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Updates and Comments

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

Minor League Baseball joins Major League teams in endorsing MLB's new netting policy

Several Major League teams and Minor League Baseball have endorsed MLB's recommendation on extending netting to improve fan safety. The recommendation, made at the Baseball Winter Meetings in Nashville, is to increase safety netting to between the near ends of both dugouts and within 70 feet of home plate.

With increasing ball-and-bat injuries to fans, and the eroding in some states of the protection of the so-called baseball rule, it was clear some action would be taken. It was wise to do it now, to avoid future injuries as well as ballpark liability issues.

MiLB agreed and issued a statement, which begins: "Minor League Baseball is very appreciative of the time and effort that went into the research done by Major League Baseball in an effort to balance fan safety and the overall fan experience." Read the rest here.

The Phillies and the Red Sox were among the first majors to commend Baseball Commissioner Rob Manfred on the new policy, and were soon joined by the Dodgers, Cubs and Rays.

Manfred was quoted on MLB.com, "I am confident that this recommendation will result not only in additional netting at Major League ballparks but also draw additional attention to the need for fans who make the choice not to sit behind netting to be prepared for the possibility of foul balls and bats entering the stands." The full story is available here.

 —December 10, 2015

MLB owners might discuss netting

Update, Nov. 20: Following the meeting of major league baseball owners this week, MLB Commissioner Rob Manfred said that more netting to protect fans from flying bats and foul balls was discussed, and specific recommendations for the 2016 season might be made at the next owners' meeting in January.

Major league baseball owners will be meeting this week and according to media reports, the issue of more netting to protect fans is likely to arise, given this summer's increased profile of bat-and-ball injuries. The recent certification as a class action of a lawsuit against Commissioner Rob Manfred and major league baseball by an Oakland A's fan seeking more netting at all major league and minor league baseball parks may affect the timing of any action by the owners. The owners and legal counsel will likely consider very carefully any decision within the context of the lawsuit.

The lawsuit says the fan's seats, along the first base line, are in an area it calls the "Danger Zone," that is, the stretch from home plate to each foul pole that is unprotected by netting. The suit itself was filed in July in the U. S. District Court for the Northern District of California, and has moved slowly. But it asks that the additional protection be installed by the 2016-2017 season.

 —Nov. 17, 2015

Safety first

Another ballpark injury—this one fatal, involving a fan who lost his balance while reaching over a railing to catch a foul ball at an Atlanta Braves game—should concern teams, ballpark and arena owners, fans and even vendors. All of them can and should work to prevent such tragedies. Legally Speaking has addressed the issue, from ball and bat injuries to railing accidents and fan violence, for the last decade.

Some of these mishaps fell under the "baseball rule," as discussed in the item below. Others have to do with liability under the law. A fan who falls over a railing is not likely going to be able to recover from the team, unless for some reason the railing was defective or violated building codes. An intoxicated fan who causes injury, to him- or herself or to others, can be cited as a potential danger that should be reasonably foreseeable. In the legal realm, that means the team may have a duty to control the situation so as to protect the fan and others. It is certainly the goal to prevent a tragic accident that might have been avoided.

(See "Are all your bases covered? The bottom line on inside-the-park liability" Summer 2005, and subsequent articles from Legally Speaking at “Past articles” including “Railing accidents: What can you do?” Winter, 2012.)

 —Sept. 14, 2015

Is the baseball rule headed for change?

Discussion of the so-called baseball rule, which grants teams immunity from lawsuits involving ball and bat injuries to fans, has been thrust into the national spotlight because of the severe head injury suffered by a woman struck by a broken bat at Fenway Park June 5.

Many states, including Massachusetts, honor the baseball rule. But in the last two years, at least one court has declined to recognize it. The Idaho Supreme Court sent back to trial a case of a fan who lost an eye after being struck by a foul ball at a Boise Hawks game. The rule places upon the fans the duty to protect themselves from hazards such as being struck by a foul ball or a broken bat, as long as the team takes precautions such as installing netting in front of the most dangerous sections of the ballpark.

