NCAA Show-Cause Penalties Violate State Law and Are Illegal, California Judge Rules

By Gregg E. Clifton on

One of the NCAA’s strongest penalties has been declared illegal in California.

California Superior Court Judge Frederick Shaller issued a final decision finding NCAA “show-cause” penalties to be a violation of California state law.

Arising from a lawsuit filed more than seven years ago by former USC assistant football coach Todd McNair, Judge Shaller, confirming a tentative decision he had reached in August,

concluded the show-cause penalty provision of the NCAA bylaws is illegal because it constitutes an “unlawful restraint” on McNair’s ability to pursue a lawful profession.

In his eight-page opinion, Judge Shaller explained, “McNair’s ability to practice his profession as a college football coach has been restricted, if not preempted, not only in Los Angeles, but in every state in the country.”

McNair had filed a state court action against the NCAA following the NCAA’s extra-benefit investigation focused on former USC star running back, and Heisman Trophy winner, Reggie Bush. At the conclusion of its 2010 investigation, the NCAA concluded McNair “knew or should have known” that Bush was engaged in violations with a potential agent while still playing at USC, and McNair had “provided false and misleading information to the enforcement staff.” The NCAA then issued McNair a one-year show-cause penalty and a one-year ban preventing McNair from recruiting student-athletes to USC or any other school. As a result of the NCAA penalty, McNair’s contract at USC was not renewed and he has not coached at the college level since the penalty was levied against him.

McNair had the defamation count of his lawsuit against the NCAA rejected in May after a jury voted 9-3 in favor of the NCAA following a three-week trial.

Judge Schaller’s final decision concluding the NCAA’s show-cause penalty is unlawful was issued after objections were offered by the NCAA in response to the judge’s tentative decision in August.

The NCAA offered written declarations from Pac-12 Commissioner Larry Scott and Big West Conference Commissioner Dennis Farrell in support of its opposition.

Farrell’s declaration expressed concern that his conference schools would be unable to rely on the NCAA’s disciplinary mechanisms if the show-cause penalty was not legal.

Scott asserted, “If California law prevents institutions in that state from honoring such commitments, it is hard to see how the Pac-12’s Member Universities in California could continue to meet the requirements of NCAA membership.” He continued, “[T]he Court’s tentative ruling would place at risk the competitive and scholarship opportunities that flow from NCAA participation for the Pac-12 California Member Universities.”

Judge Schaller rejected the opinions expressed in both declarations, stating that they are “completely speculative and irrelevant to the issue….[T}he proposed testimony of Scott and Farrell is deemed inadmissible and is not considered.”

Following issuance of the court’s opinion, the NCAA stated, “The NCAA disagrees with the court’s ruling, which is wrong as a matter of law….We will explore all avenues for relief to ensure that NCAA member schools in California can continue to abide by the same rules as the rest of the NCAA’s membership.”

While the Commission on College Basketball recently recommended that the NCAA consider potential “lifetime” bans as part of the show-cause penalty process, Judge Shaller’s ruling means that the NCAA has lost the benefit of their disciplinary muscle to deter bylaw violations in California. Will other states follow and conclude similarly?

 

Dallas Mavericks Investigation Report Recommends Women in Leadership and Anonymous Workplace Climate Surveys to Combat Sexual Harassment

By David R. Jimenez and Alyssa M. Toft on

Following a February 2018 Sports Illustrated article regarding alleged sexual harassment and misconduct within Dallas Basketball Limited, the Dallas Mavericks basketball organization (“Mavericks”), the Mavericks commissioned an independent investigation into the claims.  The investigators, comprised of two outside law firms, interviewed 215 witnesses and analyzed 1.6 million documents.  The investigation report was publicly released on September 19, 2018.

The lengthy report details a number of allegations regarding sexual harassment or other misconduct by the former CEO, the former Human Resources Director, and other employees.  Allegations ranged from inappropriate touching and sexual advances, to watching pornography at work, to domestic violence.  The report also highlights concerns regarding management’s failure to appropriately address employee complaints and stated that “there were no internal controls or governance structures in place[.]”

