On May 22, 2015, Riot Games, Inc., creator of League of Legends, announced changes to the League of Legends Championship Series rules. One of the notable changes is the addition of Rule 11.3, the “Best Interests of the LCS” rule. This rule states:
"LCS officials at all times may act with the necessary authority to preserve the best interests of the LCS. This power is not constrained by the lack of any specific language in [these rules]. LCS officials may use any form of punitive actions at their disposal against any entity whose conduct is not within the confines of the best interests of the LCS." (Emphasis added)
These rules are known as “bests interests of the game” clauses, and some derivation of this clause exists in most, if not all, professional sports. This clause is an important addition for Riot, as it grants Riot the authority to act in response to matters which are not explicitly covered by the rules. It also brings Riot’s rules a bit closer to those which exist for professional sports.
Professional sports leagues have used these clauses to punish activity of both players and teams that do not neatly fit into the predefined rules and provisions established through the collective bargaining process. A recent example of such a clause being invoked was Alex Rodriguez’s suspension from Major League Baseball for 211 games (which was later reduced to 162 games) for his use of performance enhancing drugs and attempting to obstruct and frustrate Major League Baseball’s (“MLB”) investigation into his conduct. MLB specifically noted that Rodriguez’s punishment was based upon his violation of the prohibition against using banned substances and the “best interests of the game” clause.
On one hand, the vague nature of a “best interest of the game” clause is necessary because it is impossible to foresee all potentially harmful events and subsequently create a rule barring such activity. However, the broad language of the clause creates the opportunity for abuse, to which there is little recourse, unlike in professional sports. In professional sports, a decision to punish a player by the sport’s commissioner can be challenged in arbitration because the commissioner’s authority is granted by the collective bargaining agreement between the league and the players’ union. However, as the LCS Rules are not collectively bargained, Riot has the ability to create and enforce rules as it sees fit, with legal impunity.
What is even more troubling is the fact that Riot explicitly denies appeals for its discipline. Rule 11.1 explicitly states “All decisions regarding the interpretation of the rules…and penalties for misconduct, lie solely with the LCS, the decisions of which are final” and “LCS decisions with respect to these Rules cannot be appealed.” Effectively, the new “best interests of the LCS” rule authorizes Riot a broad disciplinary power to which there is no recourse at law or even an appeal.
At the very least, an appeals process should be implemented to curb some of Riot’s unyielding disciplinary power and grant a modicum of rights to the players. However, as the LCS is not collectively bargained, such a decision would have to come from Riot themselves, which would be unlikely. Given the finality of Riot’s disciplinary system, it will be interesting to see how Riot utilizes this rule in the future.
(This article also appeared on Gods of Mayhem)
Last night, Alex Rodriguez passed Willie Mays for fourth place on Major League Baseball’s all-time homerun list. Much like the baseball fans that deny Rodriguez’s achievements due to his performance enhancing drug use, the Yankees are denying Rodriguez his $6 million bonus for likely the same reason.
Rodriguez’s contract with the New York Yankees contains a rare provision known as a milestone-marketing bonus. This type of provision pays the player a substantial sum for the marketing rights related to milestone accomplishments. The only players to receive such provisions in their contracts in recent memory are Rodriguez and Albert Pujols. Following Pujols’ contract, such milestone-marketing bonuses were banned by Major League Baseball. However, to Pujols’ and Rodriguez’s delight, the ban on such clauses was not retroactive, thus allowing such clauses to remain enforceable.
Pursuant to Rodriguez’s milestone-marketing clause, he was to be paid $6 million for passing Willie Mays on the all-time homerun list. However, Brian Cashman, the Yankees General Manager, has publically stated that they will not pay Rodriguez the $6 million bonus. The Yankees argument is presumably that the bonus payment is contingent upon being able to market the milestone achievement and since Rodriguez was suspended for the 2014 season due to performance enhancing drug violations, the milestones no longer have marketability.
