Minor League's Salary Structure Unfair?
Sponsored by Snyder Gislason Frasier LLC[/HR] Starting at 6 PM today, hundreds of "kids" (I'm 47. I can say that.) will be drafted by MLB teams and begin their dream career but before they get to The Show, they’ll be serving time in a economic system that is being called into question in federal court. At issue is whether MLB teams are using those players' dreams to conduct unfair – and even illegal – labor practices in the minor leagues.
I learned more about this when I joined Chad Snyder and Mike Frasier of Snyder Gislason Frasier at a Twins game last week. That question is being raised in a California federal court by three ex-minor leaguers bringing a class-action suit against Major League Baseball, the Office of The Commissioner, Commissioner Bud Selig, and all the teams in MLB. At issue is whether MLB is violating the Fair Labor Standards Act (FLSA) which was FDR’s landmark legislation that governs the length of work week, minimum wage, overtime pay and child labor laws.
Certainly, it’s not hard to find evidence that minor league players are treated as serfs by the baseball industry. American minor leaguers do not get to pick their teams; they’re distributed via a draft. While a few get a big bonus, the vast majority get something closer to a couple thousand dollars to sign. Before they play for an organization they need to sign a Universal Player Contract (UPC) which grants MLB exclusive rights to the player for seven seasons, not even allowing them to play for a team outside the United States, or even retire. And while, in theory, the player can negotiate a salary during that time, in reality they can’t; many MLB organizations have a no-negotiation policy.
This has resulted in salaries that, according to the lawsuit, range from $1,100/month in rookie and short-season leagues to $2150/month in AAA. In a recent story on Cedar Rapids Kernels players, catcher Alex Muren said he takes home about $660/month. And Twins players are some of the luckier ones. The Twins, unlike many teams, arrange housing for their players with local families. The Kernels also feed players before and after games. But the players are at the ballpark 10-12 hours per day, often six or seven days per week. And there is no provision for overtime. Simple division shows the players aren't earning anything close to minimum wage.
But that’s the least of the extra time players put in. The UPC also dictates that those salaries are only paid for the months of the season. The players are not paid for spring training, extended spring training, instructional league, winter ball or winter training.
And unlike their major league counterparts, the minor leaguers don’t belong to a union. In fact, the Major League Baseball Players Union (MLBPA) and MLB have collectively agreed to limit many aspects of compensation for the minor leaguers, including signing bonuses for players in the draft or who are signed internationally.
The suit concludes: “Since minor leaguers do not belong to a union, nothing has prevented the defendants from artificially and illegally depressing minor league wages. Indeed, MLB's exemption from antitrust laws has only made it easier. Given that MLB carefully controls the entryway into the highest levels of baseball, and given the young minor leaguer's strong desire to enter the industry, MLB and the defendants have exploited minor leaguers by paying salaries below minimum wage, by not paying overtime wages, and by often paying no wages at all."
Because of this, the suit is asking for damages and an injunction against the defendants for continuing these practices. But since the class-action suit was filed this winter, the teams and MLB have answered and given some hints as to the defenses they might use:
Break It Down
Some teams are asking that some of the charges get tried in different states. At the same time, the teams are arguing that different facts and different law should apply to each player. This could be a strategic move by which MLB breaks this class-action suit into separate lawsuits, none of which would be as damaging.
One of the most common defenses for a FLSA suit is that the employer or employee is exempt, as there are many exemptions in the law. You might be surprised to find out that one of these is NOT baseball’s antitrust exemption. That covers a lot of things, but monopolies still need to pay their employees a fair wage.
However, there is an exemption for seasonal “amusement or recreational” employees. Certainly, the “Boys of Summer” stereotype of baseball players would seem to support that category. But the suit was very careful to anticipate this defense, showing that players are working, or at least serving, their organization year-round. This could be one of the key points the federal court would need to decide.
“Courts have been presented with this argument before, and have gone both ways,” explained Mike Frasier, who specializes in employment law. One court determined that bat boys for the Detroit Tigers fell under this exemption and another court found that the groundskeeping staff at the Sarasota White Sox facility does as well. On the other hand, another court determined that maintenance employees of the Cincinnati Reds do not qualify for the exemption. But none of those decisions were in California, which means the court hearing this case does not need to follow what those others did.
The federal court could rule that they shouldn’t be the ones to decide this case at all. One defense raised by MLB is that that the UFC has a provision in it for players and their organizations to resolve disputes: arbitration. Because of this provision, the players can't take the organization to court if MLB decides it should go to arbitration instead. But if MLB wants to play this card, they need to do so soon. If they engage in this lawsuit for very long without compelling arbitration, they may waive that right.
MLB and the teams are asserting many other defenses, but these appear to be the strongest – or at least the ones that could most quickly win the case for them.
There is a significant chance, given some of the defenses, that this case could head for a fairly quick dismissal. But if it becomes extended, it might raise some issues that MLB (and maybe the MLBPA) would be wise to consider. MLB was estimated to have revenue of 8+ billion dollars in 2013. Investing just 1% of that revenue would provide an extra $13,000 to each of their 6,000 minor leaguers, doubling or tripling their salaries. Perhaps it is time MLB considered that investment.
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