One of the most interesting components of the report is the remedial recommendations made by the investigators.

The investigators’ very first recommendation was to increase the number of female employees, including those in leadership positions, within the company.  The report observed that “Research has shown that the single most important thing that companies can do to reduce sexual harassment and gender discrimination in the workplace is to employ, and promote, more women.  Having women in executive leadership positions is particularly critical.”  The report noted that when the investigation began, there were no female executives.  Shortly thereafter, Cynthia Marshall was hired as President and CEO, and there are now eight women in executive positions (out of eighteen total).

The investigators also recommended that the Mavericks “[c]onduct anonymous workplace culture and sexual harassment climate surveys on a regular basis” to identify problems.  Further, the report illustrated instances where management failed to make important personnel decisions, and indicated the company’s culture “lacked any hierarchy and consisted of blurred lines of decision-making on some issues.”  The report stated that “Numerous studies have concluded that unstructured decision-making leads to increased risk and a higher prevalence of sexual harassment in the workplace, as policies are less likely to be enforced strongly and promptly, and disciplinary consequences become less clear and uniformly applied.”  Thus, the investigators recommended the Mavericks establish clearly-defined decision-making roles.

The report further recommended that the Mavericks expand its Human Resources department and hire a full-time General Counsel – both of which have now been done.  Of course, the investigators also recommended robust sexual harassment training and emphasized the importance of including leadership in these trainings.

The investigators’ recommendations demonstrate that traditional remedies, such as conducting trainings and redefining policies, may be insufficient, particularly when actions of the organization belie those policies and training efforts.  Instead, employers should address sexual harassment through more nuanced approaches aimed at creating a culture of inclusivity and trust in organizational leadership.

 

NHL Secures Federal Court Victory As Class Action Status Denied In Concussion Case

By Gregg E. Clifton on

U.S. District Court Judge Susan Richard Nelson has denied the class-action status sought by a potential class of several thousand current and former players suing the National Hockey League (NHL) alleging that the league was negligent in its care and prevention of head trauma and that it fraudulently concealed the long-term impact of head injuries while promoting violent play.

The decision is a significant victory for the NHL.

In a forty-six page order, Judge Nelson acknowledged the potential costs and duplication of effort in pursuing individual claims but focused on the ”widespread differences” in the various state laws regarding the subject and standard for medical monitoring.

She concluded that this issue would “present significant case management difficulties.”

Judge Nelson’s opinion stated that the class could contain up to 5,000 players, and depending on the history of and state of legal residence for each player, the judge said she would be forced to apply a wide range of legal standards based upon the distinct variances of applicable state laws.

Noting that a player who played for a New York franchise like the New York Rangers or New York Islanders would have to show proof of current injury to state a medical monitoring claim, while players who played for a Florida team, or those who have retired there, would not, Judge Nelson concluded, “Given those differences, the court finds that resolving these claims in a single class action would present significant case management difficulties.”

In another victory for the NHL,

Judge Nelson also rejected the players’ argument that New York law should be applied for the entire class because that is where the NHL is headquartered.

Rather than one state law applying, the judge found instead that the law of the state where a player spent most of his career — or for players who moved around often, the state where they currently live — should be applied.

The players had also proposed a class of living players who had been diagnosed with a degenerative neurological condition, such as Alzheimer’s. Similarly, the judge found that the legal issues for this proposed class were also too varied and individual.

Responding to the decision, Attorney Charles Zimmerman, an attorney for the players, asserted that the ruling was only procedural and that the individual players are prepared to move forward. Commenting on the future status of the cases, Zimmerman stated, “We will continue to litigate….on a case-by-case basis. Players with traumatic brain injuries …will prevail as we move forward.”

