Minor Leagues Turn to Inside Baseball To Ward Off Player Wage, Hour Dispute

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By Chris Opfer

Feb. 19 — Professional baseball's minor leagues are asking Congress to step up to the plate and block a legal challenge to the sport's “farm” system by amending the Fair Labor Standards Act to make clear that players aren't entitled to minimum wages and overtime pay.

The National Association of Professional Baseball Leagues in January hired Frost Brown Todd LLC to lobby Congress to amend the FLSA, which generally requires employers to pay workers at least $7.25 per hour and time-and-a-half wages for all hours logged in excess of 40 per week. Attorney George E. Yund, who registered to lobby on the NAPBL's behalf, told Bloomberg BNA Feb. 18 that the move is in response to a “surprising and unprecedented” lawsuit in which a number of former players say they were paid substandard wages in violation of the law (Senne v. Office of the Comm'r of Baseball, N.D. Cal., No. 3:14-cv-00608, complaint filed, 2/7/14).

“We in the minor leagues are concerned that this will cause the costs of minor league player development to skyrocket,” Yund said of the litigation. “We want Congress to clarify the law so that it says what everyone already knows: That the FLSA does not apply to baseball players.”

Three former minor league baseball players sued Major League Baseball and MLB teams the San Francisco Giants, Miami Marlins and Kansas City Royals in February 2014, alleging that the league and teams paid players as little as $3,000 for five months of work. The complaint, which was later amended to include 34 players suing the league and all 30 of its teams, says that MLB operates as a “cartel” thanks to its exemption from federal antitrust law and “has a long, infamous history of labor exploitation dating to its inception.”

Professional baseball organizations at all levels have long argued that they fall under the FLSA's “amusement or recreational establishment” exemption, under which a business that operates for seven months or less per year or generates the bulk of it's income over a six-month period isn't bound by the statute's minimum wage and overtime requirements. A patchwork of cases has left the issue undecided, however, spurring the NAPBL to ask Congress to create a separate exemption specifically for professional baseball players.

Garrett Broshuis, a former minor league player and an attorney at Korein Tillery in St. Louis, told Bloomberg BNA Feb. 18 that the players are looking to sue on behalf of a class of minor league athletes that could be “in the thousands.” Broshuis said he's also discussed with certain unidentified unions the possibility of organizing players for bargaining purposes.

“It' the best long-term result,” Broshuis said of forming a separate union for minor league players. “The idea is that you get the two sides together and get a negotiated result.”

Life on the Farm

Each MLB club fields six teams at various levels in the minor league system, controlling all decisions about which of its players are assigned to each team. The minor league teams are owned independently and enter into affiliation agreements with big league clubs, under which MLB teams agree to pay all player salaries and expenses and the minor league teams foot the bills for operation and marketing costs.

Although minor league players can be “called up” to the major league level at any time, most of the small segment of players who ultimately make it to the game's highest level—where the minimum pay is more than $500,000 per year and players often earn tens of millions of dollars in salary and endorsements—toil in the minors for at least a few years first. Once a player is selected by a major league team in an annual draft, he signs a seven-year, non-guaranteed contract that significantly limits the player's ability to join another team.

Only those players who are on a club's 40–man major league roster are represented by the Major League Baseball Players Association.

The players in the Senne case allege that most minor league players earn about $3,000 to $7,000 over a five-month season in which they regularly work 50 to 70 hours per week. They say their schedules included six or seven games per week, as well as regular practice, strength and conditioning training, mandatory pregame activities and long stretches of bus travel. Players aren't paid for required spring training sessions leading up to the regular season, according to the complaint, nor during other off-season training and instructional sessions in winter and fall.

“These wage violations force many minor leaguers to live in poverty,” the players allege in the complaint.

In a statement issued after the lawsuit was filed, MLB said the FLSA and state wage and hour laws “were not intended to apply to professional athletes,” such as minor league players. “For example, it is both impractical and nonsensical to require baseball players to maintain time sheets, and to submit requests for overtime when they desire to take extra-batting practice or their game goes into extra innings.”

MLB also said major league clubs paid out $224 million in signing bonuses to first-year players last year, and noted that minor leaguers are free to take offseason jobs. Signing bonus limits make the system top heavy, however, with much of the money used to convince a few of each major league team's top prospects to sign on instead of going to college.

Still, Yund told Bloomberg BNA that the nature of a baseball player's job makes them different from other workers and justifies an exemption from the FLSA's wage and hour requirements.

“It’s not a factory job,” Yund said, arguing that players should be paid only for actual game time. “What they’re doing is an adventure, which could turn into a lucrative career.”

Current Exemption Unclear

Yund said baseball players are already covered by two different FLSA exemptions, those for “amusement or recreational establishment” workers and certain professionals, or otherwise should be considered trainees not protected under the statute. It appears that no court has ruled squarely on how minor league players should be classified, however.

The Senne players dodged a bullet last week when the district court denied a motion to transfer the case to Florida, where precedent appears to favor MLB and its teams. In Jeffrey v. Sarasota White Sox, 64 F.3d 590, 2 WH Cases2d 1537 (11th Cir. 1995), the Eleventh Circuit ruled that a minor league groundskeeper wasn't entitled to overtime pay because the team was covered under the “amusement or recreational establishment” exemption.

Other courts have reached different decisions cases involving major league teams. The Sixth Circuit, for example, held in Bridewell v. Cincinnati Reds, 68 F.3d 136, 2 WH Cases2d 1573 (6th Cir. 1995), that a major league club couldn't take advantage of the exemption because the organization effectively operated throughout the entire year. The Eastern District of Michigan has used similar reasoning in finding that Detroit Tigers batboys were entitled to minimum wages and overtime under the FLSA (Adams v. Detroit Tigers, 961 F. Supp. 176 (E.D. Mich. 1997)).

Although the NAPBL and its teams aren't parties to the Senne case and aren't responsible for paying players, Yund said the litigation poses a threat to minor league baseball. A ruling for the players would likely drive up the costs of player development for major league clubs—and spur additional lawsuits—Yund said, potentially causing them to reduce the number of teams that they field.

Yund said the lobbying efforts have so far been aimed at educating members of Congress about the situation, but added that he's confident about convincing lawmakers to pursue the amendment. “We have operations in 46 states and we think congressman and senators will be interested in preserving affordable baseball in those areas,” he said.

Yund also pointed to the minor leagues' previous lobbying success in maintaining an antitrust exemption as an example of the broad support the group enjoys in Congress. When federal lawmakers passed the Curt Flood Act in 1998, technically limiting MLB's antitrust immunity, they included a provision specifying that the new law didn't apply to minor league operations.

Unionization Challenges

Meanwhile, Broshuis told Bloomberg BNA that the unique circumstances under which players work also makes organizing more difficult than in other industries.

Among other hurdles, Broshuis said that many players may be reluctant to unionize out of fear of retaliation. Although the National Labor Relations Act bans employers from retaliating against workers for organizing activities, player personnel decisions often include complicated strategic decisions that might make unlawful motivation more difficult to prove.

He also said he's received “mixed feedback” from unions about the organizing effort, adding that minor league players' low salaries “are not much of a carrot” for attracting labor community support. The MLBPA declined to weigh in on the Senne lawsuit and minor leaguer efforts to unionize.

“As matter of policy we do not comment on lawsuits brought by or against outside parties,” Greg Bouris, the MLBPA's communications director, told Bloomberg BNA Feb. 19. “Our public position on this topic is consistent with our general belief that all workers, regardless of industry or profession, deserve the opportunity to protect and pursue their rights to fair compensation, including exploring options that may be available to them through the court system.”

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com