One of the biggest news stories coming out of Linda McMahon's unsuccessful election campaign last year was the likely politically motivated but long overdue Connecticut Labor Department's investigation of WWE's classification of its wrestlers as independent contractors. Long overdue because WWE has classified its wrestlers as independent contractors for the last 25+ years despite their performers failing most of the basic tests that an independent contractor should pass. This allows them to mandate that their wrestlers carry health insurance without paying for it themselves (though they do at least pay for the surgery and rehab of all on the job injuries, unlike TNA), fail to provide them with pensions and avoid paying certain taxes.
In a crafty move, WWE got the word out via Susan Haigh of the Associated Press that the apparent end result of their supposedly secret state audit was that they owed just over $7,316 in underpaid unemployment contributions. Of course, the company didn't agree with the findings, but decided to pay up under protest to make this headache go away, as the costs of challenging the payment in court would end up being much higher. After all, the services of McMahon family friend Jerry McDevitt doesn't come cheap!
APNewsBreak gave a longer version of the story by Susan Haigh. There's an interesting breakdown of how the underpayment occurred:
The WWE's letter refers only to an audit concerning underpaid unemployment compensation. According to the letter, the audit also determined that WWE's payroll company overpaid on taxable payroll wages in both 2008 and 2009, creating a credit. WWE differed with the state's decision for five employees to be considered "talent" when most appeared only sporadically.
WWE also maintains that 23 people the state believes should be considered employees for purposes of unemployment compensation taxes were really temporary workers who no longer work for the company.
Five of them hold part-time jobs as "blurrers," people hired to edit images in the WWE's film archives to delete the old WWF logo following a lawsuit filed by the World Wildlife Federation.
The bolded part probably refers to road agents like Fit Finlay and Ricky Steamboat, who the auditors may have naively classified as "talent" due to their ring performances in those years without realising that they also held management positions within the company. Moreover, it suggests that the auditors didn't quibble WWE's assessment that their wrestling talent should be treated as independent contractors for tax purposes, possibly because it was out of the remit of this part of the investigation or if not that, then probably because no current WWE wrestlers stood up for their withheld employee benefits when they had a unique opportunity to do so.
So will this small payment for back taxes be the end of WWE's Connecticut labor audit? It depends which cynic you listen to. James Caldwell of the Pro Wrestling Torch isn't optimistic:
The next step should be an investigation of WWE's independent contractor classification, but that probably won't happen after the Department of Labor went through a two-year audit that likely cost a whole lot more than the fine WWE will be paying. It would be difficult to justify a follow-up investigation despite evidence WWE does not meet the guidelines to classify wrestlers as independent contractors.
In matters like these such a cynical take is usually proved right, but a more politically savvy cynic like Irv Muchnick would suggest that such a further investigation may be dependent upon whether or not Linda McMahon decides to run for senate again:
If Linda McMahon takes another stab at a U.S. Senate seat next year, as expected, Governor Dan Malloy, Labor Commissioner Glenn Marshall, and others might get a little better focus on the independent contractor issue.
So it's unsurprising then that Muchnick got the old run around when he asked the Connecticut Department of Labor whether the case on WWE was closed or not.