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  • Minor League's Salary Structure Unfair?


    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.

    Exemption
    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.

    Arbitration
    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.

    Snyder Gislason Frasier LLC is a Minneapolis-based law firm committed to providing personalized service to their clients while cheering for the Minnesota Twins. Their talented lawyers can help you find innovative solutions to legal issues in many areas, including general business law, litigation, contracts, family law, employment law, and entertainment law.
    Comments 62 Comments
    1. diehardtwinsfan's Avatar
      diehardtwinsfan -
      Honestly, if teams went out of their way to house and feed these kids, I doubt there'd be too much going on, but at those rates (which I believe are the non-40 man rates), those kids aren't making enough to get by. I would think the teams woudl be very interested in housing and feeding of their prospects, just as I'd think the union would be behind this too. Given the lack of a seat at the table in the CBA process, I really don't see how MLB is going to win this one. The would be wise to settle and make some changes.
    1. SD Buhr's Avatar
      SD Buhr -
      Just to be clear, it's not the Twins that are arranging housing for their minor leaguers. Where the benefit exists, such as in CR, it's provided by the local club and their supporters, not the parent organization.
    1. mike wants wins's Avatar
      mike wants wins -
      I find it bizarre that teams don't invest in proper food for their most important assets. It is clear that minor leaguers are underpaid for their work, and I hope the plaintiffs win and take money from the greedy MLB players and owners.
    1. LimestoneBaggy's Avatar
      LimestoneBaggy -
      It would be unfortunate if the players were compelled to arbitration or if this suit falls under an exemption. Quite frankly, the gentleman are being exploited for their desire to live a dream. A fair salary wouldn't hurt MLB's bottom line in the least.
    1. Boda P's Avatar
      Boda P -
      Great article. This is not something those of us that follow baseball and the minor leagues think about. Are minor leaguers part of the major league union? If not, it seems the logical next step is for them to unionize. That would allow them to standarize the compensation for all players and allow them to negotiate for their fair share.
    1. Badsmerf's Avatar
      Badsmerf -
      Changes have to be made. These guys are right be filling this suit. Just giving these kids 50k would be plenty for them to get by and would hardly break the bank for MLB teams. That might create a little more accountability for roster spots in the minors too. I'm not a union guy, but the minor league guys are really getting the shaft.
    1. Mike Frasier Law's Avatar
      Mike Frasier Law -
      Quote Originally Posted by Boda P View Post
      Great article. This is not something those of us that follow baseball and the minor leagues think about. Are minor leaguers part of the major league union? If not, it seems the logical next step is for them to unionize. That would allow them to standarize the compensation for all players and allow them to negotiate for their fair share.
      Players not on the 40 man roster are not represented by the union. If they were represented by the union, they could not have brought this suit - they would have had to have the fight in front of the National Labor Relations Board.
    1. diehardtwinsfan's Avatar
      diehardtwinsfan -
      Quote Originally Posted by Boda P View Post
      Great article. This is not something those of us that follow baseball and the minor leagues think about. Are minor leaguers part of the major league union? If not, it seems the logical next step is for them to unionize. That would allow them to standarize the compensation for all players and allow them to negotiate for their fair share.
      This is a big part of the problem. They are 'represented' by the MLBPA, but they have no voting interest. They have no vote on the CBA at all. The MLBPA has clearly not represnted them well, and that's a big part of this problem.
    1. DJL44's Avatar
      DJL44 -
      You and I are feeding the minor leaguers since so many of them qualify for food stamps.
    1. diehardtwinsfan's Avatar
      diehardtwinsfan -
      Quote Originally Posted by DJL44 View Post
      You and I are feeding the minor leaguers since so many of them qualify for food stamps.
