As previously noted, California Senate has passed the AB5 gig-work bill which could end up classifying most independent contractors as employees. Attorney Eric D. Anderson discussed how this bill could affect WWE and AEW:
#AB5 is based upon the CA case Dynamex v Superior Court of Los Angeles (2018) 4 Cal.5th 903. It codifies the Court decisions and alters the Labor Code especially at Sec.2 2750.3. Let’s briefly look at the rules in this thread.
Under CA law now any person providing labor or services for remuneration SHALL be considered an employee rather than an independent contractor .. this section of CA Labor Code 2750.3(a) (1) establishes that employee status is now presumed.
Under the code (and not including certain exemptions) the hiring entity has to prove 3 things to be able to overcome the presumption of employment.
Under 2750.3(a)(1)(A the person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. WWE will have a hard time making that argument.
The person performs the work outside the usual course of the hiring entity’s business. Whether using “wrestling” or “entertainment” there is no valid argument that the WWE Superstars are performing work outside of the WWE’s usual course of business. They ARE the business.
The person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed. WWE controls where their talent works, when they work, who they can speak with, what they can wear on stage/in-ring.
The irony is that once upon a time every wrestler really was an independent contractor, but now, thanks in large part to the WWE, for major companies that is not the case.
There are exceptions for certain professions in the code including and if the 3 part test is not applicable then the Borello test applies (see Borello & Sons inc v Department of Industrial relations (1989) 48 Cal.3d 341.)
For those thinking the WWE need not comply because it is incorporated in DE and based in CT, think again. CA law applies across the board and WWE is also a full registered foreign CA company. They not only appear often in CA but conduct all sorts of business year-round.
Do not be surprised if we start seeing a slew of Production companies owned by wrestlers pop up to try and fit into one of the exceptions provided by the law. Very similar to how many Hollywood deals work out.