Political Capitol

Brian Lockhart covers the Connecticut General Assembly in Hartford

Why won’t WWE provide two important details about state audit?

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Yesterday our newspapers reported Stamford-based World Wrestling Entertainment is being audited by the state for worker misclassification – treating some independent contractors as full or part-timers but using their independent status to avoid paying certain taxes/benefits like healthcare.

As the New York Times reported back in February, Democratic President Barack Obama’s administration and more than two dozen states, including Connecticut, have stepped up enforcement, fearing companies during tough financial times are skirting labor laws to cut costs.

Former WWE CEO Linda McMahon, who resigned from her job running the family company last September to focus on her self-funded bid for U.S. Senate, has been criticized on the campaign trail by both Democrats and some fellow Republicans for mistreatment of talent. WWE wrestlers are classified as independent contractors, as are around 350 behind-the-scenes employees.

So last Friday I asked WWE spokesman Robert Zimmerman if the company would reveal if it has ever been investigated for worker misclassification by either state or federal officials?

Tuesday morning Zimmerman issued the following statement, which we previously reported: “WWE has always complied with the law. Up until this election, WWE has not been fined nor investigated in the past for independent contractor classification. However, curiously the state of Connecticut is currently conducting an audit of WWE’s classification of independent contractors. WWE constantly reviews its internal practices and procedures to comply with ever-changing employee laws. The average WWE performer earns more than $550,000 annually, while only wrestling less than three days per week. WWE covers 100 percent of all costs associated with any in-ring related injuries and rehabilitation.”

I blogged more about the audit here and you can read my actual report, which included a reaction from McMahon, here.

While the company was willing to make the audit public, WWE is withholding two crucial details – which state agency is in charge of the audit and when did company officials learn the probe was launched?

Why won’t they provide that information?

I asked Zimmerman and he said the company is not commenting further on the audit.

I’m certainly not directing this post at Zimmerman, who is doing his job and helps when he can.

But the folks running WWE and calling the shots about what information is provided and not provided the press/public are no fools. Linda’s husband, Vince, fought the federal government and media mogul Ted Turner and won.

So Zimmerman’s Tuesday e-mail was carefully crafted to reveal some information but also to raise questions about the timing and source of the audit that the company should be able to answer.

McMahon’s Democratic opponent is long-time state Attorney General Richard Blumenthal, who has been involved in efforts to strengthen the penalties for worker misclassification.

Blumenthal’s office on Tuesday said it is not involved in any audit of WWE. And my understanding of the process is he won’t be unless the agencies that typically conduct such probes – the departments of labor and/or revenue services – conclude WWE is guilty of something and seek to enforce the law/impose penalties.

But the departments of labor and revenue services told me they neither confirm nor deny audits, allowing the WWE’s charges of political shenanigans to just kind of sit there for voters to draw their own conclusions.

As to when WWE first learned of the audit? I can provide a bit of information.

Early this summer we received a tip that some issues had been raised about the company’s use of independent contractors and WWE was working internally to quietly remedy the situation. The tipster cited a new law, signed by Republican Governor M. Jodi Rell and set to take effect Oct. 1, imposing stiffer penalties on companies found guilty of misclassifying workers.

So while WWE acknowledged the audit yesterday, might it have been launched months ago before McMahon entered the Senate race in September? Rell nominated her to the state Board of Education in early 2009 and some of the same questions about WWE were being raised during the confirmation process.

Could the audit have been launched before Blumenthal announced his candidacy in January?

Who knows? Again, the relevant state agencies won’t say. And it appears for now WWE has no incentive to shed additional light on the situation.

Categories: General
Brian Lockhart

3 Responses

  1. Full Disclosure says:

    Full Disclosure ALWAYS wins in the long run !

  2. OLD TIMER says:

    It may be all politics, to make it sound like the State is doing the audit, hoping some voters will believe Blumenthal is behind it, and will vote against him for dirty tricks. It may well be both the IRS and the state are looking at WWE for similar reasons.

  3. OLD TIMER says:

    It is probably IRS doing the audit to recover taxes that WWE did not withold from “contractors”. IRS probably considers wrestlers as WWE employees.
    If that is what is going on, it probably began long before Linda became a candidate. It will cost WWWE a lot of money if IRS holds WWE liable for back taxes and penalties.