Sports, entertainment and media
At Willis, a WTW business, our Financial, Executive & Professional Risks (FINEX) team works closely with experts across the employment practices liability (EPL) insurance space to better understand the many facets of our industry. In our “EPL Professionals Series,” we feature a range of voices, from EPL underwriters to labor & employment litigators, coverage counsel and others, each offering their take on what’s shaping the landscape. We aim to shed light on how shifting legal and societal trends are impacting EPL risk, employment litigation and the industry at large.
In this article, we’re turning the spotlight on emerging risks that are particularly relevant to our sports, entertainment and media sectors where leading labor & employment law firm, Jackson Lewis provides some meaningful insights on the top risks impacting these sectors.
Willis: What are some of the unique EPL risks for companies in the sports, entertainment and media industries?
Jackson Lewis: The entertainment, media and sports (EMS) industries face specific employment practices liability risks that, while similar to those seen in other sectors, are often amplified by the industry's unique characteristics. These risks include sexual harassment claims, discrimination based on protected characteristics, talent and freelancer misclassification issues and corresponding wage and hour violations, retaliation claims, and particular challenges related to the employment of minors. EMS companies operate under heightened public scrutiny, with high-profile disputes potentially causing significant reputational damage beyond the immediate legal consequences.
Ever since the #metoo movement arose, sexual harassment claims have been subjected to public scrutiny and the court of public opinion. Whistleblower retaliation claims, particularly involving political speech, workplace safety on production sets and other issues have also proliferated in recent years. Additionally, discrimination claims based on race, sexual orientation and other protected classifications continue to persist given the subjective nature of creative decisions. Moreover, as discussed below, the industry's reliance on temporary project-based work and freelance relationships creates vulnerabilities regarding worker classification. Also, the frequent use of child actors requires strict adherence to regulations governing the employment of minors, including work hour restrictions and permit requirements.
These claims generally arise from perceived power imbalances, blurred professional boundaries, generational attitudes (particularly among minors and younger employees) and non-traditional work environments which enhance risks, requiring specialized risk management approaches and more comprehensive insurance coverage than many other industries.
Willis: What are some of the unique wage & hour (WH) risks for companies in the sports, entertainment and media industries?
JL: As referenced above, the most significant wage and hour risk is the misclassification of workers as independent contractors or freelancers instead of regular employees. Misclassification claims and lawsuits can lead to substantial legal and financial implications, including back wages, penalties and potential class action lawsuits. These risks exist nationwide, but are more prevalent in high-frequency/severity jurisdictions like California, Illinois and New York.
The classification of workers is a moving target, influenced by changing federal priorities and state-specific regulations. For instance, California's "ABC" test for determining independent contractor status, as judicially mandated in 2018 and codified in 2020, presumptively considers all workers to be employees and has substantially more requirements to satisfy for contractor classification compared to the federal Fair Labor Standards Act (FLSA) test. This creates challenges for EMS companies operating across different jurisdictions as to which law to apply, and whether such application is even permitted by law. Similarly, a change in venue for a production could have significant worker classification implications, and the consequences of misclassification are considerable.
Relatedly, in the entertainment industry, the legal complexities surrounding reality show contestants highlight unique issues for misclassification claims. For example, in late 2024, cast members of a well-known reality show filed complaints with the National Labor Relations Board (NLRB), arguing they should have been classified as employees entitled to overtime and other protections. Misclassification has been and will continue to be a focal point for the industry.
Willis: Which EPL trends are you most concerned about in the next 12-18 months for companies in the sports, entertainment and media industries?
JL: The shifting legal landscape under the new administration has left many employers uncertain where their priorities should be.
DEI remains a focal point, with companies facing increased scrutiny over their initiatives. The new administration's stance on DEI has led to government investigations into employer policies, including a number of EMS-related companies. Pending litigation testing the viability and enforceability of DEI-related directives from the administration will be instructive. However, in the meantime, executive orders at issue remain in effect for which EMS companies must review, navigate and comply with. Employers need to accordingly remain vigilant in ensuring compliance with all applicable law.
In addition, and as further discussed below, the integration of generative AI in employment decisions is transforming the EMS industry. While AI can enhance efficiency in hiring and data analysis, it also introduces risks related to discrimination and privacy.
Furthermore, the use of non-compete agreements is under increasing regulatory scrutiny. Although a federal district court recently blocked an FTC attempt to ban non-compete agreements, state-level regulations continue to evolve. EMS companies must review their non-compete agreements for compliance with applicable state laws and monitor legislative developments. This is particularly important as states like California, Minnesota, North Dakota and Oklahoma have prohibitions on non-compete agreements. New York is currently considering similar legislation.
Finally, the EMS industry has seen a rise in unionization efforts and labor activism, with high-profile strikes and negotiations highlighting employee demands for better working conditions and protections. Companies must be prepared to engage in collective bargaining and address labor issues proactively.
