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Employment Blog

Boys of Summer Bring Wage and Hour Lawsuit: Marks Beginning of Ideological Spring

Authored by Ruder Ware Attorneys
Posted on December 10, 2015
Filed under Employment

Much ink has been spilled by those writing about the attention-grabbing, nationwide, consolidated wage and hour lawsuit brought by current and former minor-league professional baseball players.   The case is Senne v. Office of the Commissioner of Baseball, Case No. 3:14-00608-JCS, venued within the federal U.S. District Court for the Northern District of California.   As a baseball agent who represents a multitude of active minor-league players, and as an employment and labor-relations attorney, this case has captivated me since its inception.   Through the case, the players seek relief in the form of minimum wage and overtime payments due to them because allegedly: (1) their wages do not, when divided by the total number of hours worked in exchange for such wages, yield a minimum wage [players are paid only during the championship season, but are expected to perform services on a calendar-year basis]; and (2) they have not received overtime compensation for hours worked in excess of 40 in given workweeks.  In late November, the players I represent began receiving the collective action “opt in” notice authorized by the Court.  This notice triggered many questions about the nature of the lawsuit and likely outcome—and ultimately precipitated this blog post. 

As a player agent, I am keenly aware of how little my minor-league clients earn in terms of annual salary—which always comes as a surprise to anyone with whom I talk who is unfamiliar with how the baseball machine operates.   For this reason, there is no question that the Senne case has the potential to be a paradigm-shifting event within professional baseball.    However, one aspect of the case is, in my opinion, underreported—which is understandable given that the case remains at a relatively infant stage.   This significant, potentially outcome-determinative aspect of the case is the so-called “seasonal amusement or recreational establishment” exemption from minimum wage and overtime compensation.  This exemption is a defense Major League Baseball is certain to raise in resisting the players’ collective effort to change the status quo—and it has already hinted, in Court documents, that the defense is applicable in the Senne case.  

Under the “seasonal amusement or recreational establishment” exemption, once the League and the major league clubs demonstrate that professional baseball organizations are indeed amusement or recreational establishments [a given], the League and individual clubs must also demonstrate the following to take advantage of the exemption from federal minimum wage and overtime requirements: (1) the clubs’ revenue-generating operations do not operate for more than seven months in any calendar year; OR (2) during the preceding calendar year, average receipts for any six months of such year were not more than 33% of average receipts for the other six months of such year [this has been interpreted to mean that clubs must compare the average of the six lowest receipt-generating months to the average of the six highest receipt-generating months for purposes the “receipts” test].   

This exemption is not untested in the context of professional baseball.  For example, legal claims for minimum wage and overtime relief have been advanced by groundskeepers, maintenance and cleaning employees, and batboys.  These lawsuits have had mixed success.  However, in the seminal case in my opinion, the Cincinnati Reds did not successfully invoke the exemption because the Court concluded that the club’s revenue-generating operation was a year-round operation [significantly, during the offseason, the club retained more than an insignificant number of workers—suggesting the club was not a truly seasonal business] and could not meet the “receipts test,” because average receipts for the leanest six months did not amount to more than 33% of the average receipts for the most lucrative six months.   However, in another similar lawsuit—one involving the Detroit Tigers—the club was able to satisfy the “receipts” test and take advantage of the exemption.  Due to the highly fact-drive nature of the “seasonal amusement or recreational establishment” exemption, the Senne case is not likely to produce an all-or-nothing, one-size-fits-all outcome.   Given the inconsistency in how the courts have applied the exemption, it will be interesting to monitor this case.  A victory for the players is welcomed—but many within professional baseball have posited portentous predictions if the players prevail, including minor-league contraction and a reduction in the number of players drafted each year in the Rule 4 Draft.

Stay tuned for more.  This case has reinvigorated the players’ rights movement—some have suggested the case, notwithstanding the ultimate outcome, may be the impetus for the formation of a minor-league players’ union.   The Senne case also raises state-based companion claims based on a handful of state-specific laws.  However, because these laws are not applicable to all class members, I decided not to address those aspects of the case in this blog post.