Esports & Employment After Dynamex
An important issue to the esports industry is whether esports players are employees of their teams under the Fair Labor Standards Act of 1938 (FLSA) and derivative state laws. Although there has been some work analyzing the issue, the recent California Supreme Court decision in Dynamex Operations West v. Superior Court (Lee) adds new factors to the discussion. Players fall across a spectrum, but Dynamex favors finding an employment relationship, despite the difficulty of defining an esports organization’s “business.” Organizations new and old to the industry should be wary of the dangers of misclassification, particularly since the analysis under Dynamex is different than the tests for FICA payroll taxes and the FLSA. Prior to analyzing the status of esports players under Dynamex, it is necessary to give a brief description of the players and teams.
I. Putative Employees: Players
Players can be affiliated (either sponsored or hired by an organization) or unaffiliated, and fall along an influencer-professional spectrum. While it will prove critical that independent players are successful,  the focus of this article is on the nature of the affiliation between players and the hiring organization. Professionals are competitors in leagues with structures similar to major league sports franchises. Meanwhile, influencers—or content creators—are players that act as brand ambassadors for their organization while streaming and interacting on social media. Players fall along a spectrum with some influencers joining competitive tournaments and some professionals livestreaming casual play.
Professionals play their video games, either competitively, for practice, or for show (streaming), up to fifteen hours a day. While some professionals rely on their own gaming gear, sponsors of players, teams, or tournaments often also provide equipment. In certain instances professionals may live in gaming houses, owned or rented by their employing organization, and shared with their fellow teammates, in which they eat, practice, and sleep. Because of the varied nature of esports, professionals compete in team games (e.g. League of Legends or Overwatch), paired games (e.g. Fortnite), or solo games (e.g. Hearthstone). In turn, the players are generally salaried and share in the profits of competition earnings; they may also derive additional income from streaming donations, sponsorships, and ad revenue.
Organizations may also gather streamers under their brand, even if the streamer does not play in organized competitive tournaments. These players are referred to as influencers or content creators. While professionals focus on winning tournaments, influencers focus on developing a brand and reputation in order to monetize a social media presence. Much like models and other social media personalities, influencers act as an ambassador when creating content and attracting viewers towards his or her organization’s sponsors and advertisers. Like the greater esports industry, the influencer economy is dependent on social media sites like Twitter, Twitch, and YouTube that serve as platforms for the influencer’s opinions and video content.
II. Putative Employers: Esports Organizations
The primary putative employer in esports is the esports organization. Esports organizations form with the intent to sign players, organize teams, and monetize talent. The organization draws in revenue through sponsorships and advertising, merchandising, and revenue sharing agreements involving media rights. Sponsorship and advertising revenue might be recognized through revenue sharing agreements with the league or through direct product placements on an organization’s apparel, in-game banner, or video content. Esports merchandising strategy mimics traditional sports in the sale of apparel and fan gear (e.g. posters, keychains, etc.) and adds the additional product offerings of computer gaming equipment like mice, mouse pads, and headsets. Finally, organizations in leagues participate in revenue-sharing agreements to share in the monetization of online videos and, more-recently, tickets sales from physical attendees.
While sponsorships are the biggest source of revenue for major teams, newer teams hope to prove themselves prior to any sponsor investment by identifying and engaging top talent—both professionals and influencers—to play for their organizations. A newer organization may specialize in a particular game, but organizations tend to diversify across titles, house academy-tier teams and branch out to include even all-female rosters. As mentioned above, the team can also sponsor individuals playing in tournaments and individual streamers to help promote their brand. 
III. Esports Employment After Dynamex
The FLSA and California have differing tests for employee status. Under the FLSA, an employee is any individual employed by an employer. Employ means “to suffer or permit to work.” An employer is “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Similarly, the California Labor Code defines an employee as “every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed.” Statutes and wage orders in many states, including California, frequently define “employ” as “to suffer or permit to work.”
