Contractual Issues for Esports Athletes

Picture yourself in a large, well-lit room. The room is unfamiliar to you but you can see an exit on the far wall. There are couches, chairs, rugs, and lamps. There is even some art on the walls. Suddenly, the lights go out. How do you get to the exit? This is where esport athletes find themselves currently. They are in a dark room that they have never seen before, and they are trying to navigate their way through as best they can. Truth be told, nobody’s ever really been in this room before and knows the exact layout.  This is the uncharted space in which esports currently operate.

Just this week, esport athlete and streamer ‘Tfue’ filed a lawsuit against esport organization FaZe Clan alleging that the contract he signed with them last year is ‘oppressive, onerous, and one-sided’. This may very well be a defining moment for esports as this highly unregulated industry experiences its first major labour pushback.  The uncharted space is becoming a little more familiar, at least for esports contract law.

In light of this landmark event, this blog will highlight a few other contractual uncharted areas that are coming to light in esports contracts.

 

Independent Contractors vs. Employees

Once there is a contractual agreement, it is important for the athlete to know what type of relationship they have with their employer. In the esport ecosystem, an athlete can be categorized either as an independent contractor or an employee.  The distinction between these two is important because of the way the law treats each type of ‘worker’.

For esports athletes, being classified as an independent contractor often means they are not afforded the same workers’ rights as employees.  For example, In Ontario, Canada (where I am from), independent contractors are not protected under the Employment Standards Act.  This means they are not legally entitled to things like minimum wage, overtime pay, and public holidays.

Determining whether an individual is an employee or an independent contractor is a tricky business.  Every jurisdiction makes this determination in its own way. In Ontario, for example, a number of situational factors are considered, including whether the individual supplies their own tools or whether the business does, who determines the amount of pay for the work, and how and where the work is completed. Importantly, it is not relevant whether the words “independent contractor” were included in the terms of the contract.

With esports organizations exerting more and more control over their athletes, the argument for an ‘employer-employee’ relationship is growing stronger.  Today, many organizations are still insisting in their contracts that their athletes are ‘independent contractors’ despite the fact that demands on their time, living arrangements, event attendance, etc. are controlled by the organization.  Organizations are doing this as a strategic move to minimize the rights and benefits they have to provide their athletes.

The important takeaway for athletes here is that the type of relationship they have with their employer depends on the situation they are in, and not what their contract says.

Employer Ambiguity

Is an athlete hired by the Game Developer or the Team Owner…or both? Who do they answer to? The one who pays them or the one who dictates their actions? Determining this structural employment hierarchy is becoming increasingly important in creating a mutually beneficial space for all involved. The level of control that the Developers want to exert over their athletes may be a deciding factor.

As I explained previously, Valve has a reputation of being ‘hands-off’ when it comes to the amount of control they exert over their IP.  As a result, athletes competing in CS:GO primarily deal with esports organizations when negotiating and signing their contracts, and no one else.  Valve has almost no involvement in this employer-employee relationship – despite it being based on their IP.

Blizzard, on the other hand, retains much more control in the Overwatch League (OWL). They not only tightly control the IP underlying Overwatch, but they also control every facet of every level of how the game is franchised and used. They also have much more presence and influence over the contents of player contracts.  For example, Blizzard insists on setting minimum standards in their contracts OWL athletes still sign contracts with their respective teams, and this is only one piece of Blizzard’s heavy and on-going influence.

In the Blizzard scenario, it’s possible that an athlete in the Overwatch League could have two employers based on the level of control their team AND the Developer has over them. But, how does an athlete have two employers? How can that work?  

Well, some legal systems have recognized the possibility of an employee having two employers.  In Canada, for example, the legal idea of “Joint Employers” has been recognized. The idea is that an employee can have two employers for the same job. It stems from the fact that an employer’s authority is sometimes exercised between two distinct entities.  Applied to esports, it could be possible that an athlete is employed by their team AND the developer – like in the example above.

The Omnipresent Developer

It should be noted that because IP is the ‘issue’ that is always present, Developers will always be attached to the athlete on some level. They own the game. The Team Owner hires the athlete (employee), but the athlete relies on the game being present in order to play it.  It all comes down to the level of control the Developer exerts over their IP, and how it affects the esport athlete.

In my next blog, we’ll take a look at the organizations helping athletes to fight and protect their rights, and how athletes without access to one of these organizations can help themselves.  

Stay tuned!

 

Thanks for reading my blog. The above content is not legal advice but observation about the vast esports field. If you have any questions or comments or would like to schedule me to speak at your event, head over to my website www.ecesports.gg  

 

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