/freelancers, such as gigging musicians, not being forced to be classified as employees), made me take notice of the issue occurring over in Stamford, CT, with World Wrestling Entertainment, a billion-dollar mega company that is a fertile legal test case regarding its bizarre and craven, controlling contracts of its professional wrestlers, er, Superstars, as WWE prefers them to be called. They are athlete-performers that work year-round acting and engaging in challenging physical, often dangerous feats for our entertainment guided by scripted storylines. 

What piqued my interest? Well I'm a lapsed wrestling fan just recently reacquainting myself with the landscape, and these issues related to the walkout of two main roster talents, Mercedes Vernado (ring name owned by WWE, Sasha Banks) and Trinity Fatu (ring name Naomi) are blowing up the Internet. I won't go into detail as to why they walked off (there's plenty to read both on wrestling and mainstream news sites with various perspectives), and what kind of punishment WWE felt it needed to mete out.

Goodness knows I could write a year's worth of posts about WWE's non-traditional approach to hiring and treatment of talent, but quite honestly I've been waiting for the day SOMEONE on the roster with enough clout and a good lawyer would challenge the unbelievable contracts these folks sign as "independent contractors." One has to believe that the company has gone out of its way to keep challenges quashed and the Department of Labor out of its practices. But an investigation is long overdue. ANYHOO...

This is an expansion and condensation of my YouTube and Reddit comments on the matter...
 

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Sure, WWE can discipline Sasha and Naomi for walking out during a show (WWE's version of events here). They can choose to handle the situation as they have -- suspension, removal of merch, deleting Facebook pages, etc. BUT if they push any of their top talent too far, they can take WWE to court and win on every WWE wrestler contract's state and federal labor law violations -- and that can blow the roof off the industry as a whole.

WWE should be concerned about any challenge to the validity of its contracts in relation to independent contractor status versus employee. It doesn't matter whether wrestlers sign a WWE contract if they are not legally worth the paper they are printed on. WWE has coasted on the fact that there has not been sufficient competition in the industry, and thus wrestlers sign contracts that wouldn't hold water. They violate laws in Connecticut (see below) and other states regarding the definition of what an independent contractor is.

These performers have no control over what they wear, when they travel, how they travel, whether they can take independent bookings outside of WWE, etc. that is the definition of an EMPLOYEE. Not to mention its practice of releasing people under contract yet the same people cannot leave the contract before it's terminated is open to question legally.

Only wrestlers with sufficient clout and money would be able to ride out such a lawsuit, even if they are going to win it -- do Sasha and Naomi have that clout or desire to change the industry to benefit themselves and their peers? Most wrestlers have chosen not to rock the boat. To a degree, All Elite Wrestling (AEW) does treat its wrestlers as independent contractors because they can earn a living taking independent bookings, having their own merch shops, and owning their own twitch accounts etc.

That is also giving wrestlers bargaining power when they choose whether to leave WWE.

I'd like to see the Internet Wrestling Community (IWC) discuss the issue from this perspective in a sane manner, devoid of tribalism. It really is worthwhile because we are at a critical point where even actor and former WWE writer Freddie Prinze, Jr is in the process of creating his own wrestling promotion where he will treat his wrestlers as employees who will be members of the Screen Actors Guild as performers, a union that provides the very benefits that WWE wrestlers do not have and cannot have as long as the company considers them independent contractors.

WWE tries to treat them like independent contractors when it suits them, and treats them like employees when they want to control them. WWE can't have it both ways. 

Why? The documentation is out there.

As I mentioned, Connecticut (the HQ location of WWE/Titan) is one of 20 states that have adopted the ABC test for unemployment insurance eligibility and/or wage and hour protections for employees. So it is relevant if a company is classifying people as independent contractors when they may actually be employees...

"To address the problem of misclassification, more than 20 states have adopted what is known as the ABC test for determining whether an individual is an employee or an independent contractor for purposes of coverage of certain workplace laws. The ABC test got its name from the three, interlocking elements of the test—parts (A), (B), and (C). It establishes a presumption that an individual performing services for an employer is an employee, not an independent contractor, unless the employer can establish three factors:

(A) The work is done without the direction and control of the employer.

(B) The work is performed outside the usual course of the employer’s business.

(C) The work is done by someone who has their own, independent business or trade doing that kind of work."

Source: Misclassification, the ABC test, and employee status - https://tinyurl.com/yzu82aea

So, according to Connecticut state law, the WWE is clearly misclassifying the wrestlers that work for them. Factor (A) is the more egregious of the three. The wrestlers are misclassified just on that clause alone. Nearly every aspect of their work is controlled by the WWE. What they wear, how they travel, where they have to be, and the company determines their hours of work. How are they NOT employees?

The implications are huge re: burden on the employer and tax withholding, unemployment benefits, workman's comp, etc.

So yes, the WWE does not want its contracts being challenged in court on that basis.

