By Doug Fuglsang. Mr. Fuglsang is a licensed attorney in Illinois and Wisconsin with a Sports Law Certificate from the National Sports Law Institute. He can be reached at firstname.lastname@example.org.
In 2014, CM Punk, the self-proclaimed “Best in the World,” vanished from the WWE one year removed from a 434-day title reign. Punk was later suspended, and ultimately fired, by the WWE, but both Punk and WWE remained relatively silent on the details of their falling out.
The Internet Wrestling Community did not hesitate to fill the void with rampant speculation as to why such a popular superstar suddenly left such a beloved institution as the WWE.
Rumors aside, the truth as to why Punk and the WWE parted ways in such a public and bitter way lies in employment law. Specifically, Punk was fed up with the independent contractor-employee dichotomy. The dirty little secret of the wrestling business is that professional wrestlers are not WWE employees, they are independent contractors. Therefore, they lack numerous benefits and protections that come with the “employee” status.
Recently, the rumblings of a professional wrestlers’ union have begun to surface, fueled by comments made by Punk after his departure from the WWE. Although there are numerous drawbacks to unionizing, it is ultimately a move that modern wrestlers should explore.
Punk finally broke his silence two-months ago on Colt Cabana’s Art of Wrestling podcast; the entire podcast is worth a listen, if you have the time. Punk discussed an array of topics, coming off opinionated, insightful, and admittedly bitter for being fired on his wedding day, but still manages not to cross the line into a cheap shoot interview—If you have time to kill and are interested in hearing some stories about the biz, I highly recommend you go down the rabbit hole of wrestling shoot interviews on YouTube.
On Cabana’s podcast, Punk revealed that his relationship with WWE deteriorated shortly after the infamous “Pipe Bomb” promo in 2011—a worked shoot reminiscent of the infamous Attitude Era. The ensuing storyline, or angle, would foreshadow Punk’s real life exit from the company nearly three years later. Punk explained his departure wasn’t caused by one particular event, rather a culmination of many factors including: a hostile work environment, demanding schedule, creative differences, unfair pay and ultimately, his health. He didn’t hesitate to discuss the darker side of sports entertainment business and made some serious accusations concerning the medical care provided by WWE staff. Specifically, Punk claims WWE misdiagnosed a staph infection to keep him on the active roster, and even allowed him to fly to Europe the day after sustaining a concussion, a potentially deadly breach of concussion protocol.
EMPLOYMENT AND TAX LAW IMPLICATIONS
“WWE doesn’t do anything to protect the wrestlers, they do things to protect themselves.”
Punk’s comments, although cynical, are not without merit. The WWE loves to advertise how it employs more than 625 full-time employees and provides a comprehensive benefits package to all employees including: medical, dental, vision, 401(k) and employee stock purchase plans. There is just one problem; wrestlers aren’t employees of the WWE.
Wrestlers are hired as independent contractors, a holdover from an era when wrestlers were free to travel among the regional territories, selling their services to the highest bidder. The rationalization behind the independent contractor label is that it gives skilled workers certain advantages, like workplace flexibility, the freedom to perform their craft free of employer interference, and the ability to work for several different employers.
However, the truth is that the current tax and employment laws give employers incentives to create these contingent relationships in order to avoid legal obligations, and not for the benefit of the employee.
Employers who hire independent contractors don’t have to pay health or unemployment insurance, nor do they make contributions to Social Security and Medicare. Instead, independent contractors must pay a Self-Employment Tax, which essentially is the equivalent to both the employer and employee’s share of Social Security and Medicare taxes. Additionally, they incur the costs associated with performing the work, like travel and lodging, they are ineligible for workers’ compensation, and must purchase their own health insurance, which can be extremely costly for wrestlers. The health care industry charges them exorbitant premiums because they consider wrestlers a high risk for injuries.