      Sadly yes... and I would think that MLB would want to make sure their nutrition is well cared for. This is an odd way to treat an investment in my opinion. Guys like Buxton won't really have problems given their large signing bonuses, but guys drafted in the later rounds really don't have much to work with.
    1. Mike Frasier Law's Avatar
      Mike Frasier Law -
      The article doesn't mention it, but the lawsuit names Bud Selig as an individual defendant. Under most circumstances, he would not be personally liable for the acts of the MLB. But the Fair Labor Standards Act defines "employer" very broadly, and courts have held owners, officers, and directors of companies individually liable if they were personally involved and in charge of the corporate conduct that violated the FLSA. Can you imagine Bud being on the hook personally for a multimillion dollar judgment?
    1. SD Buhr's Avatar
      SD Buhr -
      Quote Originally Posted by Mike Frasier Law View Post
      Can you imagine Bud being on the hook personally for a multimillion dollar judgment?
      No I can't, but the thought does bring a smile to my face.
    1. Sconnie's Avatar
      Sconnie -
      Quote Originally Posted by diehardtwinsfan View Post
      This is a big part of the problem. They are 'represented' by the MLBPA, but they have no voting interest. They have no vote on the CBA at all. The MLBPA has clearly not represnted them well, and that's a big part of this problem.
      That's just it, why would the MLBPA represent the non-voting members to the same extent they represent the voting members. Does it make sense to have 1 union for 2 distinct groups?
    1. SD Buhr's Avatar
      SD Buhr -
      The best minor leaguers generally got decent signing bonuses and expect to be Major Leaguers. The guys who need something like union protection would be in real danger of simply being released if they got involved with union organizing while in the minors.
    1. Sssuperdave's Avatar
      Sssuperdave -
      Quote Originally Posted by Mike Frasier Law View Post
      Can you imagine Bud being on the hook personally for a multimillion dollar judgment?
      I would expect that MLB has a hefty D&O insurance policy that would prevent Bud from having to personally contribute very much.
    1. Brock Beauchamp's Avatar
      Brock Beauchamp -
      Quote Originally Posted by Mike Frasier Law View Post
      Can you imagine Bud being on the hook personally for a multimillion dollar judgment?
      Sounds like a hell of an idea for a sitcom.
    1. TheLeviathan's Avatar
      TheLeviathan -
      Just like the NCAA, MLB is sinking their own ship out of pure greed on this issue. As John points out, they have plenty of profit to invest and even a meager investment would likely do away with these issues for a long time.
    1. Steve Johnson's Avatar
      Steve Johnson -
      Quote Originally Posted by diehardtwinsfan View Post
      Honestly, if teams went out of their way to house and feed these kids, I doubt there'd be too much going on, but at those rates (which I believe are the non-40 man rates), those kids aren't making enough to get by. I would think the teams woudl be very interested in housing and feeding of their prospects, just as I'd think the union would be behind this too. Given the lack of a seat at the table in the CBA process, I really don't see how MLB is going to win this one. The would be wise to settle and make some changes.
      Er, no they wouldn't. The MLPA simply has no reason to care about those not in their membership (and these players are NOT members in any meaningful sense), even perspective or impending members.

      I would argue that this lawsuit is incomplete and that the Major League's Player's Association should be enjoined as defendents and co-conspirators in limiting the amount of money available for amature signings and those in the minors who lack voting power within the Union. Afterall, the Players Unoin shaped and signed off on the CBs and have never visibly recognized or forwarded the cause of these types of players.

      The Union is just as culpable and fines and remedies should be split.
    1. JB_Iowa's Avatar
      JB_Iowa -
      This issue is gathering steam not just in the courts but in the court of public opinion ... which is often more effective.

      Maybe they can shame mlb into that extra 1% at some point.
    1. Trevor0333's Avatar
      Trevor0333 -
      This really bothers me, not because of the food stamp deal. I have 0 problem contributing to that for society in general.

      This reminds me of bad business we see every day in our own employer's. Like letting the best talent slip away for lazy sub standard ones to save on payroll then spending 3X that budget on giant big screen monitors no one uses.
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