 

 

Seventh Circuit Upholds NCAA “Year In Residence” Requirement For Transfers

By Gregg E. Clifton and John G. Long on

The Seventh Circuit has rejected antitrust claims filed against the NCAA by former Northern Illinois University student-athlete Peter Deppe and upheld the NCAA’s rule delaying the athletic eligibility of student-athletes who transfer to alternate schools without serving a “year in residence” at their new school before becoming eligible to resume their collegiate career.

The Circuit Court’s decision supporting the NCAA’s year in residence requirement follows the recent NCAA Division I counsel’s voluntary modification of the transfer process. The rule change eliminated the NCAA’s long-standing “Permission to Contact” process for Division I athletes in favor of a simple notification standard allowing student-athletes to initiate the transfer process by simply providing written notification of the desire to transfer to his or her institution.

Deppe, a former punter for the Northern Illinois football team, claimed that he had been promised an athletic scholarship following his success of the field. Unfortunately, the special team’s coach who allegedly made the scholarship promise to him left the school and the head coach refused to honor the commitment that was made to him.

Following the refusal of the head coach to honor his assistant’s commitment to Deppe, Deppe was offered the opportunity to play for the University of Iowa but subsequently learned that an NCAA Bylaw would prohibit him from playing during his first year at the school. The University of Iowa informed Deppe that as a result of his inability to be able to play for the team immediately that they would be forced to pursue a different punter for the squad for the upcoming season.

Deppe initially challenged the NCAA Bylaw restricting his ability to play immediately upon his transfer by filing a proposed class action suit against the NCAA in March of 2016 alleging that the NCAA rule was anti-competitive in violation of federal anti-trust laws. U.S. District Judge Tanya Walton Pratt dismissed Deppe’s action on the basis that the NCAA bylaw furthers its mandate to promote competition among amateur college sports programs. Deppe appealed Judge Walton’s decision to the Seventh Circuit arguing that the lower court decision gave the NCAA “carte blanche” to violate anti-trust laws.

In response to Deppe, the NCAA argued to the Circuit Court that its bylaw promotes a pro-competitive environment by maintaining the proper balance between academics and athletics.

The NCAA successfully argued that the potential movement of student-athletes by changing schools during each year of their eligibility would “completely divorce the athletic and academic experience for NCAA student-athletes.

So while the ease to move forward with a potential transfer has been put in place by the NCAA,

the Seventh Circuit has reinforced the NCAA mandate that their rule requiring student-athletes to spend one year in residence at their new school remains in full force and effect pending other anticipated court challenges to the rule.

For more information about the proposal, and institutional obligations and best practice related to implementation of the notice of transfer system, please contact Gregg Clifton or John G. Long at Jackson Lewis P.C.

 

New NCAA ‘Notice to Transfer’ Model Replaces Controversial Permission to Contact Rule

By Gregg E. Clifton and John G. Long on

The NCAA Division I counsel has acted to formally adopt the highly anticipated proposal that modifies the requirements for an athlete to transfer and to eliminate the NCAA “Permission to Contact” process for Division I athletes. Currently, student-athletes must seek their current NCAA institution’s permission prior to engaging in recruiting contact and subsequently transferring to a different NCAA institution.

Effective in October 2018, the Division I Proposal 2017-108 amends Bylaw 13.1.1.3 as follows:

13.1.1.3.1 Notification of Transfer. A student-athlete may initiate the notification of transfer process by providing his or her   institution with a written notification of transfer at any time. The student-athlete’s institution shall enter his or her name information into the national transfer database within two business days of receipt of a written notification to transfer from the student-athlete.

Additionally, the proposal codifies severe penalties associated with an institution’s failure to abide by the new procedure.

The amendment’s goal is to reduce and effectively eliminate the interference and influence of coaches or university affiliates from other institutions encouraging student-athletes to transfer without having received permission to contact to do so.

Proposal 2017-108 now codifies a mandatory Level II violation for instances in which university employees tamper with student-athletes prior to the student-athlete clearing the notice of transfer process.

