By Chris Klein
(Editor’s Note: The following appeared in Esports and the Law)
When an esports player signs a contract with a professional team, is that player classified as an “employee” or an “independent contractor”? The distinction is significant; if the player is an employee, then the player is entitled to protections of state labor laws, including minimum wage, rest and meal breaks, and safeguards against discrimination and harassment. Conversely, independent contractors do not receive those benefits.
Unsurprisingly, the answer is complex and fact-specific. In California, one of the hubs of the U.S. esports industry, courts apply a three-part test to assess employment classification. This test, known as the “ABC” test, requires a contextual review of the relationship between the worker and employer. As workers in various industries seek to challenge and reclassify their employment status under the “ABC” test, litigants must reference other “ABC” cases to inform their arguments.
In September 2024, six contestants from the unaired Amazon Studios reality show Beast Games filed a lawsuit in Los Angeles Superior Court against the show’s producers. The contestants allege that the show misclassified them as independent contractors, in violation of California labor laws. The defendants have not yet responded to the complaint, and the case is currently stayed until mid-November.
The classification issues in the Beast Games case parallel challenges faced by esports workers, who often find themselves in ambiguous employment relationships. As this article discusses, the court’s interpretation of the Beast Games contestants’ status could offer important insights for esports players regarding their eligibility for employee protections.
Background: California’s “ABC” Test and its Impact on the Esports Industry
California has deep ties to the esports, where major cities like Los Angeles and San Francisco serve as key hubs for teams, tournaments, and game development. Venues such as the Crypto.com Arena in Los Angeles and the Esports Arena in Santa Ana regularly host high-profile events that attract both professionals and amateurs. Professional esports contracts involving California-based teams or players are subject to the state’s employee-friendly labor laws.
In 2019, California enacted AB5 (officially known as Assembly Bill 5) to establish a stricter standard for classifying workers as independent contractors rather than employees. The legislation introduced the “ABC” test, which outlines three criteria that must be met for a worker to be considered an independent contractor. Under this test, a worker is deemed an independent contractor only if:
- the worker is free—both factually and contractually—from the control and direction of the hirer in connection with the performance of the work;
- the worker performs work that is outside the usual course of the hiring entity’s business; and
- the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903, 955–56 (Cal. 2018).
Importantly, an employer cannot preemptively designate a worker as an independent contractor in an employment contract. AB5 establishes that a worker must satisfy all three components of the “ABC” test to be legally classified as an independent contractor, emphasizing the need for a worker to clearly demonstrate independence and control from their employer.
The classification of esports players as either independent contractors or employees exists in a complex grey area, with compelling arguments supporting both perspectives. On one hand, proponents of employee status emphasize the significant control that organizations exert over players, including setting practice schedules and providing strategic guidance. Additionally, many players sign long-term contracts that offer a level of stability and regular compensation, aligning more closely with traditional employment relationships than independent contracts. This perspective argues that such structures create a dependency that undermines the independence typically associated with contractor status.
Conversely, advocates for classifying esports players as independent contractors highlight the players’ autonomy in managing their own schedules and pursuing multiple competitive opportunities. Players frequently negotiate their contracts and participate in various tournaments, reflecting the flexibility inherent in independent work. Moreover, many players invest in their own branding and operate as individual entities, further underscoring independence from their employer’s control.
Due to the inherent variability in contracts, player circumstances, and team structures, each AB5 analysis will produce distinct outcomes based on the specific facts of the case. But given the lack of extensive case law specifically addressing AB5 and esports players, those anticipating legal challenges should look to analyses from other industries navigating similar legal considerations for guidance. One noteworthy case in the entertainment industry is currently pending in the Los Angeles Superior Court.
MrBeast and Beast Games
Jimmy Donaldson, a.k.a. MrBeast, is one of the most influential figures on YouTube, renowned for his grand-scale challenges and high-budget productions. Since starting his channel in 2012, he has amassed a massive following by creating videos that often feature eye-catching feats, like giving away large sums of money or orchestrating elaborate events. For example, in 2021, Donaldson produced a real-world recreation of the Netflix series Squid Game, featuring 456 contestants who competed in challenges inspired by the show for a chance to win $456,000.
