Navigating Employment Law in The Metaverse - A New Frontier

The rise of the metaverse and Web3 technologies has the potential to transform the world of work in ways that we can only imagine. As companies begin to build out services in these virtual worlds, they will be faced with new challenges and opportunities when it comes to employment law. In this blog post, we will explore what the metaverse and Web3 are, how companies are already building out services on them, and what new issues of employment law may arise as a result.

What are the Metaverse and Web3?

The metaverse is a virtual world where users can interact with each other in a variety of ways, ranging from gaming and socializing to conducting business transactions. It is a fully immersive experience that allows users to create their own avatars, explore virtual environments, and interact with other users in real time. Web3, on the other hand, is a decentralized version of the internet that relies on blockchain technology to create trustless networks for exchanging data and value.

 Some metaverse platforms include:

1. Roblox: Roblox is a game platform that allows users to create and play games in a virtual environment. The company has over 200 million users and employs thousands of people around the world. Employees work remotely, collaborating in virtual environments to create games, graphics, and other assets. The company also interacts with customers through in-game events, social media, and other virtual channels.

2. Decentraland: Decentraland is a virtual world that uses blockchain technology to enable users to create, experience, and monetize virtual content. The company has a team of developers, designers, and community managers who work remotely to build and manage the platform. Employees interact with customers through virtual events, community forums, and social media.

3. The Sandbox: The Sandbox is a virtual world that allows users to create, share, and monetize their own games and experiences. The company employs a team of developers, designers, and community managers who work remotely to build and manage the platform. Employees interact with customers through virtual events, community forums, and social media.

In the metaverse, employees typically use virtual avatars to represent themselves when working for companies. This allows them to interact with colleagues and clients in virtual environments that may include chat rooms, virtual meeting spaces, and 3D simulations. However, the use of avatars can complicate issues of employment law.

For example, if an employee uses an avatar, it may not be immediately clear who they are in the real world. This can make it difficult for employers to verify their identity, monitor their activities, and ensure that they are complying with company policies and legal requirements. Additionally, employees who use avatars may feel more comfortable expressing opinions or behaviors that they would not feel comfortable expressing in the real world. This can create potential legal issues if an employee engages in discriminatory or inappropriate behavior while using an avatar.

To address these issues, companies operating in the metaverse will need to develop policies and procedures that are tailored to the unique features of virtual environments. This may include developing procedures for verifying the identity of employees, monitoring their activities, and enforcing company policies and legal requirements. Companies may also need to provide training for employees on appropriate behavior in virtual environments and develop mechanisms for addressing issues that arise.

Overall, while the use of avatars can complicate issues of employment law, companies can mitigate these issues by developing policies and procedures that are tailored to the unique features of virtual environments. As more companies begin to operate in the metaverse, we can expect to see new approaches to managing remote work and ensuring compliance with employment laws in virtual environments.

Companies Building on the Metaverse and Web3

As the metaverse and Web3 continue to gain traction, companies are beginning to build out services on these platforms. For example, fashion brand Gucci recently opened a virtual store in Roblox, a popular gaming platform, where users can buy digital versions of the brand's clothing and accessories. Similarly, gaming company Mythical Games has created a blockchain-based platform called Blankos, where users can buy, sell, and trade virtual toys and collectibles.

Recently, a Colombia court even held a hearing in the metaverse. 

New Issues of Employment Law

As companies begin to operate in the metaverse and Web3, new issues of employment law are likely to arise. For example, how will companies classify employees who work in virtual environments? Will they be considered remote workers, independent contractors, or something else entirely? How will employers ensure that workers are protected from harassment and discrimination in these virtual worlds? Will they be held liable for virtual harm caused by their employees?

Another issue that may arise is how to determine jurisdiction in the metaverse. If an employee is working in a virtual environment that is hosted on servers located in another country, which country's laws will apply to their employment relationship? Will there be a need for new international treaties to govern these relationships?

As companies begin to explore the potential of the metaverse, they are also grappling with a range of new employment issues that are unique to this virtual space. 