The Boston situation could have some impact. First, the timing may be right. Rumblings that ballparks should have a greater duty to protect fans—such as extending netting past the dugouts, instead of just behind home plate—have increased. Second, this latest incident occurred in one of the East Coast's media centers, and was readily reported nationwide before the court of public opinion. It generated headlines such as "Scary Fenway incident puts fan safety in spotlight" and "Time for MLB to make netting changes...."

Moreover, the Fenway incident has a sympathetic victim, Tonya Carpenter, 44. News photos not only showed Carpenter being taken away on a stretcher, but also pictured a young boy, presumably her 8-year-old son who attended the game with her, being comforted by a friend. It was reportedly his first Red Sox game. And the family supplied a picture of the victim with an engaging smile. Intentionally or not, it raised issues of whether the accident would leave her disfigured.

The baseball rule took an odd twist in the case of John Coomer, who suffered an eye injury from a hot dog thrown into the stands by the Kansas City Royals' mascot, Sluggerrr, in 2009. A county jury in 2011 found Coomer was 100 percent at fault, but on appeal, the Missouri Supreme Court earlier this year sent the case back, saying promotional activities were not protected by the baseball rule. A second jury decided on June 17 that neither Coomer nor the Royals were at fault.

It remains to be seen if the thinking among the courts will evolve one way or another. A point of contention is whether the disclaimer on the back of baseball tickets and ballpark signage should absolve teams of responsibility, while such disclaimers do not always work in other venues, such as parking lots or concerts. In any case, the trend seems to be that teams will be held more accountable for protecting fans.

 —June 15, 2015

Lawsuit shows details matter in stadium leases

The city of Avon in Lorain County, Ohio has sued Avon Baseball LLC, the owner of the Lake Erie Crushers independent league baseball team, over net advertising receipts from an electronic marquee along Interstate 90.

But what seemed like a cut-and-dried case of whether one party owed something to the other, the focus became what the stadium lease agreement said about how to settle disputes. The episode offers a lesson in the care that must be taken when drawing up stadium leases and each party's understanding of the terms, including procedural ones.

The city of Avon, which initially filed the lawsuit in Lorain County Common Pleas Court, claimed that the Crushers' owner defaulted in marquee advertising payments dating back to 2011. Meanwhile, owner Avon Baseball removed the lawsuit to the U.S. District Court for the Northern District of Ohio, based upon out-of-state diversity with Avon Baseball, which is located in Wilmette, Ill.

Federal Judge Patricia A. Gaughan, however, dismissed the suit in mid-April over language in the lease that she ruled provided first for mediation and arbitration before any dispute could be taken to state or federal court. The judge left open the right of the city of Avon to reinstate the suit if the alternative dispute resolution does not resolve the issue.

And that is, has Avon Baseball accounted for and paid to the city of Avon all of the net marquee revenues for the electronic sign that reaches traffic on Interstate 90? The ballpark lease, attached to the complaint as an exhibit, provides that the net marquee revenue must be paid to the city of Avon for deposit into a fund for improvements to the ballpark as needed.

The court documents reveal that the two sides have been talking. We will see what more it might take to resolve.

 —May 11, 2015

Will record Dayton Dragons deal set a trend?

The record-setting purchase price for the Dayton Dragons—reported at $40 million—says a lot about the market value of Minor League Baseball teams. The Dragons are a Single A team, not AA or AAA—levels where such a record might be expected.

The size of the transaction, completed in August, was no fluke of rookie owners being lured by the romance and excitement of team ownership. The purchaser includes HWS Group, an experienced and well-reputed ownership concern that over the years has owned several MiLB teams. It is run by an equally well-respected managing partner, Mike Savit. Two of his Harvard University classmates, retired investment banker Nick Sakellariadis and merchant banker Greg Rosenbaum, are also principals in the Dragons deal.

The Dayton team has a lot going for it. It has a 15-year sellout streak, and the new owners, not wanting to mess with success, are reportedly retaining the current management.