Adoption of the proposal has been received very favorably in the media, but the new system raises concerns with institutions. Division I members are still required to maintain adequate “Academic Performance Rate” scores in order to receive the opportunity for postseason access.

Student-athletes who transfer-out of Division I institutions without meeting specific academic performance benchmarks damage the institutional APR scores of their former school, and the new transfer system will force institutions to monitor student-athlete affairs closely with APR in mind.

Institutions will no longer have the option to decline permission to contact as a mechanism to deter transfers of student-athletes who do not meet APR retention point exceptions.

The notice of transfer system raises a number of unanswered questions that should be answered next fall. For more information about the proposal and institutional obligations and best practice related to implementation of the notice of transfer system, please contact Gregg Clifton or John G. Long at Jackson Lewis P.C.

 

Following Supreme Court Decision New Jersey Considers Sports Gambling Law

By Gregg E. Clifton on

New Jersey is considering a bill that would establish the framework of operation and regulation for wagering at casinos and racetracks on the results of certain professional, collegiate sports, or athletic events. The Garden State has long been at the forefront of advocating for state autonomy and discretion regarding sports wagering. State legislators introduced Assembly Bill No. 3911 on May 7, 2018, in anticipation of  the Supreme Court decision (Murphy v. National Collegiate Athletic Assn., No. 16-476 (May 14, 2018) ending the prohibition against states enacting legislation permitting gambling on sporting events previously contained in the Professional and Amateur Sports Protection Act of 1992 (PASPA).

New Jersey’s bill supplements and amends sections of existing New Jersey casino and gaming law.

Most significantly for the NCAA and its member institutions, however, is the legislation’s general prohibition on wagering on collegiate events that occur within the state of New Jersey or involve any New Jersey college team.

Specifically, the limitations placed on wagering on New Jersey collegiate contests or any contests involving New Jersey schools are contained in the “prohibited sports event” definition. The prohibited sports event is defined as “any single collegiate sport or athletic event that takes place in New Jersey or a single sport or athletic event in which any New Jersey college team participates regardless of where the event takes place.”

However, a “prohibited sports event” does not “include the other games of a collegiate sport or athletic tournament in which a New Jersey college team participates, nor does it include any games of a collegiate tournament that occurs outside New Jersey even though some of the individual games or events are held in New Jersey.”

Therefore, the mere participation of a New Jersey school in the NCAA or NIT tournament will not prevent gamblers from betting on tournament contests held in New Jersey involving non-New Jersey schools. Gamblers will be prevented only from placing wagers on tournament games or events involving any New Jersey-based schools.

For example, if a New Jersey school, such as St. Peter’s, Monmouth, Princeton, Rutgers, or Seton Hall, participates in the NCAA or NIT tournament, any wagers on those schools would be prohibited. However, wagers would be permitted on other tournament games involving non-New Jersey schools, even if those games take place in New Jersey. So, a regular season game involving Duke-North Carolina in the Prudential Center in Newark would always be considered a “prohibited sports event” and not subject to wagering. However, a Duke-North Carolina NCAA tournament game taking place in the same Prudential Center location would be available for wagering in New Jersey.

Practically speaking, except for tournament games, New Jersey gamblers will only be able to place wagers on regular season collegiate sporting events occurring in states other than New Jersey that do not involve New Jersey-based schools.

Regulation of sports wagering is to be overseen by the New Jersey Division of Gaming Enforcement, which will be responsible for taxation and for ensuring the integrity of sports gambling. Gross sports betting revenue will be taxed at 8 percent and online sports betting revenue will be taxed at 12.5 percent. The proposed legislation currently provides that casinos and racetracks operating a sports pool will be charged an annual “integrity fee” equal to the lesser of $7.5 million or 2.5 percent of gross revenue attributable to wagers placed on sporting events.

