Wrestlers file lawsuit against WWE over independant contractor/employee BS

[sek69]

After reading Raven's contract, I want to see WWE's lawyers try to explain how the wrestlers are independent contractors but they go out of their way to specify companies even affiliated with Turner Broadcasting in the non compete portion.

[Ronnie]

I'm amazed to see the wrestlers referred to as such: WRESTLER. Not "Superstar", not "Talent" nor "Sports-Entertainer". Wrestler.

 

I thought Vince considered that to be a dirty word ...

[Boondocks Kernoodle]

At least Raven has found a new career outside of the wrestling world: http://www.youtube.com/watch?v=NHT4cdoHvxE

[Bob Morris]

The latest on the lawsuit:

 

http://www.ctemploymentlawblog.com/2008/11...ion-to-dismiss/

 

However, the wrestlers highlight an interview given to a British newspaper in August 2008 about the case that suggests a bit more complicated of a picture. While the result is the same -- she was treated as an employee, not an independent contractor, it appears the WWE argued that she was not an employee.

 

In the interview, K&L Gates attorney Jerry McDevitt noted that the only time WWE litigated the issue - it actually lost on the legal argument (though ultimately prevailed in the case on other grounds).

 

The independent contractor v employee situation has only come up once before in litigation in the long history of the WWE, when they were sued for sexual harassment by former female wrestler Nicole Bass.

 

Jerry reveals: “The sexual harassment laws, of the United States at least, are purposely designed to protect employees and do not extend to independent contractors.

 

“However the interpretation given under Title VII of the Civil Rights Act which covers sexual harassment is very broad, as it wants to include in it as many people as possible.So a preliminary issue that came up was whether she was an employee, for Title VII purposes, or an independent contractor.

 

She was determined to be an employee.

[Guest The 3H's]

They lost.

 

 

http://www.stamfordadvocate.com/localnews/ci_11793293

[JHawk]

Any word as to what grounds the case was dismissed on? The article makes no mention of it and that seems like a pretty important aspect of the story to not even mention.

[Bob Morris]

I checked the blog that I linked to previously and didn't find an update regarding the case or why the judge granted the WWE's motion to dismiss. It's possible, though, that the person who maintains the blog hasn't pulled the information up yet to review.

 

The Stamford article notes it's possible the plantiffs could appeal, so it may not be a dead issue yet.

[kjh]

Bryan Alvarez reports in this week's F4W newsletter that the suit was dismissed due to the judge agreeing with WWE that the statute of limitations had expired.

[kjh]

More details can be found in the following links:

 

http://www.ctemploymentlawblog.com/2009/03...suit-dismissed/

 

http://www.ctemploymentlawblog.com/uploads...how_temp_pl.pdf

[Marty]

The New York Times published a detailed report on the U.S. government's plans to crack down on businesses that misclassify independent contractors, which could directly affect WWE.

 

The big issue that could affect WWE is President Obama's Administration looking to re-write a "three-decade-old" tax rule that allows companies to "indefinitely classify employees as independent contractors — even when the government knows they are misclassified — so long as the company once had a reasonable belief that the workers were contractors."

 

Looking back three decades to when WWE began to snap up wrestlers from across the country to build their national wrestling promotion, wrestlers were independent contractors moving from territory to territory. At the time, there was "reasonable belief" to classify wrestlers as independent contractors.

 

According to Obama, the emphasis on re-evaluating the independent contractor vs. employee classification is to fix a system where companies often-times classify workers as independent contractors to avoid paying social security, medicare, and unemployment tax while not being obligated to provide healthcare to workers.

 

Obama estimates that the re-classification of workers would produce $7 billion over ten years. Considering the economic hardship facing the U.S., the crackdown has obviously become a priority issue.

 

The issue could also affect former WWE CEO Linda McMahon, as she has yet to formally address the topic of independent contractor vs. employee classification during her campaign for Senator in Connecticut.