The post-recession economic environment has encouraged the practice of hiring independent contractors. There are 53 million independent contractors working today in a variety of professions including lawyers, software developers, graphic artists, accountants, consultants, nannies, writers, editors, and web designers among many others. Congruently worker misclassification is a hot-button issue with significant tax and employment law ramifications for both employers and independent contractors. During Linda McMahon’s second failed Senate campaign, she was attacked by the Democratic Party over WWE’s worker misclassification and simultaneously audited by Connecticut’s Labor Department. However, the audit and mudslinging amounted to nothing more than political grandstanding.
The most significant aspect of the independent contractor employee distinction is the ability to form a union. Under the National Labor Relations Act employers have no obligation to collectively bargain with independent contractors, even if they unionize. The right to form a union is only granted to employees. If you examine WWE’s practice of hiring wrestlers under the pretense of independent contractors, you’ll see that it is—in the time-honored tradition of professional wrestling—nothing more than kayfabe. The various areas of law pertaining to worker classification is a complicated web of bureaucracy, but the only test that matters for unionization purposes is the complex common law agency test utilized by the NLRB. Essentially, at the core of this multiple factor test is the amount of control the employer has over the worker
Brock Lesnar’s Booking Contract clearly states that wrestlers are hired as independent contractors. The contract language is just one factor, however, among many the NLRB uses to analyze the totality of the circumstances of the employment relationship. The reality is WWE controls just about every aspect of their employment. WWE instructs wrestlers where and when to perform, wrestlers sign exclusive deals with WWE, and WWE is in charge of; creating a wrestler’s gimmick, producing that character’s theme song and vignettes, and controls their overall story line.
On the other hand, a wrestler’s work is not completely controlled. While it is true the WWE books which wrestler wins, the wrestlers are given the freedom to perform the match as they see fit, with the exception of a few major spots for story line purposes.
CM Punk detailed how much control WWE actually has over its talent in and out the squared-circle. Punk alleged he was told to maintain his character’s appearance outside the scope of employment and was even reprimanded for comments on social media. Additionally, he recounted a few occasions when the WWE interfered with his ability to earn income through additional promotions and sponsors. After the “Pipe Bomb” interview, WWE gained mainstream attention; Punk was asked to do interviews with major outlets and had companies interested in sponsoring him. According to Punk, he went to Vince for permission but was denied the opportunity.
Punk called it a creatively stifling environment; he wasn’t given permission to do TV shows, stunt work, movies, or other outside projects. When approached with outside opportunities Punk claimed “I would go to the office like a good little soldier and then they would tell me I can’t do it, and two weeks later John Cena is doing it, the same exact thing.” At one point, when Punk was WWE champion he wanted to accompany Chael Sonnen to the Octagon at a UFC event before the Royal Rumble, in an attempt to create a buzz and get more buys of the PPV. Vince McMahon said “no” because he thought it was barbaric. Yet weeks later Triple H would accompany Floyd Mayweather Jr. to the ring for his bout with Miguel Cotto.
In response to the growing trend of employer’s taking advantage of the current system, the NLRB has shifted towards recognizing more independent contractors as employees. In the current environment, if WWE wrestlers’ employment status were to be analyzed in totality the NLRB would likely find wrestlers are in fact employees, giving them the right to form a union. However, to best understand why wrestlers need a union in the first place, it is important to examine the history of the wrestling business.
WWE’s RISE TO MONOPOLY DOMINANCE
The Sports Entertainment business has evolved significantly over the last 50 years. Gone are the fiefdoms of the 60s and 70s when regional promoters operated exclusive territories throughout the country, replaced by McMahon’s monopoly we know today. McMahon’s rise to power during the wrestling boom of the 1980s was the byproduct of several savvy business decisions. He encroached into regional territories — a forbidden practice at the time — by broadcasting his events on PPV and TV. He then used that revenue to poach top talent, like Hulk Hogan, from rival promotions. With the success of Wrestlemania and Hulkamania running wild, McMahon simply bought out his remaining competitors.