Under the FLSA, courts, and the IRS, apply an economic-realties or right-to-control test questioning whether the worker is economically dependent upon another’s business. While courts have considered several dozen factors, the question is ultimately one of control. The difficulty of managing the amalgam of factors led some states, such as California, to adopt in limited circumstances, an ABC test that shortcuts the fact-intensive control test, questioning the freedom of the worker from the hiring entity’s control only if the employer proves that the worker is performing work outside the normal course of business, and that there is an independently established trade.
Dynamex Operations West v. Superior Court (Lee) decided how “workers should be classified as employees or independent contractors for purposes of California wage orders, which impose obligations related to the minimum wages, maximum hours, and a limited number of very basic working conditions.” In Dynamex, the California Supreme Court affirmed the applicability of the “suffer or permit to work” standard and adopted the three-part ABC test already applied in New Jersey and Massachusetts:
Part A: Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact?
Part B: Does the worker perform work that is outside the usual course of the hiring entity’s business?
Part C: Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?
The employer’s failure to prove any of the parts is sufficient to find the worker an employee. The substantial shift is that even if the employer exerts no control over the worker, the worker may still be considered an employee.
A. Control by the Hiring Entity
The principal factor in the test, Part A looks to both the contractual relationship and the performance of the contract to determine if the worker is free from the control of the putative employer. “A business need not control the precise manner or details of the work in order to be found to have maintained the necessary control.” While the court did not analyze this factor for the case at hand, it referenced S.G. Borello & Sons, Inc. v. Department of Industrial Relations and Martinez v. Combs, cases that have interpreted the “suffer or permit to work” standard as broader than the FLSA test.
Control can be exerted both affirmatively (e.g. directions, time management, apparel, branding, dedicated space on personal sites, etc.) and negatively (e.g. restrictions on player behavior, non-competes, activity blackouts, etc.). Organizations control their players’ practice schedules and apparel, may require them to live in a gaming house, and may contract for the players to perform additional services through advertising, branding, and interviews. Coaches provide consistent supervision and direction over the team or player; however, the player ultimately chooses how to play (relying on the player’s skill and game knowledge). Influencers generally retain more freedom with their brand and are not subject to the same organizational control. Regardless, Dynamex emphasized the broad applicability of the ABC test and the hiring entity is likely to struggle in convincing a court that there is sufficient freedom.
B. Outside the Usual Course of the Hiring Entity’s Business
Part B asks if the worker’s role is within the usual course of the hiring entity’s business. In essence, the employer cannot hire someone to perform similar duties to that of its recognized employees and misclassify them as an independent contractor. The court recognized that while an electrician hired to install a new electrical line falls outside the scope of a clothing manufacturing company’s business, an at-home seamstress hired to make dresses from patterns supplied by a clothing manufacturer would fall within the scope.  The question ultimately turns on whether the worker is among those “individuals who are reasonably viewed as providing services to the business in a role comparable to that of an employee, rather than in a role comparable to that of a traditional independent contractor.”
But how does the court determine the hiring entity’s business?  In Dynamex, it was clear that the delivery drivers were in the same business as the employer, a delivery company. Post-Dynamex cases are equally uninstructive because the workers often form the very foundation of the business. Massachusetts, from whom the California Supreme Court took the ABC test, defines the business using the putative employer’s own public-facing definition and then compares that to the realities of the business operations. Next the court determines whether the services are necessary to the employer’s business or merely incidental. The Massachusetts Supreme Court has given several examples of employees under Part B: an art instructor performing regular services for an art museum, a musician performing as a usual and customary activity at a beer bar, and an organist playing music at a funeral home’s business. Combining the Dynamex Court’s instruction along with clarification from Massachusetts caselaw, the analysis has three parts: 1) define the business based on the employer’s own public-facing definition, 2) look to the realities of the business operations, including its classification of workers, to see if the worker performs services central to the business, and 3) compare the worker to other employees in the business and those found to be traditional independent contractors.
