Labor & Employment Newsletter

Another major sports organization has been hit on the head with a concussion lawsuit. Most recently, former WWE performers claim that they suffered concussions and other head injuries that have resulted in long-term brain damage. In Laurinaitis v. World Wresting Entertainment, Inc., 53 former World Wrestling Entertainment, Inc. (WWE) wrestlers and performers filed a class-action lawsuit in Connecticut District Court against the WWE claiming that they were intentionally and incorrectly hired as independent contractors rather than employees. The former wrestlers seek to hold the WWE responsible for their traumatic brain injuries and allege that they were misclassified as independent contractors in order to shift liability for their injuries. Plaintiffs’ 17-count complaint seeks declaratory, equitable, compensatory, and punitive relief. This lawsuit is filed on the heels of the settlement of a recent class-action lawsuit filed by NFL players for head injuries that could pay out approximately $1 billion dollars to those plaintiffs, so the stakes are potentially high for the WWE.

As independent contractors, the performers do not have union representation unlike other athletes in major professional sports. In contrast to employees, independent contractors are not able to enjoy the benefits of important employment laws, including the Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), and applicable income tax contributions, workers’ compensation protection, and unemployment insurance benefits. If classified as an employee, the WWE would be responsible for paying Social Security contributions, unemployment insurance, and Medicare. Consequently, how a worker is classified has extensive repercussions for both the employer and its workers.

In support of Plaintiffs’ contention that the WWE should treat them as employees rather than independent contractors, the complaint alleges that the “WWE control[s] Plaintiffs’ personal lives just as strictly as their professional careers. The WWE regulated what the Plaintiffs could wear in public, how they traveled, where they trained, how they trained, where, when, and how they performed, and what medical treatment they received, if any.” Central to plaintiffs’ complaint is the allegation that the “WWE maintained its own medical personnel who provided care and treatment if the WWE itself deemed treatment necessary.” The plaintiffs state that this misclassification forced them “to rely on the goodwill of [the WWE’s] medical staff to monitor, diagnose, and treat injuries since the majority of Plaintiffs could not afford their own insurance or health care while performing for WWE.” Ultimately, plaintiffs argued that their intentional misclassification meant that they were not afforded the protections of state and federal laws that would have “ensured proper medical care and treatment for injuries occurring during employment.”

In response to the Complaint, the WWE issued the following statement: “This is another ridiculous attempt by the same attorney (Konstantine Kyros of Massachusetts) who has previously filed class action lawsuits against WWE, both of which have been dismissed. A federal judge has already found that this lawyer made patently false allegations about WWE, and this is more of the same. We’re confident this lawsuit will suffer the same fate as his prior attempts and be dismissed.”

Brenden Leydon, one of the attorneys representing plaintiffs, responded to the WWE’s statement by saying: “There is nothing ridiculous about this case. WWE's misclassification of its wrestlers as independent contractors is an outrageous scheme to shift to the taxpayers its legal obligation to the catastrophically wounded talent who literally gave their blood sweat and tears for it. It needs to stop immediately.”

Worker misclassification has been the recent subject of numerous lawsuits as well as the focus of the Department of Labor (DOL). Last year, the DOL issued guidance aimed at making it more difficult for employers to classify their workers as anything other than regular employees under the FLSA, which establishes minimum wage and overtime pay obligations. The ultimate inquiry for determining how a worker should be classified under the DOL’s FLSA guidance is whether the worker is economically dependent on the employer or whether he is truly in business for himself. One factor in determining whether a worker should be classified as an employee under the DOL’s guidance is the nature and degree of the employer’s control over the worker. Outside of the FLSA context, the degree of an employer’s control over a worker is often utilized in assessing how a worker should be classified. If plaintiffs’ allegations that the WWE exercised complete control over their performances and daily lives proves true, the WWE may be facing a significant judgment against it.

Given the DOL’s increased focus on the FLSA enforcement and other high-profile misclassification lawsuits, businesses that classify workers as independent contractors should look closely at their contracts and, more importantly, the actual work being performed by and the “control” of their independent contractors. Moreover, businesses should closely monitor federal and state developments as worker misclassification suits are adjudicated and be prepared to revise their agreements if necessary.