Interestingly, the contract is reportedly clear that the Yankees agree to pay the sum of $6 million, and that “Such payment will be made within fifteen (15) days of its designation of the Milestone Accomplishment under Paragraph 1, above.” The Yankees still have some time to make the payment as indicated in the contract, but if Rodriguez is not paid, he would have to take legal action against the Yankees to get his bonus. This matter would be especially important to Rodriguez, as he may be able to achieve additional designated milestones in his contract, and thus be entitled to more moey.
If Rodriguez were to sue the Yankees, once the fifteen day period expires, he would allege (amongst other causes of action) that the Yankees breached his contract. In order to prove a breach of contract, the following elements must be proved:
1. The existence of a binding contract
2. One of the parties to the contract materially breached the contract
3. The material breach caused damages
Rodriguez’s potential case hinges on element 2. A breach occurs when a party fails to perform its obligations under the contract. However, that definition immediately calls for clarification as to what obligations the breaching party has under the contract. Cashman’s statement, that “We (the Yankees) have the right but not the obligation to do something, and that’s it,” is particularly interesting, as such rights are usually explicitly stated in contracts. Unfortunately, it is impossible to ascertain the validity of such a statement without seeing Rodriguez’s contract.
Understandably, the Yankees are upset that Rodriguez has been implicated in multiple performance enhancing drug scandals. However, whether or not he is owed the $6 million milestone bonus is determined solely by the language of this milestone-marketing addendum to his contract. If the language is as clear as reports have stated, an argument that the bonus is not owed would have to be quite creative, and still may not pass legal muster.
Rodriguez can also file a grievance with the Major League Baseball Players Association. Greg Bouris, spokesman for the Players Association, has already stated “The Union is prepared to intervene on Alex’s behalf.” Despite Rodriguez’s past drug use, the Union would not want any team to establish a precedent of refusing to pay any player a contractually agreed upon amount.
Of course, there is still time for the Yankees to make good on Rodriguez’s bonus. The contract allows for the bonus to be paid within 15 days of the milestone being achieved. Despite Cashman’s comments, it would not be surprising for the Yankees to pay Rodriguez the bonus within the designated window. In effect, the comments would then serve as a way of publically shaming Rodriguez for his conduct. Given Rodriguez’s litigious history, the Yankees have to expect him to take action if he is not paid.
At the beginning of any relationship between an eSports player and their team, a contract should be entered into that describes the services the player is to perform, compensation, and the duration of the agreement, amongst other clauses. Depending upon how this contract is drafted, a player will either be considered an employee of the team or an independent contractor. This distinction is critical in establishing the obligations that a team has to a player and the rights that the player holds. In the eSports business, the trend has been to attempt to classify players as independent contractors.
ESports teams, like many other businesses, would prefer to employ independent contractors instead of employees for several reasons, including:
How Courts Determine Independent Contractor Status
However, what eSports teams may be unaware of is that calling players independent contractors is not enough to actually be considered such. In fact, many of these contracts, if challenged in Court, would be found to create an employee/employer relationship. Due to the overwhelming benefits to a business using independent contractors, Courts have scrutinized independent contractor agreements by utilizing tests to determine whether such a relationship is sufficiently established, or if the agreement instead creates an employee/employer relationship. New York Courts utilize two tests, the first being the Economic Realities Test, which is as follows:
The second test is the Common Law Test, which is as follows:
In both of these tests, the totality of the answers of the above questions will be examined to determine how to classify the parties' working relationship. It is worth noting that these factors are not exhaustive, and the Court may undertake additional inquiry. An example of an additional factor in the eSports context would be whether the player is required to wear a uniform.
Analyzing Player Contracts: Economic Realities Test
Teams typically exert a great amount of control over their players in a variety of ways. This could include booking player travel, requiring players to use equipment provided by team sponsors, requiring players to promote team sponsors, requiring players to be active on social media/Youtube/streaming services, requiring players to live in a team house, and more. This factor is extremely important, as independent contractors are supposed to maintain a great deal of control over their work and environment.