Then in 1989 McMahon went before the government and admitted his wrestling matches were fake; mere performances by skillfully trained athletes with predetermined outcomes. The outcome was twofold: WWE no longer had to pay various state taxes on television rights to broadcast events, and State Athletic Commissions no longer needed to sanction matches, essentially deregulating the industry.
This period in wrestling featured a crude formula where cartoonish, larger than life, characters were pitted against each other in a battle of good versus evil. The Federal Government would later show these larger than life characters were the product of anabolic steroids, contrary to what some wanted you to believe, 24” pythons weren’t built by “saying your prayers and eating your vitamins.”
In the end, McMahon was acquitted of steroid trafficking and conspiracy charges, thanks in large part to Hulk Hogan’s testimony. Although a Harrisburg, Pa., physician Dr. George Zahorian was convicted of illegally distributing to numerous WWE wrestlers and McMahon was forced to cut ties with many of his top stars. The trial drained McMahon’s finances and forced him to restructure the company, which gave Ted Turner’s WCW the opportunity to steal his top talent and make a serious run at the industry leader.
The Monday Night Wars of the late 90s, between Turner’s WCW and McMahon’s WWE, are legendary. Wrestling went mainstream; the shows put up unprecedented ratings, driven by more realistic adult-oriented storylines. Ultimately, Turner’s WCW lost the war and Vince purchased the company, cementing WWE’s status as the premier wrestling promotion in the world.
UNIONS AND THE ALMIGHTY DOLLAR
Today, the economics of the industry have changed; WWE is a publicly traded company that brings $500 million per year. For better or for worse, WWE is the only game in town if you want to make it as a professional wrestler. As such, WWE can leverage this into more favorable deals for itself. Unless you’re an established superstar, WWE can dictate the terms of the agreement leaving the wrestler with little choice—either sign or look for work in the indy circuit.
WWE boasts that the annual salary of the average active wrestler is $550,000. In reality, a small fraction of them make this amount; Superstars like John Cena, Brock Lesnar, and CM Punk can earn in the millions, but developmental wrestlers and mid-carders earn anywhere from $25,000-$75,000 annually. Compare that with WWE’s biggest competitor Total Nonstop Action, where some guys work just as hard and earn as little as $300 a match, you can understand the desire to sign a take it or leave it deal with WWE.
In spite of this, there is no guarantee wrestlers would even want to form a union. Being an independent contractor can provide certain advantages. It’s possible to earn more money as an independent contractor because they can receive royalties from merchandise sales, while employees cannot. However, as Punk points out, WWE Creative can have a serious effect on the amount of royalties earned. At the height of his popularity Punk was outselling John Cena in merchandise, WWE responded by turning him into a heel character, reducing his appeal to the younger audience which is more likely to want to purchase WWE merchandise. Therein lies the rub; Vince McMahon has almost complete control over a wrestler’s character and story line, with the potential to weaken earning power. He has the ability to book a wrestler to lose matches consistently hurting his ability to get over with fans. This actually happened to current “COO” of WWE, Triple H, when he was buried for a year after breaking kayfabe during the infamous “Curtain Call.”
McMahon also has the ability to reduce a wrestler’s income by taking him off TV, house shows, or worse, a PPV. Punk explained it best: “WWE’s job, almost, was to undermine what anybody is worth, if my truth worth was eight million dollars a year, WWE doesn’t want to pay me eight million dollars a year, because they still need to turn a profit.”
It is certainly easier to play Monopoly when you have all the hotels.
Yet, wrestlers might not want to form a union due to the loss of individual bargaining power. Some of the biggest names in the industry—Dave Bautista, D’wayne “The Rock” Johnson, and Brock Lesnar—recently negotiated lucrative deals with WWE that included limited appearance dates. They can do this because WWE views them as big draws. It is hard to deny this, and Punk acknowledged those guys deserved the deals they received. As an employee, these wrestlers would be required to work as many dates as WWE wanted, and likely for a lot less money.
