As I sit here watching professional wrestling with my son, it hits me. Vincent Kennedy McMahon, the Chairman of World Wrestling Entertainment, is a genius. First, Mr. McMahon has kept me interested in staged fights (with predetermined outcomes) for the majority of my life. Second, I marvel at how he has successfully monetized this phenomenon through ample merchandizing (I write this as my son’s many wrestling figures stare back at me). Finally, and most amazingly, he has built a billion-dollar industry using independent contractors (wrestlers).
Unlike other professional athletes, wrestlers, as non-employees cannot unionize. As independent contractors, wrestlers are also left without traditional employment benefits such as health insurance. While Vince McMahon is in many ways a modern-day P.T. Barnum, his enterprise remains a cautionary tale for most private sector employers today.
Various states and the federal government (and their respective courts) are increasingly scrutinizing independent contractor relationships, and more often than not concluding that they are actually misclassified employees. Here in Miami, U.S. Federal Magistrate Judge Goodman recently provisionally allowed a group of 500 exotic dancers to collectively pursue unpaid wage claims against a club that had classified them as independent contractors. This week, the Nevada Supreme Court also ruled that exotic dancers were employees, not independent contractors.
The Kansas Supreme Court recently found that 500 Federal Express drivers were employees, not independent contractors for state wage law purposes.
Last month, 800 newspaper delivery workers in San Diego settled their wage claims for $3.2 million after alleging that they were misclassified as independent contractors.
Employers that utilize independent contractors need to consult with counsel. They do not want to find themselves on the wrong side of a lawsuit. The outcome may be predetermined, and they may not have Vince’s “no holds barred” approach and resources to deal with the results.