First, having reviewed major esports teams and their websites, the descriptions of the organizations generally promote three things: innovative partnerships (i.e. sponsorships), (recruitment and development of) renown talented players, and fan engagement. Second, the realities do not appear to differ from this characterization and the classification of players has generally shifted from contractors to employees. The players form the foundation of the organization; revenue generation through the sale of sponsorships or competition earnings depend on the players’ talent and success. Third, players will be compared with their colleagues and traditional independent contractors. The internal comparison will be fatal to organizations attempting to classify solo competitors as independent contractors while they field a team of employees. The court’s external comparison will likely be to traditional sports where, under a different test for employment, the Employment Development Department of California has said that athletes playing in team sports, “where the player competes under the direction and control of a coach or manager,” are employees; meanwhile, athletes competing in individual sports competitions, “where the athlete is normally free to determine his/her own style and manner of performing,” are independent contractors. However, the coach’s impact on the players in the esports context is rather limited, even in the team scenario, because of the game knowledge of the players. But this external comparison conflates Parts A and B, and the business of traditional sports teams is to recruit and develop talented athletes, meaning the services thereof are central to the business.
Without players, there would be no viewership, no sponsorship, no fan engagement, and no revenue. Players in an organization’s team provide services central—not incidental—to the business or organized competitive play. A single player competing under an organization’s banner provides services central to the business of organized competitive play and sale of sponsorships. Strict application of Part B is a sweeping classification of employment that may not be intended by the California Supreme Court.  Even organizations merely sponsoring an influencer fail to satisfy this requirement, because the influencer provides services—streaming—central to the sale of sponsorships, thereby leaving them on the hook for wage order protections.
C. Independently Established Trade
Part C questions if the worker is one who has decided to go into business for herself. Individuals can show independence through incorporation, licensure, advertisements, and offerings to provide services. California Part C is more stringent than Part C under Massachusetts caselaw: “The fact that a company has not prohibited or prevented a worker from engaging in such a business is not sufficient to establish that the worker has independently made the decision to go into business for himself or herself.” The primary evidence of an independently established trade would be an actual contract to perform similar services to another entity at the same time as the hiring organization. Other evidence includes an employee-maintained home office, independent licensure, independent business cards, solicitation of outside work, independent liability insurance, and advertisements.
Part C is deceptive given the independent streamer market and ability for some players to enter tournaments independently. Streamers, more so than professional players, incorporate in personal limited liability vehicles, advertise to potential sponsors, and provide exclusive content to paid subscribers. However, players, generally, do not play for multiple teams. Furthermore, it is unclear if the court would consider on-the-side streaming as the same trade as professional tournament play. As the exclusivity of the contract increases, so too do the chances of a court determining the player to be an employee under Part C.
The employment status of esports players was unclear, but Dynamex’s ABC shortcut (perhaps too) broadly crystallized the employment status in the wage order context. Under the ABC test, courts are running towards finding an employment relationship. This classification impacts a broad array of legal obligations of the employing organization including taxes, tort liability, working conditions, and, most importantly, overtime and minimum wage provisions. Organizations should be wary of employee misclassification, especially with the multiplicity of tests determining separate liability for non-payment of wages, FICA payroll taxes, and benefits. An attorney should be consulted regarding this issue.
 Michael Arin is a student at the University of Minnesota Law School with an eye towards assisting esports clientele in the future. For author correspondence please email EsportsArinMJ@gmail.com.
 Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201–19 (2018).
 See Hunter Amadeus Bayliss, Note, Not Just a Game: The Employment Status and Collective Bargaining Rights of Professional Esports Players, 22 Wash. & Lee J. Civil Rts. & Soc. Just. 359 (2016) (concluding that the LCS, the league operator for professional play of League of Legends in the United States, and the teams would be joint-employers of the players under the 2016 California labor code, FLSA, and the National Labor Relations Act). Since the Note, the LCS has split into the LCS (governing North America) and the LEC (governing Europe) and has switched from a relegation system to a “franchise system.” The NBA 2K and Overwatch Leagues have also experimented with Franchise-leagues. The franchise system gives much more stability to teams; they no longer depend on player performance to maintain their position within the league. Stephen D. Fisher, Foster Pepper, Player Contracts: Defining Expectations to Avoid Conflict (Aug. 2014), https://www.slideshare.net/slideshow/embed_code/key/pMNaZ8VLi2h74J.