Under the bill, a casino or racetrack may establish a sports wagering lounge independently at the casino or racetrack, as a partnership between a casino and a racetrack, or it may authorize a casino service industry enterprise to operate a sports pool on its behalf. Wagers may be placed on any sporting event in-person in a sports wagering lounge located at a casino or racetrack, or online. Persons placing wagers must be at least 21 years of age. In order to operate a sports wagering pool, a casino or racetrack must obtain a permit from the Division of Gaming Enforcement. Permits will cost a minimum of $500,000 and will remain valid for one year. The legislation strictly prohibits gambling on all high school sports, but permits wagering on international sports events in which a majority of participants are at least 18 years of age (e.g., many Olympic sports).

It remains to be seen whether other states will follow New Jersey’s lead in creating broad based restrictions on gambling on collegiate events that occur within state borders.

Jackson Lewis will continue to monitor the progress of this New Jersey bill as well as other proposed state and federal gambling legislation. If you have any questions, please contact an attorney in the Jackson Lewis Collegiate and Professional Sports Practice Group.

Supreme Court Strikes Down Law Banning States from Legalizing Sports Gambling

By Gregg E. Clifton on

The U.S. Supreme Court has struck down the federal law known as the Professional and Amateur Sports Protection Act of 1992 (PASPA) that bans states from permitting gambling on sporting events. Murphy v. National Collegiate Athletic Assn., No. 16-476 (May 14, 2018).

This decision effectively ends Nevada’s long-time monopoly in this arena and opens the floodgates for states to pass their own legislation regarding sports wagering.

The original action spent close to eight years winding its way through federal courts before landing before the Court. New Jersey challenged the constitutionality of PASPA, alleging the law violated the Tenth Amendment by “commanding” the states to act (or not act) in a certain way. This, New Jersey argued, violated the Tenth Amendment’s anti-commandeering principle and encroached on the goals of public policy, which have generally favored allowing the states to legislate, free of federal interference and constraint.

Justice Samuel Alito, writing for the Court majority, explained the problem with PASPA is that “state legislatures are put under the direct control of Congress.” He continued, moreover, that “[a] more direct affront to state sovereignty is not easy to imagine.”

States around the country have been hoping to receive a cut of the nearly $150 billion that Americans spend on illegal sports wagering each year. States also stand to gain by taxing sports gambling in a variety of ways. Numerous states have been prepared to launch sports gambling legislation in the event of a favorable decision. Governor Phil Murphy of New Jersey, in particular, stated that New Jersey would be ready to act “sooner than later.”

Still unclear is the effect the decision will have on major sports leagues and organizations such as the NFL, MLB, and NCAA. In the past, the leagues have taken positions opposing legalized sports wagering. However, as of late, many prominent sporting organizations, led by the NBA and Commissioner Adam Silver, have expressed support for sports gambling and the positive effects it might have on professional and amateur sports across the nation.

This support, of course, comes with the caveat that the NBA, NFL, and others want a “seat at the table.” For example, Commissioners Robert Manfred and Roger Goodell of the MLB and NFL (respectively) have indicated that gambling laws should preserve the “integrity” of their sports. When discussing a pro-sports gambling law proposed in West Virginia, Manfred stated, “[The MLB is] not opposed to the idea of West Virginia passing a sports betting bill . . .. We’d just like them to pass one that creates a framework that protects the integrity, recognizes the variety of interests at play here and quite frankly puts the state in a position to maximize the revenue return from it.”

Expect leagues to lobby both the states and Congress to adopt gambling legislation assuring them some form of control over wagering and permitting them a revenue stream from bets placed and payouts awarded.

Jackson Lewis will continue to monitor the progress of state and federal gambling legislation and keep you updated with any and all developments. If you have any questions, please contact a Jackson Lewis attorney.

PAC-12, Big East May Foreshadow Upcoming NCAA Commission on College Basketball’s Report

By Gregg E. Clifton and Blake T. Wilkie on

An overhaul is on the way for men’s college basketball.

The NCAA’s Commission on College Basketball, established in response to a federal investigation into corruption in college basketball, is expected to release proposed changes to the sport on Wednesday, with the goal of final versions of the recommendations voted on by the NCAA executive board in August.