Of course, only a few WWE superstars have this type of leverage. For the rest of the locker room WWE is the only game in town. During the Monday Night Wars there were three different weekly primetime cable shows with WWE, WCW, and ECW. The competition among the three was intense and the era was rife with high profile defections: WCW gave Scott Hall and Kevin Nash guaranteed contracts for $1.2 million and 120-days of work to lure them from WWE; later “Big Show” Paul White got $10 million over 10-years from WWE to leave WCW. Numerous ECW stars were also poached by WWE and WCW because they had deeper pockets.
Perhaps the biggest obstacle to unionization, however, is the wrestlers themselves.
According to Punk the WWE instills a desire to do what’s best for business rather than what’s best for the individual. It’s a pay for performance industry, as a result, you have wrestlers who work hurt to get paid, or worse, take combinations of painkillers and uppers to get up for a match. This was a common practice during the Attitude Era when WWE was forced to adopt a more hardcore style of wrestling in response to ECW’s growing popularity. Wrestlers began taking insane risks with their bodies on a nightly basis. Punk admits he worked hurt on several occasions because that was the locker room mentality. “I bought in to the I’m the champion it’s pro wrestling and it’s tradition… I made every show and I worked my ass off every show.” When asked why, Punk said there is both internal and external pressure to work while injured; he worked through concussions, as well as, knee and elbow injuries that needed surgery. He led by example, there is an expectation to go out every night and do it for the boys: reach for one of Vince McMahon’s proverbial brass rings.
He later explained, “I’ve grabbed so many of Vincent K. McMahon’s imaginary brass rings that it’s finally dawned on me that they’re just that, they’re completely imaginary.”
If you don’t go out and work hurt “you’ll get punished, you’ll get left off a pay per view, they’ll take you off of Raw, they’ll take you off of house shows, and now you aren’t making any money.”
At the request of Vince, Punk was back on TV cutting promos with his arm in a sling just four days after elbow surgery. There is no denying a weird backstage dynamic. In one sense, all the wrestlers want to work together to improve the overall product, yet at the same time they really only focus on gaining favor with Vince to earn a top spot.
A glaring example of this occurred when Jesse “The Body” Ventura tried, but failed, to gain support for a union prior to Wrestlemania 2. During McMahon’s 1994 trial it was revealed that Hulk Hogan, WWE’s top superstar at the time, torpedoed Ventura’s effort by alerting Vince to his union effort. If you look at the 1991 Summerslam payoff sheet from Ultimate Warrior’s lawsuit against the WWE, it’s easy understand why; Hogan was paid $90,000 to appear, whereas some mid-carders only made $5,200.
A UNION COULD PROTECT THE HEALTH AND WELLNESS OF ITS MEMBERS
Wrestlemania VI brought an end to the boom/steroid era of wrestling and started the slow transition toward the Attitude Era. If you look closely at the card you’ll notice an alarming trend; thirteen of the wrestlers that appeared are dead. Wrestlers’ future health should be the predominant motivation for unionization.
While the ignorant point to the fact wresting is fake, they fail to grasp how grueling professional wrestling can be. Wrestlers essentially throw themselves at the ground four nights a week for a living, and the wear and tear on the body takes its’ toll.
In fact, between 1996-2007 it’s estimated that sixty-two wrestlers have died, the most common causes of death are heart disease, drug overdose, and suicide. You can make your own assumptions about steroid use and heart disease, but the more recent increase in drug overdose and suicide deaths of Attitude Era wrestlers has many pointing to CTE.
David Metzler editor of the Wrestling Observer Newsletter, and author author Irv Muchnick have been critical of WWE’s handling of concussions and CTE. In the wake of the NFL concussion settlement WWE is currently facing a class-action lawsuit in Federal Court brought by two former wrestlers that claim “WWE has, for decades, subjected its wrestlers to extreme physical brutality that it knew, or should have known” causes a variety of medical problems, including brain damage.
