Pay for Play: Pro Athletes and their Employment Status

by: Mickey Ingles

I’m going to skip the usually clever intro and just dive in to this month’s topic: under Philippine law, is a professional athlete an employee of his or her team?

Short answer, yes. But I’ll be remiss if I don’t give you the long answer, hence, this blog post. (The longer, more scholarly answer can be found in my Ateneo Law Journal article that can be accessed here.)

But before we get to the nitty-gritty of answering the question, it’s important we lay the proper foundation and start with the four-fold test. It’s a test that law students all have to memorize and understand. It’s so popular that even if you don’t know a thing about labor law, you’ll probably know the four-fold test.

The four-fold test is used to determine whether an employer-employee relationship exists between parties. For this relationship to arise, the following four elements must be present:

  1. The selection and engagement of the employee;
  2. The payment of wages;
  3. The power of dismissal over the employee; and
  4. The employer’s power to control the employee’s conduct.[1]

The fourth element—the power of control—has been considered the most important.[2] It’s the MVP of the four-fold test. The power of control must not simply refer to control over the results of the work but also the means and methods to be used in order to achieve these results.[3] This power of control often comes in the form of rules imposed on an employee.

Of course, a little nuancing goes a long way. (As my Constitutional law students found out in their recent final exams, lol.)

An employment contract that enumerates a laundry list of duties and responsibilities the hired party must comply with suggests that the power of control exists.[4] But if the rules are mere general guidelines to achieve a certain result and the hired party could perform the job at his or her pleasure, no power of control (and no employer-employee) exists.[5] In these cases, the hired party is most likely an independent contractor.

WAIT. You just introduced a new concept. You can’t do that.

Well, I just did.

Fine, how’s an independent contractor different from an employee then, precious?

An independent contractor is free from any control from the principal or the hiring party. The independent contractor’s main job is, in Bill Belichick’s famous words, to “get the job done.” How he or she gets the job done is left to the contractor’s discretion and is beyond the control of the principal whose primary concern is the result of the work.

For labor and entertainment law, the seminal case on independent contractors is Sonza v. ABS-CBN,[6] where TV and radio host Jay Sonza was considered an independent contractor because ABS-CBN did not have control over how Sonza delivered his lines or how he sounded on the radio. The Court also considered Sonza’s celebrity status and unique skills, which separated him from other employees.

In sports law, the Supreme Court has ruled a PBA referee an independent contractor because the PBA has no control over them—the most the PBA can do is evaluate the referees over botched calls.[7]

So, is a professional athlete an employee or an independent contractor of his team?

In Negros Slashers, Inc. v. Alvin Teng,[8] the Supreme Court noted that a professional basketball player is an employee of his team. The case is a MUST for fans of the now-defunct Metropolitan Basketball Association. Remember the MBA, the late 90s league that gave players the option to shoot three-pointers instead of free throws? It was the best. (Alex Compton was a beast, btw).

Anyway, the case involved the MBA team Negros Slashers and the basketball player with arguably the best nickname of all time, Alvin Teng aka Robocop (hence our featured image). For young ‘uns, he is, however, known as Jeric and Jeron’s father. The issue revolved around whether Teng was illegally dismissed from the Slashers after he sat out a championship game and was dropped from the lineup. Ruling that he should not have been dismissed from the team, the Court noted that Teng was an employee of the Slashers.

His status as an employee was never an issue. Teng’s employment status was—like a good boyfriend cheated on by his girlfriend for the school bad boy—taken for granted. But what if it was an issue? Is a professional athlete an employee of his or her team?

Using the 4-fold test, he or she is.

First, there is no doubt that a professional athlete is selected and engaged by the team. In an established professional league like the PBA, the selection and engagement of the professional athlete starts with the celebrated Draft, where teams select promising amateur players who wish to make the leap to the big league. But the Draft is not the only way a team selects and engages a professional athlete. Players can also be offered contracts based on try-outs or past performance. Whatever manner the team uses to select and engage the athlete, the team chooses the player based on his or her unique skills, expertise in the sport (or a particular aspect of the sport), or the needs of the team at that particular point in time.

It is tempting to classify professional athletes as independent contractors because their “unique skills and qualities” seemingly put them on the same boat as Sonza. True, professional athletes are likewise selected and engaged because of their unique skills, talent, and (sometimes) celebrity status. However, a careful reading of Sonza will show that hiring of an individual based on these qualities is a mere “circumstance indicative, but not conclusive, of an independent contractual relationship.”[9] Hence, it is not a foregone conclusion that a professional athlete is an independent contractor solely based on his or her skills and qualities.

Second, in exchange for their skills and talents, professional athletes are paid by their teams. How much they are paid is a matter of negotiation and subject to any league-imposed restrictions (like a salary cap).