 Dynamex Operations W. v. Superior Court, 416 P.3d 1 (Cal. 2018).
 See, e.g., James Loke Hale, Here’s a Candid Breakdown of Exactly How much Money Twitch Streamers Earn per Month, Tubefilter (Oct. 10, 2018), https://www.tubefilter.com/2018/10/10 /twitch-streamers-earn-per-month-breakdown-disguisedtoast (discussing the success of Jeremy ‘DisguisedToast’ Wang, a Hearthstone player). See also, infra, Part III.C (discussing requirement of an independently established trade).
 This article uses the term “organization” and “team” interchangeably. Esports organizations mirror traditional sports teams. However, esports organizations may field multiple teams in different game titles. See infra Part II.
 See, e.g., Imad Khan, Riot Releases Details on NA LCS Franchising with $10M Flat-Fee Buy-in, ESPN (Jun. 1, 2017), http://www.espn.com/esports/story/_/id/19511222/riot-releases-details-na-lcs-franchising-10m-flat-fee-buy-in. However, consider the unique market for Dota 2 professional play, which is, arguably, not dominated by a developer-controlled league. Major leagues include The International (and the associated Major and Minor tournaments), ESL One Birmingham and Katowice, DreamLeague, the Summit, StarLadder, Dota Pit, and many more. However, most teams are formed with the singular goal of winning the International due to the disproportionate prize pool.
 Graham Ashton, What is the Optimum Training Time for Esports Players?, Esports Observer (Dec. 18, 2017), https://esportsobserver.com/optimum-player-training-time (building off of Harrison Jacobs, Here’s the Insane Training Schedule of a 20-Something Professional Gamer, Business Insider (May 11, 2015), https://www.businessinsider.com/pro-gamers-explain-the-insane-training-regimen-they-use-to-stay-on-top-2015-5?r=UK&IR=T, comparing the training schedules of North American Team Liquid players (minimum team-required eight hours) with their Korean counterparts (up to twelve to fourteen hours a day)). One great question is whether hours filled playing the contracted-for game on a personal streaming site should contribute to work hours. Additionally, while teams often require a minimum required amount of training, players often go beyond to ensure peak performance. Id. This environment makes hourly wage structures very risky.
 Paul “Redeye” Chaloner (@PaulChaloner), Twitter, (Sept. 12, 2018, 3:26 AM), https://twitter.com/PaulChaloner/status/1039792388510822400 (discussing expectations of organizations from the perspective of an esports host and commentator).
 Although once popular, gaming houses are now disfavored because of the injurious mental health effects, and teams have moved towards team training facilities. Alex Jang, Are Gaming Houses Worth it for Pro Teams?, Ashkon Esports (Mar. 16, 2018), https://www.akshonesports.com/article/2018/03/are-gaming-houses-worth-it-for-pro-teams.
 For an example of an esports player agreement, see T.L. Taylor, Raising the Stakes: E-sports and the Professionalization of Computer Gaming app. (2012). Estimates of average LCS salaries are around $320,000. The Explosive Growth of Esports, Berkeley Econ. Rev. (Oct. 24, 2018), https://econreview.berkeley.edu/the-explosive-growth-of-esports. However, other leagues do not boast such numbers, and some players’ earnings may depend on performance and are therefore highly volatile.
 Sam Nordmark, Live Streamer or Competitive Gamer — Which Career Makes the Most Sense?, Dot Esports (Jul. 22, 2018), https://dotesports.com/general/news/esports-vs-streaming-money-career-31144. As mentioned, professionals may dabble in casual streaming. Traditionally, teams take no part in the revenue generated on a player’s personal livestreaming site, even if the page is wrapped in the organization’s marks and brand. Therefore, professionals are incentivized to livestream through sites like Twitch that allow viewers to subscribe or donate to the player. Mansoor Iqbal, Twitch Revenue and Usage Statistics, Business of Apps (Feb. 27, 2019), http://www.businessofapps.com/data/twitch-statistics.
