Q. I heard about a new law in California making NFL cheerleaders employees. Glad to see our legislature isn’t wasting time fixing the drought issues, abusive ADA lawsuits, and crime and instead is focusing on the important stuff. Why was this even necessary?
A. While California seemingly has some very pressing issues, former collegiate cheerleader and AB 202 sponsor, Assemblywoman Lorena Gonzalez, thought a need to pep-up the status of NFL cheerleaders. As you may recall, in January, 2014, we brought you an Employment Answer which discussed the class action lawsuit brought by the Oakland Raiderettes and in April, 2014, another Employment Answer that discussed a similar issue/lawsuit brought by the Buffalo Jills. Evidently we really like cheerleaders! Both groups of cheerleaders claimed they should be treated as employees and not independent contractors. This is significant because if the cheerleaders were treated as employees they would need to be paid hourly, including overtime, and be subject to the volumes of other laws surrounding employees. Interestingly, until the lawsuit, despite the $100 per game fee paid to the cheerleaders, the teams never seemed to have a problem finding people to line up to cheer. (That said, it is unclear whether the “lining up” was simply part of their cheer training). Recently, the Raiderettes settled their lawsuit for $1.25 million dollars.
The Raiderettes’ settlement makes sense in light of the fairly ambiguous legal test for independent contractors. As noted on the DLSE’s website, “There is no set definition of the term ‘independent contractor’ and as such, one must look to the interpretations of the courts and enforcement agencies to decide if, in a particular situation, a worker is an employee or independent contractor.” The most important factor in this test is whether the worker has control or the right to control the work and the manner and means to do its job. But, there are eleven other factors:
- Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
- Whether or not the work is a part of the regular business of the principal or alleged employer;
- Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
- The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
- Whether the service rendered requires a special skill;
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
- The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
- The length of time for which the services are to be performed;
- The degree of permanence of the working relationship;
- The method of payment, whether by time or by the job; and
- Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
Despite the unwieldy test, the Raiderettes and Jills seemingly fall into many of the above categories thereby making a strong case for employee status . . . and a large settlement.
The million dollar settlement further makes sense because improperly classifying an employee as an independent contractor could mean significant damages. In addition to being liable for simple back pay, a business’ improper classification could lead to numerous penalties and other damages. Outside of back pay and penalties, the employer must also be worried about having to pay attorneys’ fees – AND not only their own – BUT ALSO the plaintiff’s attorneys’ fees. And, if a lawsuit is brought against a business as a class action suit (which they generally are), such fees could easily be in the hundreds of thousands of dollars. In the end, these lawsuits often times are settled for millions of dollars.
What makes this new cheerleading law perplexing, however, is why cheerleaders are being singled out. The cheerleaders had a remedy – and were seemingly very successful in arguing they did not fit under the existing independent contractor definition. While the independent contractor definition should be streamlined with a much clearer bright line rule, why the legislature felt it necessary to have a new rule just for cheerleaders after they just signed a 7 figure settlement seems strange. And, this new law is likely to have unintended effects – such as no more junior cheerleaders (those arrangements might violate child labor laws).
For those businesses that don’t employ cheerleaders, they will need to continue to b-e / a-g-g-r-e-s-s-i-v-e and carefully analyze the use of any independent contractors. Might be time for a preventative defense and a time out with your legal professional.
This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.