Employment & Labor Insider

EDITOR'S NOTE (2/27/24): Chris Deubert was interviewed today on Phoenix National Public Radio Station KJZZ about the subject matter of this post. You can listen to the interview here.

Florida and California are seen as polar opposites when it comes to policy and lawmaking. However, there is at least one thing they seem to agree on – minor league baseball players should be exempt from their states’ minimum wage, overtime, and recordkeeping laws. Florida passed such a law last June, and California followed in October. Now Major League Baseball and the Major League Baseball Players Association have turned their attention to other states, starting with Arizona.

Past wage and hour litigation

Minor league baseball players have previously sought protection under the laws from which they now seek exemption. In 2015, minor league players, led by Aaron Senne, filed a class/collective action against MLB and its clubs (which collectively and generally control minor league baseball), alleging that the league and clubs had violated the federal Fair Labor Standards Act and various state wage-hour laws by failing to pay the players the required minimum wage and overtime. In March 2023, a judge approved a $185 million settlement in that case.

The FLSA exemption

In the midst of the Senne litigation, MLB successfully lobbied Congress for a partial exemption from the FLSA. In March 2018, as part of an omnibus spending bill, Congress amended the FLSA to exempt baseball players from its protections, provided that the players were paid a minimum weekly salary of $290 (the $7.25 federal minimum wage x 40 hours). The exemption did not fully defeat the claims in the Senne action because it did not apply to conduct that occurred before March 2018 or to state law claims.

The players unionize and bargain

In August 2022, minor league baseball players voted in favor of unionization, with the Players Association as their representative. Even before the votes were counted, MLB announced that it would voluntarily recognize the union, avoiding a potentially contentious process before the National Labor Relations Board. The Players Association has represented major league players since the 1960s in collective bargaining with the league, and in litigation and other disputes.

With somewhat surprising speed, in April 2023, MLB and the Players Association announced that they had agreed to the first-ever collective bargaining agreement for minor league baseball players. The agreement was generally focused on core economic rights and benefits for the players, such as pay, housing, health insurance, disability benefits, medical treatment, meals, and transportation. The minimum annual salaries now range from $19,800 in rookie ball (up from $4,800 previously) to $35,800 in Triple A (up from $17,500 previously). Those salaries equate to $675 to $1,200 on a weekly basis (there is a brief period around the holidays when players are off and not paid).

Ongoing wage and hour concerns

Although the pay and benefits are substantially improved, they do not necessarily comply with state wage and hour laws. For example, many states have a minimum wage of $15 per hour, and also require overtime for hours worked in excess of 40 in a week. Under those requirements, a rookie ball player would be entitled to $825 in compensation for a week in which he worked 50 hours, more than his bargained-for salary. The numbers become even more problematic when you factor in road trips. Minor leaguers are routinely on the road for ten or more days at a time. If they were considered to be working for much of this time, then the pay to which they would potentially be entitled under state law could exceed their salaries.

Recordkeeping is another major problem. Most hourly workers track their time through clocks at their workplaces. That type of process is foreign to professional athletes, who have irregular work schedules, travel frequently, and may easily go back and forth between personal and professional time. Properly recording their time worked is difficult, if not impossible.

For these reasons, MLB and the Players Association agreed in the collective bargaining agreement to seek further exemptions from wage and hour laws. More specifically, the agreement included a jointly drafted letter to send to “lawmakers/regulators” expressing “joint support for legislation that would provide a narrowly tailored exemption from wage and hour laws (including minimum wage, overtime and recordkeeping requirements) that otherwise could apply to Players[.]” The parties further asserted that legislators should give “deference to the compensation and benefit provisions of the new collective bargaining agreement.”

The parties’ premise is that they have a longstanding relationship handling issues concerning the terms and conditions of professional baseball player employment, and that they are best able to evaluate and address any concerns, either through negotiation or arbitration if necessary. On this last point, the collective bargaining agreement provides MLB the right to reopen the agreement if a court or arbitrator determines that the method of compensating players is illegal. If such a decision were rendered, then MLB would be likely to stop offering many of the benefits provided for in the agreement. Consequently, both sides have incentives to resolve any concerns about player pay between themselves.

The state exemptions

The parties moved quickly after the consummation of the CBA to lobby state legislators for an exemption from wage and hour laws. To have started with Florida makes sense, given that the state has several MLB teams, many minor league teams, and also hosts spring training for many MLB teams.  Additionally, Florida legislators were likely to be receptive to the legislation. California was also important because of its many major and minor league baseball teams, as well as its punitive wage and hour laws.

Arizona, the current legislative target, also makes sense because it, too, is home to many spring training facilities as well as the Arizona Complex League, a rookie-level minor league. The Arizona bill has nonetheless hit some opposition among legislators who argue that it undermines a public vote in 2016 to gradually increase the minimum wage, which is now $14.35 per hour.

The immediate outcome of the proposed legislation is uncertain. What is not uncertain is that MLB and the Players Association will continue their lobbying efforts for these exemptions. The proposed exemptions concern a core part of the new collective bargaining agreement and reflect the parties’ historic preference for handling disputes privately.