You've likely heard by now that a group of former minor league ballplayers have sued major league baseball and several clubs for violation of federal and state wage laws. The ballplayers seek damages and penalties for alleged underpayment prior to filing their lawsuit, as well as an injunction requiring baseball and its clubs to conform to minimum wage requirements going forward.
On Wednesday, the ballplayers amended their complaint to include additional former players as plaintiffs, and more clubs as defendants. Craig Calcaterra at Hardball Talk obtained a copy of the amended complaint, which you can read here. Among the new litigants are Brad McAtee and Craig Benningson, two former minor leaguers now suing their onetime parent club, the Colorado Rockies.
The suit is in its early stages, but we know enough to start asking some questions, and offering some tentative answers, about the issues in play. Here are ten questions you might be considering while MLB.TV is telling you to "Stay Tuned: This Game Will Begin Shortly."
1. What's this lawsuit all about?
A group of 21 former minor league players have sued Major League Baseball, Bud Selig, and 17 clubs in federal court in California, claiming violation of the federal minimum wage and overtime laws, along with violation of similar state laws. The former players contend that MLB's system for compensating minor leaguers results in salaries that are so low that, when adjusted to an hourly basis, result in a wage far below the minimum legal requirements. The players also allege that they often are required to work for no pay, such as during spring training or when playing in post-season instructional leagues. In addition to recovering back pay, the players seek statutory penalties and interest.
The players also are pursuing separate claims alleging that MLB's system prevented them from achieving the fair value for their services if they were available on an open market. The players contend that MLB's draft system and bonus limits deliberately deprive minor leaguers from obtaining higher salaries, and they seek to recover the resulting loss.
2. Shouldn't this be resolved through the MLB Players Association?
That's part of the problem, at least as the plaintiff-ballplayers see it. The MLB Players Association represents major league players, not minor leaguers, and minor league ballplayers have no union. The former ballplayers claim that the union has no interest (and even conflicting interests) in improving wages and conditions for minor league players.
According to the complaint, MLB and its clubs know this, and actively work to keep minor leaguers in the dark about the details of their contracts. For example, paragraph 115 of the complaint notes: "While some highly talented players retain agents (or advisors) to assist them with negotiations, the National Collegiate Athletic Association-the governing body for college baseball players and prospective college baseball players-prohibits amateur athletes from employing agents or attorneys during contract negotiations. MLB teams have even cooperated with the NCAA to enforce the rule, with suspensions resulting." (emphasis added). This, of course, is a none-too-veiled reference to the Phillies recently notifying the NCAA that two players the team drafted used agent-representatives to negotiate on their behalf.
3. These contracts are between the ballplayers and clubs. Why are Major League Baseball and Bud Selig also being sued?
The plaintiffs contend that the entire minor league financial system is directed by MLB (and the Office of the Commissioner). MLB instituted the Rule 4 draft and the subsequent limitations on signing bonuses. MLB sets the terms for international signings. MLB approves a standard contract for minor leaguers that clubs cannot modify, ostensibly, according to MLB, "[t]o preserve morale among Minor League players and to produce the similarity of conditions necessary for keen competition."
In addition, the former players allege that MLB sets a uniform wage scale that teams typically follow. For example, players allege that the scale provides in the first year for $1,100 per month for rookie and short-season A ball, $1,250 per month for A ball, $1,500 for AA, and $2,150 for AAA. The salaries are, when adjusted to hourly requirements, below minimum wage for most minor league players. Because this is a centralized system, according to the plaintiffs, MLB and Selig effectively are "employers" for purposes of wage laws.
4. Why aren't the minor league clubs named as defendants? That's who these guys played for.
The complaint explains that, while minor league players don the uniforms of their minor league clubs, there's no employment relationship with them. The employment contract is with the parent major-league club, which also employs the coaches who instruct the minor leaguers, provides the equipment that they use, and manages the logistics for operating a minor league program (such as transportation and lodging). The minor league club, by contrast, is responsible only for the ballpark, uniforms, and a portion of the equipment cost.
5. I thought baseball has an antitrust exemption. Isn't that fatal to the ballplayers' case?
Baseball's historic exemption from the antitrust laws imparts a great deal of power, including labor relations power. If you take the minor leaguers' view of the case, the antitrust exemption contributed to the current system and its disparity in bargaining power.
But the exemption isn't immunity from any suit. The wage laws apply irrespective of whether a party is a legally protected monopoly. So while MLB's exemption effectively shields baseball from suits over restraints of trade, it doesn't exempt MLB from wage laws. In fact, federal courts have applied those requirements to MLB clubs.
6. The ballplayers signed a contract. They knew what they were getting in to. How can they sue?
This isn't an uncommon sentiment among baseball fans who work for a living and fork over considerable sums to attend ballgames. It's reasonable for people to be skeptical of players who, if they succeed in the big leagues, stand to make piles of money.