The E has benefited from these contracts up until a few years ago because they were the only real game in town -- if wrestlers wanted to work and earn a decent living in the industry. WWE tries to eliminate competing, ascendant promotions not just in the name of market "competition," it is to protect its contract practices by squashing any competition challenging that norm.

The IWC should be behind the talent's ability to negotiate fair employment for their services that entertain us, rather than fealty to any promotion for tribal reasoning.

AEW, for example, may pay less, but its talent has the ability to earn more income through independent bookings and side gigs that WWE disallows or takes a cut out of. It and all promotions would be affected by changes wrought by legal scrutiny of WWE's contracts.

I also want to note that these issues are wholly separate from the matter of unionization, which seems to get conflated with the issue for some reason. I doubt the wrestlers themselves would agree to unionize any time soon, though a sale of the company could change that (see at the end). Addressing the question of whether WWE is violating existing labor law practices in its contracts would more profoundly, positively impact talent if challenged.

The benefits and other collateral issues would likely resolve themselves if the WWE would simply offer legal, truly independent contractor status contracts to talent -- or hire them as employees. but it won't do so willingly.

Will Sasha or Naomi challenge the E on this matter? Hard to say.

BTW, if WWE is ever sold, the employee/independent contractor status will be a HUGE issue for the buyer -- it surely will have to comply with state and federal law if that transaction is to go through, and WWE, particularly CEO Nick Khan, who is from the entertainment industry, knows this. For instance, Disney, based in CA, has to comply with state law AB5 -- that specifically defines what an independent contractor and employee are (Source: California's Historic AB5 Gig-Worker Law https://tinyurl.com/y35zzc6x). It will surely have to clean up all active "independent contractor" contracts WWE holds.

What I don't understand is the tribalism of WWE fans. You can enjoy the company's past/present content and still understand how the company has continually strong-armed the talent by attempting to crush its competition to ensure it is a monopoly. If there is no competition, that means wrestlers have zero negotiating power for decent benefits or contract terms. Even worse, its clout has allowed it to repeatedly skirt  labor laws -- how is that beneficial to the wrestlers people are supposed to be fans of? I find it strange.

WWE fans should be happy that there is an AEW (or Impact, NJPW, etc.), and hope for additional independents to thrive -- it means more wrestling of different types to enjoy, and more places of employment for the talent to earn a living. It also forces promotions to put out a better product to woo its audiences. It's a win-win for everyone.

 

California's AB5 - wreaking havoc for independent contractors

The CA legislature goes back into session next week, and the new AB5 law is now in effect, with significant consequences ahead for California's economy. It's the law of unintended consequences -- or is it?

Some topics below:
* So I called the EDD for information about compliance...
* What does compliance look like?
* Why was AB5 needed when SB459 is already on the books?
* This isn't jaywalking...

Those who work as independent contractors/freelancers (unless you were in a professional classification that lobbied and won an exemption) now face the prospect of being fired, or less-hireable instantly. Why? Because those who hired you for your services now have to hire you as an employee. And they have to fulfill all labor laws -- that also means payroll withholding taxes. Ostensibly this is to protect service professionals that are routinely denied these rights by large companies exploiting and misclassifying them as independent contractors.

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Good reads...

• Independent contractors both helped and hurt by CA's AB5 (Pam)
• AB 5 - CA’s New Independent Contracting Rules (exemptions)
• Why misclassification is a problem
• Will This California Law End Freelance Work?
• What You Need to Know About the AB 5 “Business-to-Business” Exemption
• How a New Law Will Change California Show Biz
• Vox Media cuts hundreds of freelance journalists as AB 5 changes loom 
• Pam on Michelangelo Signorile Show re: AB5 (Dec 30). 
• What is independent contractor versus employee (State of CA FAQ)
• Employment Determination Worksheet (State of CA PDF checklist test)
• How to find your lawmaker to write/call: http://findyourrep.legislature.ca.gov

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But AB5 harms hundreds of thousands of independent contractors that rely on freedom to determine their rates of pay, when and how they work. The massive problems are exemplified by the enormous number of exemptions -- the law is too broad, a sledgehammer. Since the legislature reconvenes on Jan 6, expect amendment proposals on the table. AB5 needs to enumerate its language to include musicians in the exempted Fine Artists category, because the bill as signed into law does NOT specify musicians. Or, more broadly, adopt amendment language that includes many more groups similarly affected.

Apparently enforcement by the Employer Development Department will not occur until July, but what are contractors and those who hire them supposed to do in the meantime?! Payroll has to be set up and withholdings will begin, and payments will flow to the state coffers.

I called the EDD...
I personally called the Employer Development Department last week. If you want any education about how to comply, or who is affected...you are pretty much SOL. I was told to go to the EDD and FTB web sites. The option to talk to a human is limited - I was connected to the "Auditor of the Day" and got voicemail, left a detailed message, and was never called back.

