New reporting from POST Wrestling’s John Pollack and Brandon Thurston (Wrestlenomics) on the independent contractor misclassification lawsuit against AEW provide a rare look into AEW’s talent expenditures and the significant financial implications of potentially reclassifying their wrestling and non-wrestling talent as employees.
The Lawsuit
Former AEW announcer Kevin Kelly and The Tate Twins have filed a lawsuit against All Elite Wrestling (AEW) and others, alleging defamation and breach of contract following their departures from the company. Central to the case is a challenge to AEW’s classification of its talent as independent contractors rather than employees. The plaintiffs aim to void the arbitration clauses in their contracts and seek class-action certification for the lawsuit. Kevin Kelly’s attorney, Stephen P. New, has been outspoken in advocating for reform in the pro wrestling industry regarding talent classification.
AEW\'s Response and Legal Maneuvers
AEW is actively working to move the case to federal court. As the legal battle unfolds, the lawsuit brings to light previously undisclosed details about AEW’s talent compensation and the financial burdens the company would face if forced to reclassify its talent as employees.
Talent Compensation and Financial Insights
Over a two-year period, AEW paid 290 individuals, including both wrestlers and non-wrestling talent, more than $60 million under independent contractor agreements. This breaks down to an average of $207,000 per individual, though compensation likely varies widely, with top stars commanding multi-million-dollar contracts.
If AEW were required to reclassify its talent as employees, the company would face significant financial obligations beyond current payouts. AEW would be liable for a 9.95% tax, totaling over $5.97 million, and would incur additional employee benefits costs of $18,125 per individual annually—resulting in approximately $5.26 million in yearly expenses.
Legal and Financial Implications
Beyond taxes and benefits, AEW would also need to cover legal fees, estimated at about 30%, leading to projected expenses of $14.59 million. This sum substantially exceeds the $5 million threshold established by the Class Action Fairness Act (CAFA), which allows for federal jurisdiction, which may be perceived as more favorable to defendants.
For further analysis of the AEW misclassification lawsuit:
