Independent Contractors and NIL Rights: EA UFC 4 Highlights the UFC’s Shady Labor Practices

In August 2020, gaming giant Electronic Arts released EA Sports UFC 4, the latest iteration of its popular MMA video game franchise. The game was highly successful, being ranked as the month’s “second best-selling game” in the US and “se[tting] a new franchise launch month sales record.” Unsurprisingly, the buzz around EA Sports UFC 4 was palpable at the time of its launch—as colorfully described by disgruntled UFC fighter Kajan Johnson, “[e]verybody and their f-cking dog [was] posting about this game.”

Johnson was one of the few UFC fighters who publicly spoke out against the promotion for not compensating its fighters for the game’s use of their name, image, and likeness (NIL). Our class was lucky enough to have Perry Bahniwal from EA provide further insight on this issue for us, alluding to the fact that the only way for UFC fighters to be compensated was through special promotional agreements for such things as appearances at events and in advertisements. In other words, while those select few fighters whom EA deemed to be influential enough got a piece of the profit from EA Sports UFC 4, even that payment was not direct compensation for the use of their NILs in the game itself.

The main legal issues that animate this situation are the lack of a Collective Bargaining Agreement (CBA) between the UFC and its fighters and, more specifically, the classification of the latter as independent contractors that has long hindered progress from being made on this front.

The relationship between the UFC and its fighters operates on the basis of individual multi-fight contracts that can be renewed at any time. According to the Economist, “[t]he median pay per fight is $24,500″ and, as revealed in the UFC’s antitrust lawsuit in 2019, fighters’ pay that year represented only around 20% of the UFC’s event revenues and presumably an even smaller portion of its total revenues. This revenue split is best understood in comparison to the United States’ four major sports leagues that, like the UFC, are widely perceived as the flagship leagues for their respective sports: The NBA, the NFL, and the NHL have CBAs in place that currently guarantee their players “between 49 and 51 percent,” 48%, and 54% shares of the league revenues respectively, while the MLB’s CBA guarantees “a pro-rated portion […] outpacing” all three.

Legally speaking, independent contractors are an inherently vulnerable group. Domestically, their classification lacks legal and union protections provided to employees under the National Labor Relations Act, and, internationally, they are not covered by the International Covenant on Economic, Social, and Cultural Rights. So why would anyone want to be classified as such? The primary advantage that the independent contractor status is supposed to provide is freedom on the job from control by employers.

UFC fighters enjoy no such freedom.

UFC fighters are told when and where to fight or appear in media events. They fight in premises that are leased by the UFC while outfitted by the UFC with mandatory uniforms and must constantly report their location to the UFC for random drug testing, whether or not they are booked for a fight. Tied down to exclusive contracts, fighters cannot fight for any other promotion or delegate their work. With a laundry list of grounds for termination that are included in fighter contracts, the UFC also has the power to unilaterally discharge its fighters at any time for almost any reason. Based on the right-to-control test and the IRS 20-Factor test that are used in the United States to determine employment relationship classifications, these are substantial behavioral and financial controls that the UFC exerts over its fighters. Moreover, fighters are highly integrated into the UFC’s business operations, with the former being absolutely indispensable to the latter, and their relationships are continuous and exclusive. These are all highly characteristic of an employee-employer relationship.

These factors establish potential grounds for the reclassification of UFC fighters as employees, but, in the meantime, the UFC continues to engage in unfair labor practices without any repercussions. More importantly, it is incontrovertible that there is no clear line separating independent contractors from employees. Yet, this blurry distinction between the two classifications continues to force UFC fighters to give up basic legal protections, significant earning potential, and their individual NIL rights in order to compete in their sport at the highest level.

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