For this reason, I think, the players' complaint goes to great lengths to explain how life is much different for a minor leaguer. Most minor league ballplayers aren't toiling on the cusp of the major leagues; they're in the lower levels of the minor league system. According to plaintiffs, most earn less than $7,500 per year playing baseball. While minor leaguers play a five-month season for pay, they are expected to attend spring training, extended spring training, and post-season instructional leagues without pay. Players also are required to condition during the winter, again, without compensation. During their five-month season, minor leaguers work between 60 to 70 hours a week.
Every worker in a mail room may dream of being a CEO, just like a minor league ballplayer dreams of a big league job with a big league contract. And both the minor leaguer and the mail clerk may get their chance through persistence and hard work. But that doesn't mean that the mail clerk is outside the protection of the law, specifically, the federal and state laws that guarantee most workers a minimum wage and overtime pay. The lawsuit argues that the minor league ballplayer shouldn't be outside of those protections, either.
7. That sounds bad. Is this an open and shut case for the former players?
Hardly. MLB has legitimate, and compelling, defenses. At the outset, it's important to remember that laws on minimum wage and overtime pay don't apply to every worker. Federal law recognizes several exemptions to standard wage requirements. Seasonal workers at "recreational" establishments are not subject to the standard wage laws, for example. The defendant ball clubs likely will raise the seasonal employment exemption, although MLB clubs are 0-for-2 with this argument since they are, in fact, year-round operations.
MLB is likely to have better results relying on the exemption for creative professionals, a category of employees who by law aren't subject to the standard minimum wage requirements. To qualify for this exemption, an employee must be compensated at a rate equivalent to $455 per week, and the employee's primary duties must require "invention, imagination, originality or talent in a recognized field of artistic or creative endeavor." Writers, musicians and actors are the most obvious "creative professionals" subject to the exemption. Ultimately, however, whether the application applies depends upon the facts.
The purpose of the exemption, however, seems to apply with some force here. Professionals who are hired to perform an act requiring originality or talent are working in a fundamentally different field than the typical laborer. The nature of their labor isn't fungible, because not everyone can do it and do it well. Thus the standard labor laws don't fit this unorthodox brand of employment.
I'm not a labor lawyer, but these are the most obvious defenses that MLB has to the players' lawsuit, and they're relatively strong ones. We can also expect MLB to mount an attack on the players' attempt to certify the case as a class action. For example, the plaintiffs seek to represent a class of both former and current minor league players. This can be difficult to pursue in a single class action, since former and current employees don't always have perfectly aligned interests. Former employees are primarily interested in receiving compensation for alleged damages; current employees may be more interested in a remedy changing the employer's conduct going forward. This conflict complicates, and sometimes prevents, a class action.
8. What comes next?
MLB and the clubs likely will move to dismiss the minor leaguers' complaint, raising the legal defenses sketched out above. The defendants also may seek to dismiss the plaintiffs' state law claims or move the case to another jurisdiction. While this will extend the early stages of the lawsuit by several months, it's not likely to decide much of anything. MLB may have some compelling defenses, but neither those defenses nor the players' claims can be resolved strictly on the letter of the law. The facts will play a large role here, which means the case is a good bet to continue into fact discovery. That means producing documents, answering interrogatories, deposing witnesses.
This has important implications for the players' lawsuit. Surviving the early stages of litigation puts pressure on MLB to resolve the claims. But resolving the lawsuit means inevitable reform to the minor league system. Is MLB ready for that? That leads to the next question...
9. What's the likely outcome?
There's no denying that the stakes are high in this lawsuit. At issue is the entire minor-league development system put into place by Branch Rickey and his contemporaries in the 1920s. Rickey acknowledged that the system "originated from a purely selfish motive: saving money." To be sure, saving money isn't unlawful. But MLB may be forced to decide whether it can save more money by fighting the suit and potentially losing, or working out a compromise that would give some concessions to minor league ballplayers in exchange for some short-term stability.
If we've learned anything, though, it's that MLB will be dragged to the rational outcome only after exhausting all alternatives. It wouldn't be out of character for MLB to dig in for a protracted battle, only to have the players' side gain strength and momentum.
The momentum, though, wouldn't be toward winning a lawsuit. It would be toward organizing a minor league player's union. If the players win their lawsuit, MLB would pay a hefty damage award, but only minimum wages and overtime for minor league ballplayers going forward. If the players form a union, MLB loses control over a key financial component of its minor league system. It also risks disorder on the major league level, as two unions compete for finite dollars.
MLB may have the reputation of bull-headedness, but it hasn't survived this long without knowing when to cut a deal. And, if I had to wager, avoiding the worst-case scenario will lead MLB to cut a deal if the case survives the initial challenges.
10. Law crap is boring. How many games will the Rockies win this year?