In fairness to WWE, they have made progress in caring for their talent’s health and wellness. However, Vince appears to have stolen a page of Rodger Goodell’s PR playbook. The majority of these programs are glorified PR stunts.
WWE adopted a Talent Wellness Policy. It strictly prohibits the use of anabolic steroids and performance enhancing drugs, masking agents, the abuse of prescription medications, and the use, possession and/or distribution of illegal drugs. However, Punk and others criticize the program for preferential treatment of main-event wrestlers, as well as, the fact it has been amended to allow therapeutic exemptions for banned substances that are easily obtained, performance at PPV’s in spite of a positive test, and a system to work off a strike through a redemption program if they are already a two-strike offender.
WWE also claims to cover 100 percent of all costs associated with any in-ring related injuries and rehabilitation; and they offer current and former talent, who may have substance abuse problems, complete drug rehabilitation at no cost to them. The effectiveness of these programs has been called into question. Tragically former WWE wrestler Chris Kanyon sought treatment for depression through the program, but was denied because the program doesn’t cover mental health issues; he would later commit suicide. Former WWE wrestler Sean O’Haire was in and out of drug rehabilitation six times before he committed suicide. Both Kanyon and O’Haire are thought to have suffered the effects of CTE.
In response to the negative publicity WWE adopted the ImPACT™ concussion test, the same one utilized by the NFL as a deflector shield. You can read Irv Muchnick’s takedown of Dr. Joseph Maroon, the co-founder of ImPACT Applications, Inc., and the ImPACT™ concussion test here.
WWE has also banned chair shots and several moves deemed high risk for head and neck injuries. Small steps in the right direction but has little value to the Attitude Era stars that made the WWE what it is today.
There are only two confirmed cases of CTE being present in the brains of professional wrestlers: Chris Benoit and Andrew ‘Test’ Martin. Many speculate Mike Awesome, Crash Holly, Sean O’Haire, and Chris Kanyon did as well. What did they all have in common? They all took repeated chair-shots to the head, or performed maneuvers that have a high risk of brain injury. The Attitude Era’s popularity was driving by edgy storylines and hardcore matches. Wrestlers took chair-shots, put themselves through tables, and jumped off ladders on a regular basis. Much like the steroid era, wrestlers in the concussion-heavy Attitude era will likely pay the ultimate price for such risky moves in the not too distant future.
UNIONIZING IS THE ULTIMATE FINISHING MOVE
The best protection against the ills of the business is to form a union. The current employer-independent contractor relationship puts an undue burden on the wrestlers to handle the realities of the industry. Obviously, the downside of unionization is increased costs that are passed onto the fans. There would probably be fewer shows on the calendar or maybe even an off-season depriving the hardcore fan year-round action. But I’m willing to bet that anyone who will pay $69.95 for Night of Champions would gladly hand over more than $9.99 per month for the WWE network. This could easily be offset with a better product.
As discussed before, the NLRB would likely side with the wrestlers, but it’s not guaranteed. There is an alternative that may help wrestlers with insurance but still leaves them in an unequal bargaining position with WWE. The Freelancers Union, is a non-profit organization that helps independent contractors purchase health insurance through its’ for-profit Freelancers Insurance Company. This, in theory, gives independent contractors large-group bargaining power to negotiate with insurance companies. However, this practice isn’t without its fair share of criticisms. Additionally, it’s merely an association and has no bargaining power as far as the NLRB is concerned.
The best course of action for the WWE locker room is to attempt to unionize and gain the bargaining power and benefits of an employee. The company depends more on the wrestlers on the roster to make a profit than it does on the 625 full-time employees, and its time they are compensated as such.
Legally, it appears the path has been cleared to take on the McMahon Empire, whether wrestlers choose to embrace the idea of a union is up to them.