Employment & Labor Insider

In April, I wrote about Chelsea Zahn’s lawsuit against the Pittsburgh Steelers and the Steelers’ motion to dismiss the lawsuit. Last week, a federal judge denied the Steelers’ motion, which means that Ms. Zahn’s lawsuit will go forward. I am recapping much of my original April post here as background.

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 team has an approximate 14-person team dedicated to sourcing, servicing, and activating those sponsorships. 

Chelsea Zahn, a long-time former employee, alleges that she was discriminated against and deprived of $100,625 in sponsorship commissions owed to her, despite bringing in $1.81 million in sponsorship revenue. A federal judge in Pennsylvania has now ruled that Ms. Zahn’s claims can move forward.

Ms. Zahn has 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 Complaint filed in January of this year in the Western District of Pennsylvania, Ms. Zahn alleges that she was treated and paid worse because of her sex and sexual orientation in violation of the federal Equal Pay Act, Title VII of the federal Civil Rights Act, and the Pennsylvania Human Relations Act.

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

Ms. Zahn alleges that the Steelers sent her a check for $50,000 rather than the $100,625 she says she was owed.  She sued rather than cash the check.

Steelers on defense

As an initial matter, 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 the team is now facing.

Be that as it may, on March 24, the Steelers moved to dismiss only the claim under the state wage law. The Steelers argued that Ms. Zahn failed to identify the existence of a contract (oral or written) under which the organization was purportedly obligated to pay the alleged bonus.

However, in their motion, 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, provided 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.

The Steelers then contended that the bonus was discretionary and thus insufficient to state a claim.

Not surprisingly, Ms. Zahn responded by arguing that the offer letter was a contractual obligation to pay her a bonus sufficient to state a claim under the law.

As to whether the Steelers had the discretion to not pay the bonus, Ms. Zahn asserts that Pennsylvania law required the Steelers to exercise that discretion in good faith. She says the Steelers fail this test because the $50,000 bonus offer was not based on “Company, department and individual performance” as provided for 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 asserted that the Steelers orally agreed to pay the bonus, citing “a course of conduct of paying individuals in Plaintiff’s position these wages.”

The Court referees

In a succinct Order issued last week, the court denied the Steelers’ motion, ruling as follows:

The complaint plausibly pleads a [state wage] claim. Specifically, it pleads, at a minimum, an express contractual right to a discretionary bonus. That discretion must be exercised in good faith, and Plaintiff claims it was not when Defendant owed her and said it would pay her $100,000 in bonuses, but then only paid her $50,000. This is sufficient to state a . . . claim. Alternatively, the allegations in the complaint plausibly plead an oral contract to pay Plaintiff the full bonus; that too can serve as a predicate to a . . . claim.

(Citation omitted.)

The Steelers now face a difficult decision on how to proceed. One particular pain point is that, according to Ms. Zahn’s Complaint, the decision not to pay her bonus came directly from Art Rooney, II, the team’s owner and President. The Steelers would certainly like to avoid discovery related to Mr. Rooney’s decision, including the possibility of his deposition. 

Ms. Zahn’s claims also fly in the face of the Steelers’ reputation as one of the model franchises in the National Football League, and a progressive one to boot. The “Rooney Rule” – the NFL’s long-standing and occasionally controversial rule intended to increase the hiring of minority coaches and executives – is the namesake of Mr. Rooney’s father, Dan Rooney.

The case is likely to eventually settle. The question is how much the Steelers might be willing to pay to avoid discovery. At the same time, the Steelers should be revisiting the language of their commission plans and considering requiring employees to execute arbitration agreements.