 

It will likely become a hot topic during future debates with Republican opponent Rob Simmons as the U.S. government continues to focus on recouping lost revenue with a recent federal government survey concluding that approximately 3.4 million U.S. workers are misclassified as contractor

 

Credit: PWTorch.com

U.S. Cracks Down on ‘Contractors’ as a Tax Dodge

 

By STEVEN GREENHOUSE

Published: February 17, 2010

 

Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.

 

President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years. More than two dozen states also have stepped up enforcement, often by enacting stricter penalties for misclassifying workers.

 

Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.

 

Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.

 

One federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees. Ohio’s attorney general estimates that his state has 92,500 misclassified workers, which has cost the state up to $35 million a year in unemployment insurance taxes, up to $103 million in workers’ compensation premiums and up to $223 million in income tax revenue.

 

“It’s a very significant problem,” said the attorney general, Richard Cordray. “Misclassification is bad for business, government and labor. Law-abiding businesses are in many ways the biggest fans of increased enforcement. Misclassifying can mean a 20 or 30 percent cost difference per worker.”

 

Employers deny misclassifying workers deliberately. The businesses say the lines are unclear between employee and independent contractor.

 

Workers are generally considered employees when someone else controls how and when they perform their work. In contrast, independent contractors are generally in business for themselves, obtain customers on their own and control how they perform services.

 

Many businesses are dismayed about the tougher federal and state scrutiny.

 

“The goal of raising money is not a proper rationale for reclassifying who falls on what side of the line,” said Randel K. Johnson, senior vice president with the United States Chamber of Commerce. “The laws are unclear in this area, and legitimate clarification is one thing. But if it’s just a way to justify enforcing very unclear laws against employers who can have a legitimate disagreement with the Labor Department or I.R.S., then we’re concerned.”

 

Among the most often misclassified workers are truck drivers, construction workers, home health aides and high-tech engineers.

 

Portraying regular workers as contractors allows companies to circumvent minimum wage, overtime and antidiscrimination laws. Workers classified as contractors do not receive unemployment insurance if laid off or workers’ compensation if injured, and they rarely receive the health insurance or other fringe benefits regular employees do.

 

“This denies many workers their basic rights and protections and means less revenues to the Treasury and a competitive advantage for employers who misclassify,” said Jared Bernstein, who as executive director of Vice President Joseph R. Biden Jr.’s Middle Class Task Force has helped orchestrate the administration’s campaign against misclassification. “The last thing you want is to give a competitive advantage to employers who are breaking the rules.”

 

Organized labor, a strong supporter of Mr. Obama, has long complained about the practice. No administration has undertaken as big a crackdown as Mr. Obama’s, although administration and state officials deny they are doing it as a favor to labor.

 

California’s attorney general, Jerry Brown, is seeking $4.3 million from a construction firm he accused of misclassifying employees. Last April, he won a $13 million judgment when a court ruled that two companies had misclassified 300 janitors, cheated the state out of payroll taxes and not paid minimum wage and overtime.

 

Last November, the Illinois Department of Labor imposed $328,500 in penalties on a home improvement company for misclassifying 18 workers, saying it had pressed them to incorporate as separate business entities.

 

The Obama administration plans to expand investigations by hiring 100 more enforcement personnel. The I.R.S. has begun auditing 6,000 companies to see whether they are in compliance with the law.

 

The administration also plans to rewrite a three-decade-old I.R.S. rule that lets companies indefinitely classify employees as independent contractors — even when the government knows they are misclassified — so long as the company once had a reasonable belief that the workers were contractors.

 

One worker who welcomes stricter enforcement is Fritz Elienberg, who spent five years installing cable and Internet service for RCN in Boston.

 

Mr. Elienberg said he and a dozen other installers reported to an RCN office six mornings a week, shortly after 6:30, where they received their daily assignments and the equipment to do installations. He said he typically worked 10 to 14 hours a day and never received time-and-a-half pay for overtime.