1. Remote Work: With the rise of the metaverse, remote work will become the norm. As such, employment laws that govern the rights of remote workers will become more important. Employers will have to navigate different time zones, manage productivity, and ensure that their virtual employees are safe and healthy.

2. Intellectual Property: As virtual environments continue to grow, there will be a need for intellectual property protection. This is especially true for businesses that operate in the metaverse. Employers will need to ensure that their virtual assets are protected from theft and unauthorized use.

3. Discrimination: Discrimination is a real concern in the virtual world. Employers will need to ensure that they are not discriminating against employees based on their race, gender, age, or other protected characteristics. Virtual employers will need to be aware of how their virtual environments may be excluding or disadvantaging certain groups.

4. Virtual Currency: As virtual environments become more common, it is likely that virtual currency will become more prevalent. Employers will need to navigate the legal implications of paying employees in virtual currency and ensure that they are following all applicable tax laws.

Here are some examples of how platforms are approaching some of these challenges in their own operating regulations:

1. Decentraland: In Decentraland, a virtual world that is powered by blockchain technology, users can buy and sell virtual real estate and create their own experiences within the metaverse. To ensure that users are not exploited or taken advantage of in these virtual transactions, Decentraland has established a set of rules and regulations that govern user behavior within the platform. For example, users are not allowed to use bots to automate tasks, and they are not allowed to engage in activities that would violate real-world laws or ethical standards.

2. Axie Infinity: Axie Infinity is a blockchain-based game that allows players to collect and battle creatures called Axies. The game has become wildly popular in some parts of the world, particularly in the Philippines, where players can earn real money by selling their Axies and other virtual items. To ensure that players are treated fairly and are not exploited by more experienced players, Axie Infinity has established a system of governance that allows players to vote on changes to the game's rules and economy.

3. Facebook Horizon Workrooms: Facebook's new virtual reality platform, Horizon Workrooms, allows remote teams to collaborate in a shared virtual space. To ensure that employees are protected from harassment or discrimination within this virtual workplace, Facebook has established a code of conduct that prohibits bullying, hate speech, and other inappropriate behavior. The company has also created a set of virtual HR policies that cover issues such as compensation, benefits, and termination.

4. NVIDIA Holodeck: NVIDIA's Holodeck is a virtual reality platform that is designed to help engineers and designers collaborate on complex projects. To ensure that employees are compensated fairly for their work within the platform, NVIDIA has developed a system of virtual credits that can be exchanged for real-world rewards, such as bonuses or promotions.

These examples demonstrate that companies are already beginning to think about how to address employment issues within the metaverse. As more companies enter this space and the metaverse continues to evolve, it will be important for employers to remain vigilant and proactive in addressing the unique challenges that arise in this virtual world.

But what about law firms operating in the metaverse?

Some law firms have already started setting up operations in the metaverse to offer legal services to virtual clients. As more businesses operate in the metaverse, it is likely that legal services will become even more important. Law firms will need to be aware of the unique challenges of operating in a virtual environment and ensure that they are complying with all applicable laws and regulations.

This includes having to consider how existing Rules of Professional Conduct will be enforced in such a unique environment. For example, professionals will still likely be responsible for ABA Model Rule 5.1 and 5.3 for guidance on managerial authority regulations as well as obligations toward supervising lawyers - ensuring subordinate staff adheres to applicable codes when navigating through cyberspace's uncharted territories.

But how will avatars be supervised in this entirely virtual environment? This poses a significant challenge that law firms need to anticipate and address.

And then for lawyers, there is the whole ethics issue of what jurisdictional rules apply to the metaverse and what it means to solicit clients. We'll leave those issues to the ethics professionals! 

Conclusion

As companies continue to build out services in the metaverse and Web3, they will need to consider these and other issues of employment law. Employers who are considering operations in these virtual worlds should start thinking now about how they will address these challenges and should seek the advice of legal experts who are familiar with these emerging areas of law. Only by proactively addressing these issues can we ensure that the future of work in the metaverse is fair, equitable, and inclusive.

Questions about employment in the metaverse? Wagner Legal can help. Schedule a consultation with us today.  Don’t forget to subscribe to receive the Legal Cut, a newsletter built to keep you informed with the latest legal insights of the entertainment industry!