 See infra Part II.
 Influencer Marketing in eSports | The Rise of eSports’ Influence on Brands, Influencer Marketing Hub, https://influencermarketinghub.com/influencer-marketing-esports (last visited Mar. 23, 2019).
 Organizations use influencers for reputation rental. Like any celebrity, fans trust the opinion of an influencer. Therefore, the esports influencer has access to the unique market of tech-savvy, ad-block using, men and women aged 18 to 34 from relatively wealth backgrounds. Id.; Nicole Carpenter, Report: Women Make up Nearly One-Third of Esports Viewers, Dot Esports (June 7, 2017), https://dotesports.com/culture/news/women-in-esports-report-15095. Organizations use these influencers for the benefit of its sponsors.
 Nicolas Miachon, Esports is the Next Biggest Frontier in Influencer Marketing, Forbes (June, 28, 2018), https://www.forbes.com/sites/forbescommunicationscouncil/2018/06/28/esports-is-the-next-biggest-frontier-in-influencer-marketing/#6e37f1206d7b.
 Steve Van Sloun, Esports Franchise Economics, LoupVentures (Mar. 9, 2018), https://loupventures.com/esports-franchise-economics.
 See, e.g., Store, Cloud9, https://www.cloud9.gg/collections/all (last visited April 13, 2019). Some leagues also share revenue from in-game icons users buy to show their support for a particular organization. E.g., Riot Katana, Fandom Favs: Unlock an Esports Team Icon, League of Legends (Jan. 18, 2019), https://na.leagueoflegends.com/en/news/store/sales/fandom-favs-unlock-esports-team-icon.
 Sloun supra note 16.
 See, e.g., Teams, Cloud9, https://www.cloud9.gg/pages/teams (last visited Jan. 19, 2019). See generally, An Introduction to the Esports Ecosystem, Esports Observer, https://esportsobserver.com/the-esports-eco-system (last visited Jan. 2, 2019).
 For a European perspective on the employee classification debate, see Jas Purewal & Pete Lewin, Esports Players as Employees: What European Teams and Players Need to Know, Medium.com (Feb. 8, 2017), https://medium.com/@purewalandpartners/esports-players-as-employees-what-european-teams-and-players-need-to-know-dc2e156cb684. See also Ferguson Mitchell, Esports Primer: Understanding Independent Contractors vs. Employees, Esports Observer (Jan. 21, 2016), https://esportsobserver.com/esports-primer-understanding-independent-contractors-vs-employees (discussing, without deciding, whether esports players are employees).
 29 U.S.C. § 203(e)(1) (2018).
 29 U.S.C. § 203(g) (2018).
 29 U.S.C. § 203(d) (2018).
 Cal. Lab. Code. § 3351 (2018).
 See, e.g., Order Regulating Wages, Hours, and Working Conditions in the Amusement and Recreation Industry, 8 CA ADC § 11100(2)(E) (2001).
 Rev. Rul. 87-41, 1987-1 C.B. 296.
 Goldberg v. Whitaker House Co-Op., Inc., 366 U.S. 28 (1961) (“[T]he ‘economic reality’ rather than ‘technical concepts’ is to be the test of employment.”). See also Rest. (2d) Agency § 220(1) (1958) (emphasizing the employer’s right to control). The economic realities test is a multifactor test. The factors addressed vary by jurisdiction but the IRS provides an excellent summary in Form SS-8 (as opposed to its infamous twenty-factor test) by looking at behavior, finances, and type of relationship. Understanding Employee vs. Contractor Designation, I.R.S. FS-2017-09 (July 20, 2017).
 The number of tests for the employment relationship are numerous in California. Depending on the circumstances, the court may apply an economic realities test, a common law test, the Borello test, or, now, the ABC test.
 E.g. Dynamex Operations W. v. Superior Court, 416 P.3d 1, 39–40 (Cal. 2018); Mass. Gen. Laws Ch. 149 § 148(B)(a)(1–3) (2018).