Led by former Secretary of State Condoleeza Rice, the Commission has been tasked by NCAA President Mark Emmert with introducing legislation and methods to protect the integrity of college basketball and the principle of amateurism.

The proposals will focus on:

(1) the NCAA’s relationship with the NBA;

(2) improving the relationship between the NCAA’s national office and the universities to promote accountability and transparency throughout the sport; and,

(3) the relationship between the NCAA national office, member institutions, student-athletes, and coaches with outside entities (including agents and advisors, non-scholastic basketball, and apparel companies).

The Pac-12 and Big East conferences have proposed legislative changes that may offer a preview and foreshadow modifications that may be adopted by the Commission. Both conference proposals advocate eliminating the one-and-done rule prohibiting NBA teams from drafting players until they are a year removed from high school or until they are at least 19 years old. (While the NCAA and its member institutions can call for a change to this prohibition, it is an NBA rule that can only be changed at the professional level.) Professional-bound athletes forced to spend a season in college are considered more likely to accept money and benefits from boosters and agents, who have a financial interest in funneling these athletes to their institutions of choice, contributing to the corruption and lack of integrity necessitating the Commission’s formation.

Further, and in conjunction with the proposed rescission of the NBA’s one-and-done rule, the Big East proposes a “two or none” rule: players that choose to attend college must commit to their institution for at least two years, while high-school players who declare for the NBA draft would forfeit any future college eligibility. The Pac-12 recommends allowing an athlete who enters the NBA draft to retain college eligibility as long as he does not sign a professional contract.

Additionally, the conferences have suggested modifying current NCAA rules on to the use of agents and advisers, proposing that college basketball players be granted similar access to agents and advisers permitted for hockey and baseball players.

In those sports, student-athletes may seek advice from agents and advisers before declaring for their respective professional leagues. In basketball, any contact with an agent jeopardizes the player’s future college eligibility. The Pac-12 proposal would allow high-school athletes from sophomore class onward to seek professional guidance from agents.

The Big East and Pac-12 have suggested the assembly of an independent enforcement unit paid for by corporate sponsorships, television contracts, and other sources.

The Big East proposal includes an elite-player unit (EPU) to focus on the dealings and outside relationships of “players with realistic aspirations of playing in the NBA.” This unit would focus on:

  • Oversight of the relationship between apparel companies, coaches, schools, and the NCAA;
  • Agent regulation, including a tougher certification process than the current NBA and NBPA process;
  • Managing recruiting events;
  • Precollegiate advice for players in grades 8 through 12; and
  • Improved ethical conduct for coaches in recruiting.

Similarly, the Pac-12 investigative body would focus on the large issues facing college basketball, while rules involving minor infractions, such as institutions occasionally paying for family travel or meal expense, would be relaxed. It also includes significant disclosure obligations regarding college basketball’s relationship with apparel and shoe companies. Under the proposal, coaches and schools would be required to disclose the terms of all contracts with these companies.

Finally, both propose that the NCAA and USA Basketball take on a bigger role in non-scholastic basketball, referring to summer recruiting events sponsored by shoe and apparel companies with no connection to the NCAA. These events would transition from tournaments run by shoe and apparel companies to events co-sponsored by the NCAA. It is anticipated, that uch a change should foster better supervision over the conduct and potential impropriety of apparel companies seeking to establish relationships with student-athletes.

We will keep you apprised of the Rice Commission’s proposed changes and their potential impact on college basketball.

 

NCAA In Tune with Dancing With the Stars

By Patrick L. Egan on

The National Collegiate Athletic Association is in step with the television program Dancing With the Stars, and it has decided that the hero of the University of Notre Dame’s NCAA Championship-winning Women’s Basketball Team, Arike Ogunbowale, can compete in the dance competition without violating NCAA amateurism rules.

The NCAA has determined that any prize she receives will be due to her dancing performance, rather than her athletic prowess.

