Employment & Labor Insider

The Pittsburgh Steelers earn an estimated $650 million annually in revenue, according to Sportico.  A substantial portion of that revenue comes from its dozens of sponsorship agreements with corporate partners. To facilitate that revenue stream, the Steelers have a team of approximately 14 people dedicated to sourcing, servicing, and activating those sponsorships.

At one time that team included Chelsea Zahn. 

Ms. Zahn alleges that the Steelers discriminated against her and deprived her of $100,625 in sponsorship commissions, despite the fact that she brought in $1.81 million in sponsorship revenue.

The Steelers have filed a motion to dismiss one of her claims, and the motion only highlights the confusion about such arrangements.

Ms. Zahn with the ball

Ms. Zahn spent more than 10 years with the Steelers, rising to Corporate Partnership Sales Manager before resigning in September 2024 to join Live Nation Entertainment. 

In a lawsuit filed this past January in federal court in Pennsylvania, Ms. Zahn alleges that she was treated worse and paid less because of her sex and sexual orientation (she is a lesbian). She is alleging violations  of the Equal Pay Act, Title VII, and the Pennsylvania Human Relations Act.

Her final claim is for an alleged violation of Pennsylvania’s Wage Payment and Collection Law. That statute enables employees to recover wages otherwise owed, liquidated damages of up to 25 percent of the wages, and attorneys’ fees.

More specifically, Ms. Zahn alleges that the Steelers sent her a check for $50,000 rather than the $100,625 she says she was owed. She refused to cash the check, and sued for the full amount.

The Steelers on defense

The Steelers surprisingly do not seem to have had an agreement to arbitrate any disputes concerning Ms. Zahn’s employment, which would have prevented the public lawsuit that the team is now facing.

The Steelers on defense

The Steelers surprisingly do not seem to have had an agreement to arbitrate any disputes concerning Ms. Zahn’s employment, which would have prevented the public lawsuit that the team is now facing.

In any event, last month the Steelers moved to dismiss the wage payment claim. The Steelers argue that Ms. Zahn fails to identify the existence of a contract that obligated the club to pay the alleged bonus.

However, in their brief, the Steelers also explained that Ms. Zahn’s offer letter “set forth” her “[e]ligibility for the bonus.” That offer letter, according to the Steelers, stated as follows:

You will be eligible for a discretionary bonus based on Company, department and individual performance. Any discretionary bonus awarded will be paid after the end of the season.

According to the Steelers, this shows that the bonus was discretionary and thus that Ms. Zahn has failed to assert a valid claim against the club.

Not surprisingly, Ms. Zahn responded by arguing that the offer letter obligated the club to pay her a bonus, meaning that her wage claim is valid.

Ms. Zahn contends that Pennsylvania law required the Steelers to exercise its discretion in good faith. She says the Steelers did not act in good faith because the $50,000 bonus offer was not based on “Company, department and individual performance” as stated in the offer letter. Instead, she claims that the reduced offer was made with a “discriminatory motive” and in retaliation for her having left the team.

Additionally, Ms. Zahn asserts that the Steelers orally agreed to pay the bonus as evidenced by “a course of conduct of paying individuals in Plaintiff’s position these wages.”

A better plan

In my 2022 law review article, Labor & Employment Law Guidance for Professional Sports Teams, I wrote about the challenges of crafting commission plans for sales employees like Ms. Zahn. I said, “Commission structures should be clearly laid out in a company policy, provided to commission-based employees upon their joining the club, and reviewed at least annually with those employees.”

In determining the commission structure, I explained that clubs should consider at least the following:

• When is the commission “earned”? Is it when the payment is received, or when the revenue is earned (which might not be until the game for which tickets are sold is played or certain sponsorship assets delivered)?
• How soon after the commission is earned will the employee be paid? Should employees be paid only if the money is received from the ticketholder or sponsor?
• Should the commission rate change based on the nature or amount of the deal? For example, if a league partner decides to do a local partnership with the club -- without any material sales effort required by the club -- should the employee receive a full commission?
• What if the deal comes through some other avenue at the club -- such as the events department or ownership? Should the ticket sales or sponsorship sales representatives receive a full commission?

As the Zahn case demonstrates, failing to think through and memorialize these policies can result in confusion and litigation. It also shows that, in considering these factors, teams (and all employers) need to be mindful of state law concerning when commissions are earned and when they must be paid. The Steelers seem to have a third-and-long scenario in moving to dismiss the wage payment claim. If Ms. Zahn’s wage claim survives the Steelers’ motion to dismiss, it would provide her with a meaningful source of leverage.