Willis: From a labor and employment law perspective what impact, if any, do you think AI will have on the sports, entertainment and media industries?
JL: The integration of AI into EMS industries has significantly changed employment practices and operational dynamics. AI's influence spans content creation, talent management, and regulatory compliance, presenting both opportunities and challenges from a labor and employment law perspective.
Federal, state and local laws and regulations have begun to address the use of generative AI, including its use in employment. At the federal level, while no specific legislation directly addresses AI in employment, agencies like the Equal Employment Opportunity Commission (EEOC) have previously issued guidance applying existing anti-discrimination laws such as Title VII of the Civil Rights Act and the Americans with Disabilities Act to AI systems used in hiring and other employment decisions.
California leads state-level regulation with recently enacted legislation requiring transparency in AI systems, particularly regarding training data and bias mitigation, which will take effect in 2025-2026. Other laws seek to protect performers, establish rights with respect to AI-generated replicas, prohibit non-consensual deepfake pornography and extend existing laws on child sexual abuse materials to AI-generated materials. California and other states are also considering AI employment-related legislation that largely mirrors Colorado’s AI employment law, which covers employment decisions, audits, policies and notices.
AI has enhanced talent management processes, including casting decisions, selecting athletes for professional sports teams, and performance evaluations. While AI can improve efficiency and objectivity in tasks like recruitment, it also poses risks related to bias and discrimination. Some AI tools may not provide enough transparency to allow an organization to give real visibility into processes for which the AI is used. Companies must ensure AI tools comply with anti-discrimination laws to prevent potential legal liabilities.
Willis: Is the use of mandatory arbitration agreements prevalent in companies in the sports, entertainment and media industries? If so, has the implementation of those agreements impacted the frequency and severity of EPL and WH claims in the sports, entertainment and media industries?
JL: Mandatory arbitration agreements are generally prevalent in the EMS industry as a mechanism to manage employment disputes and limit potential class or collective action exposure on wage and hour claims. The impact of mandatory arbitration agreements on EPL and wage and hour claims is significant, as such agreements may reduce both the frequency and severity of claims through various mechanisms: deterring potential claimants from filing claims, limiting class and collective actions, resulting in lower award amounts compared to court litigation and creating procedural barriers to pursuing claims.
Mandatory arbitration agreements can also be leveraged to help keep disputes out of the public eye, cultivating a quicker and more focused dispute resolution process than one might find in a courtroom. In EMS matters, protecting the confidentiality around a project or public figure can make enforcement of an arbitration agreement appealing.
Still, the use of these agreements hinges on culture, as some employers may shy away from the negative publicity around mandatory arbitration. The savings in time and money are not always enough to change that. Whether to implement an arbitration agreement is largely dependent on the Company’s business and internal goals.
Willis: In light of the current exposures environment, what risk management strategies do you recommend to improve a client’s risk profile?
JL: In the current environment, companies in the EMS industries face exposure that requires strategic risk management:
Jackson Lewis P.C. is a leading law firm with a dedicated entertainment, media and sports (EMS) industry group. With a team of experienced attorneys, Jackson Lewis provides comprehensive legal support across issues ranging from employment litigation and labor arbitrations to crisis management and diversity initiatives. Their deep EMS sector knowledge enables their strategic advice and representation in high-profile cases involving major film studios, music labels, professional sports teams and media companies.
Partnering with WTW, Jackson Lewis strengthens its delivery of integrated risk management solutions by combining legal expertise with WTW’s global advisory and insurance capabilities. This collaboration helps EMS companies meet emerging challenges, safeguard reputations and stay compliant in a competitive, highly scrutinized environment.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
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Peter J. Woo is the office litigation manager for Jackson Lewis’ Riverside office, and is a principal in the Orange County office of Jackson Lewis P.C. He is co-leader of the firm’s Entertainment and Media group and a member of the firm’s EPLI leadership committee with respect to its nationwide insurance practice. Peter believes that equally important to knowing and understanding the law, a legal advisor must earn the trust of clients by anticipating their questions and offering solutions before they even know there is an issue requiring attention.
Chris provides practical, solution-oriented advice to clients, keeping sight of long-term business goals. He advises clients in a variety of industries on the development and implementation of preventive labor relations programs. For clients facing union organizing, Chris helps navigate the thorny legal and interpersonal issues at play. Chris orchestrates comprehensive corporate campaigns and defends clients in National Labor Relations Board representation proceedings. For unionized employers, Chris leads collective bargaining agreement negotiations, and advises on the daily administration of labor agreements.
Ellen E. Cohen is a principal in the Los Angeles, California, office of Jackson Lewis P.C., providing comprehensive representation for management in employment disputes. She handles cases involving harassment, discrimination, retaliation, and wrongful termination in state and federal courts, as well as arbitration and administrative hearings. Ellen takes a proactive approach in supporting her clients, providing valuable advice on a host of employment-related issues including employee discipline, termination, lay-off procedures, or accommodations under the ADA and FEHA.