They believe that putting a comprehensive web site and directing people there is sufficient when many independent contractors and those who hire them have never been an employer, have no experience doing payroll/withholding and submitting paperwork to the state for this. So there goes another expense -- hiring a payroll company to do that, or learn to do it yourself (with the high risk of making errors - 1/3 of companies do -- and receiving fines). Madness.

What logistically will happen if AB5 is rolled back with exemptions retroactive back to January? I cannot tell you. More confusion:

"Enforcement will be slow and uncertain: AB5 does not tell businesses that they must reclassify their workers as of January 1, 2020. Instead, the new law allows cities and the state to challenge a company’s worker classifications through legal action. California government agencies will have to spend time and legal fees to sue companies and determine through the courts whether the workers are employees or independent contractors."

So, what does compliance look like for these new "employers" and "employees"?  There you'll need to consult with an an employment attorney or accountant - and many of them aren't up on AB5. The Franchise Tax Board and Employment Development Department note AB5 on their sites -- they will enforce the law. I'm sure if you are employing a freelancer, you don't want to be caught with multiple violations. The uncertainty is why many businesses, including magazines, fired their entire freelance staff in 2019 in anticipation of compliance with AB5 (see Vox layoffs).

Question...why was AB5 needed when SB459 was already on the books? Perhaps someone out there can shed light on this...I came across this article that begs the question why CA passed AB5 at all when there is a law already on the books, Senate Bill No. 459, regarding misclassification (https://tinyurl.com/r9u7rzo):

"California already has a worker misclassification law it’s not enforcing: California Senate Bill 459 is an existing law that makes it unlawful for companies to misclassify workers. This law puts its money where its mouth is. It gives the state Labor and Workforce Development Agency the power to fine companies $5,000 to $25,000 per violation for willfully misclassifying workers and allows the state Labor Commissioner to assess additional civil and liquidated damages. 

The law has been in effect since January 1, 2012 but so far has not been used to challenge worker misclassification at Uber, Lyft, or other Gig Economy platform companies. 

From the SB459 itself:

SB 459, Corbett. Employment: independent contractors. Existing law prescribes comprehensive requirements relating to minimum wages, overtime compensation, and standards for working conditions for the protection of employees applicable to an employment relationship. 

This bill would prohibit willful misclassification, as defined, of individuals as independent contractors. The bill also would prohibit charging individuals who have been mischaracterized as independent contractors a fee or making deductions from compensation, as specified, where those acts would have violated the law if the individuals had not been mischaracterized. The bill would authorize the Labor and Workforce Development Agency to assess specified civil penalties from, and would require the agency to take other specified disciplinary actions against, persons or employers violating these prohibitions. It would also require the agency to notify the Contractors’ State License Board of a violator that is a licensed contractor, and require the board to initiate an action against the licensee. The bill would authorize an individual to file a complaint, as specified, to request the Labor Commissioner to issue a determination that a person or employer has violated these prohibitions with regard to the individual filing the complaint. The bill would authorize the Labor Commissioner to assess civil and liquidated damages against a person or employer based on a determination that the person or employer has violated these prohibitions. 

This bill would provide that a person who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status for the individual shall be jointly and severally liable with the employer if the individual is not found to be an independent contractor. This bill would exempt from the provisions regarding joint and several liability a person who provides advice to his or her employer or an attorney who provides legal advice in the course of practicing law.

So what gives?
AB5 Bill sponsor Assemblymember Gonzalez (on Twitter) -- perhaps she can give specific insight/rationale. Ostensibly the state could have charged Uber or Lyft with misclassifications violations under this statute (they were not). SO...a possible reason I can think of why they passed AB5 was to try to explicitly define what an independent contractor is (SB-459 does not). But the definition as outlined in AB5 makes it nearly impossible for any IC to pass muster. What it does do is place onus on newly minted "employers" to do withholding of taxes that go to the coffers for state unemployment, disability, etc., enforced by the Franchise Tax Board and Employment Development Department.

Call and write your representative...
If you don't know who they are, you can find them by your address and zip code: http://findyourrep.legislature.ca.gov/ .. Better yet, go make an appointment to see them in the local office or in the legislature in Sacramento. They need to see the faces of hard-working, self-employed constituents whose careers are being harmed by AB5. Find out why and how they intend to help AB5 be retooled to serve Californian independent contractors that want to remain independent.

This isn't jaywalking...
NOTE: I've also heard that some hiring freelancers/contractors will simply break the law and hope they don't get caught and do business as usual. To try to fly under the radar until AB5 is addressed. Do you trust that you won't get reported? You can't frame that as "a protest" to simply ignore the law. If you think that is a truly a protest, then feel free to call up the EDD and FTB and let them know you're openly in noncompliance with AB 5 in this manner and see how that goes...

It's the WE, not the ME time. My suggestion - redirect your anger and frustration and DO something that helps roll AB5 back, please. There are millions in the same boat as you are. And many who are not, but will stand by you and work to make this equitable and just for everyone.