Secondly, players are very invested in the team. Their actions and cooperation with other players are how the players (and team) can profit by winning matches and tournaments. This factor may also weigh against eSports players being found to be independent contractors by a Court. However, the third factor supports the notion that players can be independent contractors, as the work requires highly skilled individuals who may work at their own initiative (in some circumstances).
The fourth factor is completely determined by the contract itself. Generally speaking, the longer or more permanent a contract seems, the more likely it is that they are not an independent contractor.
The fifth and final factor strongly holds in favor of finding an employee/employer relationship, as the players are a crucial component of the team's business. From the totality of the factors within the Economic Realities Test, it appears likely that a professional team would be found to create an employer/employee relationship with its players.
Analyzing Player Contracts: The Common Law Test
The Common Law Test is unclear in this scenario. An argument could be made that the first factor, whether the worker works at his/her convenience, could go either way in Court. Certainly there are things the player must do at certain times (matches, tournaments, etc.) but they may not be on a strict timetable for content creation. This factor would be determinate upon each individual team's practices.
The second factor, whether the worker is free to engage in other employment, slightly holds in favor of an employee/employer relationship. Players can be free to partake in tournaments without their team should the team not participate, but players cannot play for multiple teams in the same events. By default, in those situations a player cannot work for multiple teams.
Fringe benefits is an interesting factor in this analysis, as it can arguably be in favor of or against a finding of an employee relationship, depending upon the specific team's actions. Independent contractors technically should receive no fringe benefits (meals, company car, benefits, etc.). However, if a team allows a player to keep items that were provided by third parties, namely sponsors, or allows the player to live in team subsidized housing, then the player can be said to have received fringe benefits. In those examples, this factor would lean towards the finding of an employee/employer relationship. However, any benefits are team specific.
The fourth factor, whether the player was on the team's payroll is also team dependent, as some teams pay salaries and some do not. Generally, a salaried worker is much more likely to be found to be an employee and not an independent contractor.
The last factor in this test, whether the worker was on a fixed schedule, is very similar to the first factor. As stated in analyzing the applicability of the first factor to the eSports team/player relationship, this factor can go either way.
Importantly, the Court can examine additional factors to each test. A factor that has been employed by New York Courts was whether the worker is required to wear a uniform. In the eSports context, a uniform can be said to be a team's jersey. This factor could realistically go either way in determining whether an employee/employer relationship exists. Although players are largely required to wear team jerseys at events, many, if not most, are not required to do so when creating content.
Effectively, players who are classified by a team as being independent contractors may not be held to be independent contractors by the Court, if their contract is challenged. Should the Court find that an employee/employer relationship exists, then a team loses all benefits of hiring the player at independent contractor status and is then subject to the totality of laws involving employee/employer relations. Therefore, the team would incur increased costs and liability. Although each State's law will differ as to how these contracts are analyzed, it appears that there are strong arguments to be made under New York law that eSports players are actually employees of their teams and entitled to benefits as such.
Recently, strong allegations have surfaced that eSports is suffering from a performance enhancing drug ("PED") use problem. These PEDs are not the steroids and human growth hormones of other sports, but are instead neuroenhancers.
These kinds of drugs (Adderall, Ritalin, Selegiline, etc.) are known as "smart drugs" due to their abilities to enhance focus, calmness, and act as stimulants, which debatably enhance performance in professional gaming. Although there appears to be much confusion as to whether such neuroenhancers are banned from professional gaming (a quick Google search reveals many questions on the topic and few actual answers), if it is banned, there appears to be little enforcement as noted in the link above.
Irrespective of neuroenhancers' status as potentially banned substances in professional gaming, utilizing such substances can have an impact upon a player's/team's existing sponsorship agreements.
As I noted previously, sponsorship agreements generally contain morals clauses. A morals clause allows a sponsor the opportunity to cancel a sponsorship should the athlete or team act in a way that is harmful or damaging to the sponsoring brand. In other words, morals clauses allow sponsors a means of exiting a sponsorship agreement with an athlete engaged in a scandal or otherwise illegal activity.
The use of neuroenhancers in pro-gaming, regardless of whether the substance is banned, can trigger a sponsorship's morals clause in several ways: