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Lawsuits show possible vulnerability to class actions

Two lawsuits that involve baseball illustrate why employers and others should think more carefully about how they comply with government regulations, or about conditions affecting ballpark liability. The lawsuits are both in a California federal court. If certified as class actions, and if successful, they could result in far greater monetary settlements or verdicts than separate lawsuits.

One is the well-publicized lawsuit regarding minimum wage and overtime for MiLB players under both the federal and state versions of the Fair Labor Standards Act (FLSA). In July, U.S. Magistrate Judge Joseph C. Spero issued a 100-page opinion denying class-action certification, but left open reconsideration. He scheduled a hearing on the issue for December.

A point that emerges in his order for the hearing on the plaintiffs' request for reconsideration is that an FLSA case will be very difficult to prove without detailed, contemporaneous records of hours worked. The technical requirements of an FLSA case will be difficult to meet if the individual players must assert their cases one-by-one.

A second class action, also pending in the U.S. District Court for the Northern District of California, involves an attempt at class action certification for spectators injured at major league ballparks. This case is at an early stage. The attorneys, we expect, will be arguing about the certification as a class action, especially in light of the small percentage of fans injured by foul balls and broken bats flying into the stands.

Class-action lawsuits must meet certain tests. They are often brought in consumer cases, and have been criticized for resulting in small awards for all except a few of the aggrieved, with sizeable fees for lawyers. Arguments in their favor include access to relief even when the value of damages is small.

 —October 17, 2016

House bill seeks to exempt MiLB players from minimum wage

Whether Minor League Baseball players are exempt from the federal minimum wage law is an issue that might—or might not—be settled by proposed legislation winding its way through Congress. The Save America's Pastime Act (H.R. 5580) would add minor league players as an exception to the federal Fair Labor Standards Act (FLSA).

MiLB expressed its support for the bill in light of a class-action lawsuit challenging whether the players are exempt. The bill was introduced last month by Reps. Brett Guthrie (R-Ky.) and Cheri Bustos (D-Ill.) and was referred to the House Committee on Education and the Workforce.

But last week, Bustos withdrew her support. She said in a statement that she had new information and, "I cannot support legislation that does so at the expense of the players that draw us to stadiums like those in the Quad-Cities and Peoria."

A news release on Guthrie's website argued, "If the law is not clarified, the costs to support local teams would likely increase dramatically and usher in significant cuts across the league, threatening the primary pathway to the majors and putting teams at risk."

The FLSA is a complex law that governs not only minimum wage but other issues such as overtime. It does exempt certain employers, including amusement or recreational establishments and seasonal events, but only under certain circumstances—some of which fit MiLB.

Aside from the issue regarding players pay, much of which is borne by MLB, MiLB team management should review its pay practices to ensure they are in line with all the provisions of the FLSA.

 —July 7, 2016

Employee or independent contractor? It's still an issue

Employee versus independent contractor status requires complicated analysis of many factors. The employer's risk for misclassification can be substantial, as I have written in Legally Speaking (see "Employment law update: two timely topics" in the Spring 2010 issue).

The issue is still alive, perhaps even more so in 2016, as the Internal Revenue Service continues to scrutinize independent contractor relationships. And, as I wrote in the earlier article, overtime becomes an issue as well, further complicating matters and increasing greatly potential financial liability.

The basic rule is whether the employer controls the duties of the individual. If in doubt, the conservative route is to pay the person as an employee. Since my last article, the IRS has instituted the Voluntary Classification Settlement Program, which offers relief from much of the tax liability, interest and penalties for employers who have misclassified employees as independent contractors.

For more details on the subject, the IRS has updated its publication, "Independent Contractor (Self-Employed) or Employee?" I thank Legally Speaking reader Jackson Hille, as content associate for FormSwift, for pointing out the change and for bringing to my attention two articles that he co-wrote on the subject, "The Freelancer's Essential Guide to Business and Taxes" and "A Tax Guide for Independent Contractors and the Companies Who Hire Them".

 —March 14, 2016


This website contains general information that should not be considered legal advice or legal opinion concerning individual situations. Legal counsel should be consulted for specific advice. Unless otherwise stated, inclusions of attachments or links to third-party websites are meant to be informational and do not constitute agreement with or endorsement of material that is presented.

Copyright 2004-2016 by L. James Juliano Jr.
Legally Speaking® is a registered trademark of the law practice of L. James Juliano Jr.


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