In March 2024, Donaldson and Amazon MGM Studios announced a new reality competition series called Beast Games. The press release described the show as “the world’s largest live gameshow” with the “the biggest single prize in the history of television and streaming.” Initially marketed on Amazon’s Prime Video platform, Beast Games was set to showcase 1,000 contestants as they competed for a $5 million grand prize. As of November 1, 2024, Beast Games has yet to be released online or on streaming services.
In September 2024, six Beast Games contestants filed a class action lawsuit alleging that they were misclassified as independent contractors rather than employees, in violation of California’s AB5 law. While the contestants were designated as independent contractors in their contracts with Beast Games, the plaintiffs claim that their working conditions reflected those of employees rather than independent contractors. The lawsuit asks the court to reclassify the contestants as employees, thereby entitling them to benefits and protections typically afforded to employees under California labor law. If the plaintiffs are reclassified as employees, the defendants could be liable for multiple labor law violations, including minimum wage violations, failure to pay overtime wages, failure to provide uninterrupted meal breaks, and failure to provide uninterrupted rest breaks.
Connecting Esports Players to the Beast Games Lawsuit
While esports players and reality show contestants exist at distinct points within the entertainment landscape, the arguments presented by plaintiffs in the Beast Games litigation could serve as a valuable reference for esports players seeking to assert employee status in future cases.
Control and Direction
The complaint states that the contestants “were the essential labor component to the entire production. Their work on the show was the entertainment product that Defendants were marketing and selling for public consumption and profit.” This allegation implies a direct relationship in which the producers dictate the terms of the contestants’ participation. If contestants were subject to the defendants’ control regarding their roles and performance, they may not be independent contractors under AB5. The emphasis on the contestants’ work as central to defendants’ core mission—creating entertainment—would further support reclassification.
Much like the contestants in Beast Games, esports players are typically directed by tournament organizers regarding rules, schedules, and roles. However, the extent to which an esports player promotes their own brand and engages in external sponsorships could complicate claims for employee classification, as courts may consider the degree of independence in their roles.
Availability and Commitment
The complaint further stated that the contestants were told that they “would have to be available for [redacted], and while they were working for Defendants, they would not be able to accept any other employment.” If true, this allegation indicates significant control over the contestants’ schedules and availability, suggesting that the defendants dictated when and how the contestants can engage in their work. Such restrictions imply that the contestants’ roles are central to the production.
For esports players, a similar analysis would apply, as they often face stringent schedules dictated by tournament organizers, limiting their ability to pursue other opportunities. This dependence on event schedules supports claims for employee status; however, many esports players participate in multiple tournaments and sponsorships, which could argue against their classification as employees by suggesting a degree of independence.
Oversight and Dedication
Another point from the complaint highlights that the defendants required the contestants “to be physically present on specific dates and times, around-the-clock, at locations dictated, controlled, and supervised by Defendants,” and that the plaintiffs “dedicate allof their time to the Production during the production period, . . . and miss other work if they had other jobs.” If true, this level of oversight would demonstrate that the contestants were not free to determine their own schedules or work conditions, strongly suggesting an employer-employee relationship. Similarly, the requirement for full dedication to the production underscores that the contestants’ work was integral to the entertainment product’s creation.
Similarly, esports players often face rigorous demands to be available for tournaments, requiring substantial time and effort for training and preparation. The expectation of full dedication to competition can suggest that their roles are crucial to the success of the events. However, participation in many events or individual streaming may imply a degree of autonomy, which could challenge their claims for employee classification.
Conclusion
The status challenges faced by contestants in Beast Games echo the complexities within the esports industry regarding worker classifications. As courts continue to interpret and apply California’s AB5 law, the implications will likely extend beyond individual cases, influencing how talent is managed and compensated in the entertainment sector. For esports players, the outcome of these legal battles could redefine their status and rights, ultimately shaping the future of their profession and ensuring equitable treatment.
