Another week, another development on the minor league salary front. Less than six days after a federal antitrust lawsuit was filed challenging the minor league salary structure, Minor League Baseball’s (MiLB) vice president, Stanley Brand, announced at the Winter Meetings on Thursday that his organization would launch a vigorous lobbying campaign in 2015, asking Congress to pass legislation protecting the industry from federal minimum wage and maximum hour laws.
Brand’s announcement comes in response to two other class action lawsuits filed earlier this year alleging that the minor league pay scale violates the Fair Labor Standards Act (FLSA) (Wendy Thurm previously discussed the first of these suits here). These cases – filed on behalf of two groups of former minor league players – contend that once all of the hours minor league players work each year are accounted for (including spring training, the regular season, and fall instructional leagues), most minor leaguers are effectively paid less than the federal minimum wage of $7.25 per hour. And despite often working more than 50 hours per week, minor league players do not receive overtime.
Interestingly, like the minor league antitrust lawsuit filed a couple weeks ago – which appears to be covered by baseball’s antitrust exemption – professional baseball is arguably already exempt from the FLSA as well under an exception covering “seasonal amusement and recreational establishments” (29 U.S.C. 213(a)(3)). Under the exception, any amusement-related business (theme parks, carnivals, circuses, and the like) that operates on a seasonal basis – basically seven months or less per year, although the law is a little more nuanced – is not required to pay its workers minimum wage or overtime.
Courts are currently divided as to whether this exception should apply to professional baseball teams. On the one hand, some courts have ruled that baseball teams are effectively year-round enterprises, conducting a number of their business operations during the off-season. Meanwhile, other courts have concluded that baseball teams are seasonal businesses because they only directly provide entertainment to the public during their playing season, which generally lasts seven months or less (not including spring training).
Rather than wait to see if this latter view is adopted in the pending minimum wage lawsuits, MiLB has instead decided to ask Congress to expressly shield the industry from the FLSA. Should MiLB succeed, “minor league baseball player” would join a hodgepodge of other professions excluded from minimum wage protection (including babysitters, crustacean farmers, and telephone switchboard operators).
The prospect of an MiLB lobbying campaign is no idle threat. With more than 160 teams spread throughout 42 states, minor league owners have historically been able to successfully exert their influence on a large and geographically diverse group of Congressional representatives. Such efforts led former Congressman Emanuel Celler to famously quip, “I have never known, in my 35 years of experience, as great a lobby that descended upon the House than the organized baseball lobby …. They came upon Washington like locusts.”
That having been said, it is no secret that Congress hasn’t been particularly productive when it comes to passing legislation in recent years, so there is no guarantee that MiLB’s lobbying efforts will succeed. This is especially true considering the favorable press coverage that the minor league wage lawsuits have generated in the media this year. And even if such a bill were to pass Congress, President Obama could, of course, always decide to veto it.
Regardless, all of this begs the question of why MiLB is so concerned with the pending minimum wage lawsuits in the first place. Neither case names MiLB itself – nor any minor league team – as a defendant, instead charging only MLB and its teams with violations of the FLSA. This makes sense, as minor league players are typically directly employed and paid by MLB clubs.
Rather than worry that its teams will be held directly liable in any of the current cases, MiLB appears to fear the trickle-down effect that a judgment in favor of the players could have on the industry. As an unnamed minor league owner told Baseball America, if “player-development costs would skyrocket … then I think there could be some kind of detrimental effect on the minor leagues because of that.”
In other words, MiLB fears that if minor league salaries go up, some MLB teams may decide to cut back the financial support they provide to their minor league affiliates. And if that were to happen, it is possible that some minor league teams – especially those located in small communities at the Rookie or Single-A level – may be forced to go out of business.
While this concern is not entirely unreasonable, it is probably somewhat overstated. Even if MLB teams were forced to pay their minor leaguers the minimum wage, it is unlikely that most franchises would be willing to let any of their affiliates fold completely, as most MLB teams would not want to lose the developmental opportunities that the lower-level minor leagues provide for their prospects.
Moreover, even if MiLB succeeds in persuading Congress to grant it an exemption from the FLSA, that will not spell the end of the minor league minimum wage litigation. Both of the pending lawsuits allege that MLB has not only violated federal law, but also state-level minimum wage protections as well. Many states – including those with a number of minor league teams, like California, New York, Arizona, and Florida – have enacted their own minimum wage laws applying to any business that operates in the state.
So even if the MiLB’s lobbying efforts are successful in Washington, D.C., these suits – or others like them – will continue to proceed under state minimum wage laws. And while state-level litigation could prove to be more time-consuming, it offers minor league players and their advocates another route to force MLB to modify its current pay practices.
Ultimately, though, MiLB’s planned lobbying effort shows how seriously the baseball establishment views the current legal challenges to the minor league salary scale. But even if MiLB succeeds in persuading Congress to change federal law, the minor league wage issue is unlikely to go away anytime soon.
Nathaniel Grow is an Associate Professor of Business Law and Ethics at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.