Discrepancies in wages again raise the question of independent contractors. Sonza seems to posit that enormous wages or fees give rise to an independent contractor relationship and not an employer-employee relationship (Sonza got a monthly salary of P300,000). In Dumpit-Murillo v. Court of Appeals,[10] the Court, ruling on the employment status of a newscaster, noted that her low monthly salary of P28,000.00 bolstered the “conclusion that [Dumpit-Murillo] was not in the situation as Sonza”[11] and therefore, made her an employee.[12] A cursory reading of the two cases together may suggest that a high salary leads to an independent contractual relationship and a low salary leads to an employer-employee relationship.

This, of course, is not and should not be the case. The amount you earn is not a factor for the four-fold test. If it was, then no employer-employee relationship can ever arise from high-paying jobs. Sonza, in fact, says that “the power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship.”

At most, high wages (and the bargaining power and panache to demand such wages) are mere indications that the hired party is an independent contractor; it is not conclusive. Other factors must likewise be considered, the most important of which, is the power of control.

Third, a team has the power to dismiss a player. This is beyond debate. The team may release or dismiss a player if he or she no longer performs to their required standards. It can also fire a player if a player does something stupid or illegal or performs an act that breaches a morality clause in the player’s contract. The propriety or legality of the exercise of the power is another issue, but the power exists.

Finally, the power of control is undoubtedly present in team sports. While the results of the work (winning or losing) depends on external factors like the opponent and luck, the team still retains control over the means and methods to be used in order to get some Ws.

The team wields such power through the coach or the team management. In turn, the coach of the team management controls the means and methods by imposing strategies, formations, and even philosophies on its players. The triangle offense for basketball and adopting a certain playbook for football are examples of these means and methods. The role of the players is to execute these plays, formations, and strategies to the best of their abilities.

These team impositions “control or fix the methodology and bind or restrict the [professional athlete or player] hired to the use of such means.”[13]

While a certain amount of leeway and creativity is given to the player to adjust and improvise to what the game gives him or her, the player must still play within these team impositions, lest he or she feel the ire of the coach or management. Even the Michael Jordan had to adjust to playing in Tex Winters’ triangle offense. If the GOAT had to play within the system, then res ipsa loquitur. (Aw man, don’t you hate it when lawyers suddenly drop Latin bombs to make them sound smarter than the rest of the population?! I’m not even sure if I used it correctly.)

What happens if they don’t play within these team impositions? Well, that’s when the power to discipline—implied in the power of control—and the power to dismiss come in. Players are, unlike the PBA referees in Bernarte, not the “only, absolute, and final authority on the playing court.”[14] No matter how good the player is, if the coach doesn’t want to play him or her, then boo-hoo. He or she is left to warm the bench.

The team also retains control of the professional athlete outside the actual game or competition. The PBA Uniform Players Contract prohibits PBA players from playing in other leagues. Senator Pacquiao knows all about that.

With the four elements ticked off like an old man with kids playing in his lawn (I just did a play of words that I’m not sure works well, but whatevs), it seems professional athletes are employees of their teams.

So, what, Borat? It sounds purely academic to me.

It isn’t! A number of legal implications flow from the employer-employee relationship between the professional athlete and his team. For one, the professional athlete will be clothed with the rights granted by the Labor Code to employees like security of tenure and mandatory 13th month pay.  As employees, it may also be possible for professional athletes to unionise. The Labor Arbiter will also have jurisdiction over disputes arising between the player and the team,  not the local courts (this was the route Alvin Teng correctly took in Negros Slashers).

Now, I know! And…

Yes, knowing is half the battle. I grew up in the 80s, too.

P.S.

In fact, it seems anyone who is paid to play for a team can be considered an employee—regardless of his or her status as “professional”— as long as the 4 elements are present. However, a bit of nuancing is important because it’s a whole different ballgame if the athlete who plays for pay is involved in an individual sport, like tennis or billiards. I wrote about this (and more) in the ALJ article which you can again access here. Give it a read!

 

Mickey Ingles is the editor-in-chief of Batas Sportiva. He was offered a contract that would’ve paid him to play soccer… but law school got in the way. 

[1] Orozco v. Court of Appeals, G.R. No. 155207, April 29, 2005. (“Orozco”)

[2] Id.

[3] Investment Planning v. Social Security System, G.R. No L-19124, November 18, 1967

[4] Dumpit-Murillo v. Court of Appeals, G.R. No. 164652, June 8, 2007. (“Dumpit”)

[5] Orozco

[6] G.R. No. 138051, June 10, 2004. (“Sonza”)

[7] Bernarte v. Philippine Basketball Association, G.R. No. 192084, September 14, 2011. (“Bernarte”)

[8] G.R. No. 187122, February 22, 2012.

[9] Sonza.

[10] Dumpit.

[11] Id.

[12] Id.

[13] Insular Life Assurance Co., Ltd. v. National Labor Relations Commission GR No. 84484, November 15, 1989

[14] Bernarte.

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