NCAA By-law 12.4.1.1 permits student-athletes to work, but it also provides that “compensation may not include any remuneration for value or utility that the student-athlete may have for the employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability.”

Few people outside the world of women’s collegiate basketball may have heard of Ogunbowale before she hit two last-second three-point shots to help win both the 2018 NCAA Women’s National Championship semi-final and championship games for Notre Dame.

While Ogunbowale cannot engage in promotional activities for the show (as that according to the NCAA would leverage her athletic achievements), she can keep any prize money she may earn and that so-useful mirrored disco-ball because those benefits would be due to her dancing abilities.

The NCAA has threaded the needle as carefully as a seamstress on set and reached a practical decision that appears to benefit all concerned, without any detriment to the NCAA’s amateurism rules. Ogunbowale now can show off her dance moves as the only college athlete in the all-athletes season. So it’s “On with the show.”

New Law Exempts Minor League Baseball Players from Certain Federal Minimum Wage, Overtime Pay Laws

By Gregg E. Clifton on

As part of $1.3 trillion omnibus spending bill signed by President Donald Trump in March, section 13(a) of the Fair Labor Standards Act is amended to exempt minor league baseball players from a class of workers entitled to certain minimum wages and overtime pay under the FLSA.

The amendment, known as the Save America’s Pastime Act, which appears on Page 1967 of the 2,232 page bill, specifically exempts:

[a]ny employee employed to play baseball who is compensated pursuant to a contract that provides for a weekly salary for services performed during the league’s championship season (but not on spring training or the off season) at a rate that is not less than a weekly salary equal to the minimum wage under section 6(a) for a workweek of 40 hours, irrespective of the number of hours the employee devotes to baseball related activities.

As “exempt” workers, minor league baseball players are not entitled to greater wages, even after spending more than 40 hours a week on baseball-related activities. As of last season, there were about 6,500 minor league players across all MLB systems with salaries ranging from $1,100 per month in rookie and low-A ball to $2,150 per month in triple-A. The Act continues the MLB’s discretion in setting these salaries, provided they are at least equal to the minimum wage under FLSA section 6(a) for a 40-hour workweek (about $290 per week).

This settles a long-running dispute as to whether minor leaguers could command additional wages for hours spent honing their craft outside of official game and practice time.

The Act effectively quashes a class-action lawsuit partially certified in the 9th Circuit in 2017.

The original action, which was filed against the Office of the Commissioner of Baseball in 2014, alleged that the League violated federal minimum wage and overtime standards because some players earn as little as $1,100 per month and no minor leaguers receive overtime pay despite spending, on average, around 50 hours per week on baseball activities.

Placing minor leaguers among the 13(a) exemptions appears to endorse the MLB’s view that a baseball player’s minimum wage and overtime pay are “incalculable.” Unlike other jobs that track hours through formal time recording, a player’s employer cannot monitor, much less project the number of hours he might “work.” It would be unrealistic and detrimental to organizations if, for example, minor league teams had to deny players extra batting practice or time in the weight room in order to afford to be able to afford to pay them.

Interestingly, the Act does not expressly mention its impact to the unaffiliated teams of independent professional leagues, where the average player is paid below federal minimum wage standards and salary caps per team fall well short of $100,000 and whether these leagues falling within the Act’s definition of baseball. Prior to the passing of this legislation, independent leagues operated under the assumption that its players were seasonal employees and not subject to overtime or minimum wage laws. If the Act is applied to independent leagues, players who have earned any average salary of $750-$800 per month would now be entitled to federal minimum wage (about $1,100 per month).

Many argue that this would put many of these leagues out of business. As Mike Shapiro, President of the Independent League Pacific Association’s San Rafael Pacifics stated, “If that is the case, it puts us out of business.” It is possible that independent leagues could still try to argue that they fall within the FLSA’s “seasonal exception” and exempt them from the minimum wage requirement contained in Save America’s Pastime because of their short season and teams’ lack of control over players in the off-season. However, this issue has yet to be addressed by Congress or the courts.

 

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