 Dynamex Operations W., 416 P.3d at 5. Let it be clear that Dynamex is not the only employment test in California. For non-wage-order cases, S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 38 Cal.3d 341 (1989), and Martinez v. Combs, 49 Cal.4th 35 (2010) provide alternative tests for particular circumstances. Esports players may fall within the definition of an Amusement of Recreation Industry, 8 CA ADC § 11100, Broadcasting Industry, § 11110 (but see question of whether esports broadcasts are “through the medium of radio or television”), or Motion Picture Industry, § 11120, which are regulated by California wage orders.
 Hargrove v. Sleepy’s LLC, 220 N.J. 289 (2015).
 Mass. Gen. Laws Ch. 149 § 148B(a)(1–3) (2018).
 Dynamex Operations W., 416 P.3d at 36–38.
 Id. at 40.
 Id. at 36.
 Id. at 35–36.
 See supra notes 8–9 and accompanying text.
 See also, Dynamex Operations W., 416 P.3d at 37 n. 27.
 Dynamex Operations W., 416 P.3d at 37.
 Legal academics point to this expansive Part as a plausible death knell for the shared and gig-economies without additional clarification because platforms, like Uber, will be found to be employers of independent entrepreneurs. James F. Morgan, Clarifying the Employee/Independent Contractor Distinction: Does the California Supreme Court’s Dynamex Decision Do the Job, 69 Lab. L.J. 4194899 (2018).
 See, e.g., Johnson v. VCG-IS, LLC, 2018 WL 7636473 (Cal. Super. 2018) (finding exotic dancers to perform services within the adult entertainment establishment’s usual course of business).
 Sebago v. Boston Cab Dispatch, Inc., 471 Mass. 321, 333 (2015)
 Valle v. Powertech Indus. Co. Ltd., 2019 WL 1437865, *10 (Dist. Ct. Mass. 2019) (slip op.) (citing Carey v. Gatehouse Media Mass. 1, Inc, 92 Mass. App. Ct. 801, 807 (2018)).
 E.g., About, Counter Logic Gaming, https://www.clg.gg/about (last visited Apr. 15, 2019); About Us, Flyquest, https://flyquest.gg/about-us (last visited Apr. 15, 2019). Some esports organizations also emphasize apparel, but it would be a stretch to say that is the business of the organization. See, e.g., About, 100 Thieves, https://www.100thieves.com/about (last visited Apr. 15, 2019).
 Roger Quiles, Are Esports Players Actually Independent Contractors?, Quiles Law (Apr. 17, 2015), http://www.esports.law/blog/are-esports-players-actually-independent-contractors (recognizing the trend to classify players as independent contractors but arguing they would be considered employees under New York law).
 Total and Partial Unemployment TPU 415.4: Professional Athlete, Employment Devop’mnt Dep’t of Calif., https://www.edd.ca.gov/uibdg/Total_and_Partial_Unemployment_TPU_ 4154.htm (last visited Apr. 13, 2019).
 Dynamex Operations W. v. Superior Court, 416 P.3d 1, 41 (Cal. 2018) (“[T]he trial court . . . appears to have adopted a literal interpretation of the suffer or permit to work language that, if applied generally, could potentially encompass the type of traditional independent contractor . . . who could not reasonably have been viewed as the hiring business’s employee.”).
 Id. at 39.
 Id. at 39. The court differentiated employees from drivers that worked for other companies or personal customers or who had their own employees. Id. at 42. See also Garcia v. Border Transportation Group, LLC, 239 Cal. Rptr. 3d 360, 372–74 (Cal. Ct. App. 2018) (citing Kirby of Norwich v. Adm’r, Unemployment Compensation Act (2018), 328 Conn. 38 (2018)).
 Garcia, 239 Cal. Rptr. 3d. at 374.
 Kirby, 328 Conn. at 51.
 The situation is different in a permanent league structure whereby players cannot enter a tournament without being hired by a league-member.
 See generally supra Part I.
 But consider the practice of loaning a player to another team. North American League of Legends Championship Series, 2018 Official Rules NA LCS and NA LACS § 4.5 (2018).