Are UFC fighters employees or contractors? Why the distinction matters – and could mean millions

Bellator President Scott Coker heard the complaints from his new signees.

Fighters who came over as free agents after their UFC contracts expired had very similar gripes, many of them about the UFC’s “athlete outfitting policy” under an exclusive apparel deal with Reebok. What Coker couldn’t understand was how it was even legal.

“Listen, they’re independent contractors,” Coker said in June. “How they’re forced to wear a uniform, to this day, still baffles me. It should be against the labor laws or something.”

It’s not just the mandatory Reebok fight kits, either. UFC fighters are also forced to participate in an anti-doping program administered by USADA, which requires them to disclose their whereabouts at all times and make themselves available for surprise drug tests.

That’s what rankled former UFC bantamweight champion T.J. Dillashaw, who discussed the matter on a Team Alpha Male podcast last year. With so many restrictions and requirements, Dillashaw wondered, how could fighters still be classified as independent contractors?

“They treat us like employees, but they don’t give us benefits like employees,” Dillashaw said. “It’s kind of crazy when you think about it. We have to tell them where we’re at at all times so USADA can show up and drug test us, but we don’t get health benefits. It’s kind of crazy that we are controlled. Any time you have to tell work where you’re at and what you’re doing, that’s considered an employee, not a contractor.”

It often seems like an ancillary issue, and one many UFC fighters ignore completely. The state of fighter pay, or the effects that the Reebok deal has had on the sponsor market for individual fighters, these seem to rate higher on the fighters’ lists of grievances.

But as the UFC has placed more restrictions on its fighters, the case for keeping them classified as independent contractors has weakened, according to some observers both in and outside the MMA industry. And if the employment classification of UFC fighters was ever successfully challenged, it could mean major change for the industry leader.

“One consequence for the UFC is if they’re misclassifying employees as independent contractors, then they owe the IRS a lot of money,” said Justin Swartz, an attorney with the firm Outten & Golden, one of the nation’s largest law firms to focus solely on employment law.

Swartz has worked on similar cases involving the misclassification of exotic dancers in New York, where some clubs were eventually forced to pay millions of dollars in settlements after years of misclassifying employees as independent contractors.

“Dancers at strip clubs, they have schedules, they have rules to follow, and they have no business at all without the club,” Swartz said. “In some ways it’s the same with fighters. The fighters rely on the UFC in order to do their business, and they have a dress code, they have a lot of rules. But if they’re getting paid as independent contractors, then they’re paying their own employment tax, and they may be entitled to a refund.”

It’s not just a question of taxes, either. As independent contractors, fighters enjoy fewer protections than they would as employees. Their right to form a union isn’t protected. If they’re fired, they can’t seek unemployment benefits. An injury on the job doesn’t entitle them to workers’ compensation.

By keeping fighters as independent contractors while heaping more and more restrictions on them, the UFC has managed to have the best of both worlds, according to Gary Ibarra, a manager who has represented fighters such as Cung Le and Ben Rothwell. (UFC representatives declined to comment for this story.)

“(The UFC wants) the benefits of having employees, stuff like forcing the guys to wear uniforms, basically, which is an earmark of an employee,” Ibarra said. “But also when certain things happen that would be negatives, then, no, the UFC can say, ‘Hey, they’re independent contractors.’ That’s because, since the UFC has kind of gone unchecked, no one has forced them to adhere to one side or another.”

Which is not to say that a legal challenge couldn’t be forthcoming.

Recent years have seen several such challenges from workers who were long classified as independent contractors. NFL cheerleaders have successfully sued over their employment classification, and states like California have even enacted new laws to categorize them as employees. FedEx drivers have also brought successful cases, and drivers for ride-sharing companies like Uber and Lyft have also challenged their employment classification.

Such a challenge for UFC fighters could come in several forms, according to Swartz, who said his firm has used different avenues to contest employment status.

“Hiring a lawyer to help you seek overtime pay is one way to go about it,” Swartz said. “Another is to file a complaint with the Department of Labor, or with the IRS over employment taxes.”

Fighters could also seek unemployment benefits after being cut from the UFC, or file a worker’s compensation claim, or seek protections to form a union. Attempts to take actions that their status as independent contractors forbids could be enough to force a decision, Swartz said, but the result and the process could vary depending on which body is asked to issue a ruling.

“The National Labor Relations Board, their test is a little different from the IRS test, which is a little bit different than the Department of Labor test,” Swartz said. “But most of these tests, what they come down to is control and freedom. The way to look at it is, how much does the organization control these folks, and how much freedom do they have to run their own business? You need to look at the totality of the circumstances. Ask yourself, is this person in business for themselves, or do they rely on someone else whose rules they have to follow?”

Ask UFC fighters, and they’ll tell you that they have no shortage of rules to follow outside the cage – and a variety of penalties waiting if they run afoul of those rules. Whether that makes them more than just independent contractors remains to be seen, but if that designation is ever successfully challenged it could have a domino effect that’s felt throughout the MMA world.

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