 

“I didn’t feel like an independent contractor. I didn’t feel like my own boss,” Mr. Elienberg said. “I always believed I was an employee. It’s a win-win situation for them and a lose-lose for us. We didn’t get overtime, sick days, vacations, health insurance or pensions.”

 

Mr. Elienberg said his foot was seriously injured when a ladder fell on it, but workers’ compensation did not cover his medical bills because he was considered a contractor. He is suing RCN for overtime pay and the value of lost benefits.

 

Michele Murphy, an RCN spokeswoman, said the company often contracted with outside service providers but did not misclassify workers.

 

A Harvard study found that 4.5 percent of Massachusetts workers were misclassified, while a Cornell study concluded that 10 percent of New York’s private-sector workers were.

 

Last October, the attorneys general of New York, New Jersey and Montana threatened to sue FedEx Ground, asserting it had misclassified its drivers. The Teamsters union has long pressed officials to pursue the company. The Teamsters hope to unionize these drivers, but independent contractors, unlike regular employees, cannot form unions.

 

FedEx argues that these drivers are contractors because they own their trucks and can sell their routes.

 

One factor in the push for more aggressive enforcement is the Labor Department’s new top law enforcement official, M. Patricia Smith. As New York’s labor commissioner the past three years, she was known for cracking down on misclassification.

 

Ms. Smith oversaw a task force comprising various state agencies that conducted 2,413 misclassification investigations and 65 joint sweeps in which teams descended on companies’ offices to examine payroll records.

 

In a Feb. 1 report to New York’s governor, Ms. Smith noted that since late 2007, the task force had identified more than 31,000 instances of misclassification and assessed $11 million in unpaid unemployment taxes and $14.5 million in unpaid wages.

 

(courtesy the New York Times)

[Bob Morris]

Assuming the Obama administration follows through on this, it could have implications on pro wrestling as a whole, not just WWE. TNA would almost certainly be affected... don't know much about how ROH structures its contracts, if any.

 

Independent wrestling promoters could be unaffected, though, given that they contract with wrestlers to work a couple of shows, rather than restricting them over a multiple-year period, as is the case with WWE and TNA contracts.

[sek69]

It's really quite amazing how this has been able to stand for 30 years despite it being so painfully obvious these people aren't true contractors.

 

 

I wonder what mid carder Vince will give an Obama gimmick in order to vent his frustrations ala Irwin R Shyster.

[Dan]

I wonder what mid carder Vince will give an Obama gimmick in order to vent his frustrations ala Irwin R Shyster.

I could see them doing a reverse Akeem gimmick.

[kjh]

I wouldn't get you hopes up. As I said on Cageside Seats, being a professional wrestler is such a strange occupation with no regular workplace and hours that I could easily see WWE continuing to dodge their federal tax responsibilities for many years to come.

[Tim Evans]

I wonder what mid carder Vince will give an Obama gimmick in order to vent his frustrations ala Irwin R Shyster.

In FCW, Abraham Washington was given the Obama gimmick but they changed it once he got called up. Wouldn't shock me if they did it again.

[1004Holds]

I wonder what mid carder Vince will give an Obama gimmick in order to vent his frustrations ala Irwin R Shyster.

I could see them doing a reverse Akeem gimmick.

 

There's that one guy who looks like John Cena but in blackface. I'm sure they would probably use him. Or they could do commercials bashing Obama like they did for the MLB when they went on strike. Looking back, now their stuff about how there's no off-season in those commercials makes more sense then it did when I first saw them.

 

I didn't know that independent contractors could not set up their own union. Why is that the case?

[MikeCampbell]

Raven is doing an appearance for my local Syracuse indy fed next, and has graciously agreed to do a Q&A session. I plan on asking about this, unless he's not allowed to legally comment on it.

[MikeCampbell]

According to Raven, the lawsuit was dismissed due to statute of limitations. He was told that had he filed the lawsuit two years earlier, he'd have a slam dunk case.