New Lawsuit Alleges Minor League Salaries Fail to Meet Minimum Wage

In the latest chapter of what has been a landmark year in sports law, several current and former minor league baseball players have filed a class action and collective action lawsuit against Major League Baseball (“MLB”) and all 30 individual teams for failing to pay salaries that met or exceeded the minimum wage on a per-hour basis, in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the wage and hour laws in five states. The suit, Senne v. Office of the Commissioner of Major League Baseball (3:14-cv-608-JCS, N.D. Cal. 2014), brings to the forefront the disparity in salaries earned by professional baseball players, puts MLB’s antitrust exemption under renewed scrutiny, and threatens to alter the business of organized baseball, which earned more than $8 billion in revenue in 2013. While the annual minimum salary for an MLB player is $500,000, and the average salary more than $3 million, the Plaintiff class claims that below the “AAA” level--the level right below the major leagues--the median salary is no more than $1500 per month. Second Amended Class Action Complaint (“Complaint”), ¶ 16. This disparity has been termed by baseball economist Andrew Zimbalist as the "struggling apprentice predicament," in which minor leaguers, like other aspirants in highly competitive entertainment fields such as art and music, often work long hours for low wages in the hopes of achieving wealth and success. Andrew Zimbalist, Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime, BasicBooks (1994), p. 119. The players claim that, between games, practice, and training, they work more than 50 hours per week during the five month season, and sometimes 70 hours, while receiving no overtime pay. Id. ¶ 9. Thus, assuming an average workweek of 50 hours per week, the hourly wage would be below the federal minimum wage at every level of minor league baseball below AAA. The Plaintiff class also claims that MLB and its teams have been on notice since at least 1995 and 1998, when the Cincinnati Reds had two FLSA cases decided against them, that they are not exempt from federal minimum wage laws. (Id. ¶ 14, citing Bridewell v. The Cincinnati Reds, 68 F.3d 136, 139 (6th Cir. 1995), cert. denied, 516 U.S. 1172 (1996); Bridewell v. The Cincinnati Reds, 155 F.3d 828, 829 (6th Cir. 1998).

The Complaint notes that since 1976, MLB player salaries have increased 2,000% in nominal terms. However, minor league salaries have increased just 75%, or less than one-fifth the rate of inflation. Id., ¶ 8. While the Complaint does not allege antitrust violations against MLB, id. ¶ 2 n.2, Plaintiff class cites MLB’s blanket antitrust exemption, which my colleague Jason Palmer has written on previously, as allowing MLB and its teams "to operate as a single organization . . . [which] significantly increases the level of bargaining power the Defendants collectively exercise over the minor leaguers." Id. ¶131. Specifically, the Plaintiff class alleges that a minor league player drafted must sign a uniform player contract ("UPC") – with identical contractual terms for any team that drafts a player – before being allowed to play. The class notes that the minor league draft system enables the MLB team that drafted him to control his rights for seven years, and the player has no right to negotiate with another team for his services. (Id., ¶¶ 139, 151). The players’ lack of negotiating power allegedly makes it easier for MLB to suppress minor league salaries below minimum wage.

MLB has answered, denying all liability and noting that a wage and hour lawsuit against MLB had been dismissed in the Southern District of New York in March 2014. Defendants The Office of the Commissioner of Baseball and Allan Huber "Bud" Selig's Answer to the Second Amended Complaint ("Answer") ¶ 12; Chen v. Major League Baseball, et al., Case No. 1:13-cv-05494-JGK, 2014 U.S. Dist. LEXIS 42078 (S.D.N.Y. Mar. 25, 2014). Notably, MLB claims that "certain training, travel and commuting time" were not part of the players' jobs, and thus they need not be compensated for that time. Id. at 76 ¶ 25. As the Plaintiff class alleges that "required team travel adds considerable amounts of work onto the player’s workweek when on the road" (Complaint, ¶ 179), the issue of what constitutes travel for purposes of work will be a major factual dispute if the case progresses. Procedurally, MLB asserts that pursuant to the UPCs each player signs, any such claim must be arbitrated, Answer, p. 71, ¶ 4, raising the possibility that the case could be dismissed prior to substantial discovery. MLB and the teams have also filed a motion to transfer the case to the Middle District of Florida, where 15 teams operate spring training or minor league teams. Doc. # 118.

The initial complaint was filed in February 2014; given the scope and complexity of the case, any resolution likely is years away. Nonetheless, the lawsuit ensures that salaries and working conditions for minor league players will be at the forefront of sports business litigation, which has potential implications for other North American sports leagues, such as the National Hockey League, which operate minor leagues as well.