Still, this is a dramatic way for the MiLB industry to break out of the recession. It will be interesting to see if this transaction generates an escalation in the market among Single A and other level teams, both higher and lower.

 —Sept. 3, 2014

Is there a lesson in the Bryan Stow beating case?

Could better security by the Los Angeles Dodgers have prevented the brutal beating in 2011 of a San Francisco Giants fan, thereby eliminating costly litigation, which resulted July 9 in a jury award of $18 million—almost $14 million to be paid by the Dodgers organization—to the victim, Bryan Stow?

The Dodgers apparently failed to convince jurors that the club provided adequate security to thwart the assault, which left Stow, then 42, in a coma in the parking lot outside Dodgers Stadium. Lawyers for Stow alleged shortcomings including inadequate planning and size of the security force and reduced use of off-duty police officers. The lawsuit also alleged that the Dodgers had a poor track record for securing the stadium, that the poor security exposed Stow to criminal acts of a third party and that security showed a poor response time of 10 to 15 minutes after the attack.

The Dodgers argued that Stow could not prove any link between additional security steps and the injuries he suffered. The jury apparently felt otherwise. This is a good lesson for Minor League Baseball and other sports as well.

As I have written in Legally Speaking on other matters (including ballpark liability and child abuse), the first step is to prevent harm, after which the question of liability should be addressed. Since the incident, the Dodgers have hired a consultant to develop a "security blueprint" for the stadium and its parking lots. Moreover, the Los Angeles County supervisor has called for strict limits on the sales of alcohol at Dodger Stadium and has chastised the Dodger organization: "Denying that lack of security played a role in this attack is simply sticking their head in the sand."

So the answer seems to be yes, injuries from incidents like the Stow beating might be prevented if teams work to eliminate the circumstances that could lead to dangers inside and outside the ballpark. Such diligence will also reduce greatly potential liability.

 —July 14, 2014

What minor league teams can teach other businesses

Minor League Baseball has been enjoying a solid success story, with regular season attendance topping 41million each year for the last eight years—even through the Great Recession.

How do the ball clubs do it? And what can other businesses learn from them?

Jim Juliano writes in a guest blog post for Crain’s Cleveland Business about two factors behind the success story that can be transferred to other business models.

Read what ball clubs are doing right, in “Minor League Baseball—behind the numbers.” 

 —Sept. 24, 2012

No free passes for DUI anymore

The old days of a police officer looking the other way are over. Police will not hesitate to stop a driver for a traffic violation and use standard procedures to test for alcohol and possible driving under the influence.

The law enforcement community will not discriminate in favor of athletes, as might have been the case 20 years ago. The possibility of civil liability is too great.

Reports indicate that Major League Baseball will place a drunk-driving provision on the table for players, but if such a provision survives the collective bargaining process with players, I will be surprised. If it does make it into the collective bargaining agreement, expect it to be watered down with very little teeth.

 

—May 5, 2011

Tweak policies on tweets

Social media is rapid-fire, and team and company policies should keep up. A good illustration is Chicago White Sox manager Ozzie Guillen’s recent use of Twitter to remark about umpires after he was ejected from a game.

Tweeting by team members during games has become an issue in the NFL and NBA, so it’s not surprising that it’s come up in baseball. In any case, the Guillen incident should be a wake-up call that a team or company needs an up-to-date policy on social media that recognizes the anytime-anywhere nature of social media and prohibits disparagement.

Think about an employee who comes out of a meeting with a boss and uses a smartphone to bad-mouth the boss or company on Twitter. Any policy about use of Twitter by employees will have to be carefully drawn so as not to interfere with a person’s First Amendment rights to expression. Guillen seemed to sense he was out-of-bounds in a later tweet, encouraging fans to donate to White Sox charities: “Ok people I got myself in trouble using TWITTER now i am going to help people who need it.”

 

—May 4, 2011 

'Best interests' might be up to court

 

The bankruptcy case involving the Texas Rangers has drawn considerable interest among the crowd that buys, sells and finances baseball teams and those who conduct other activities around teams.

The commissioner of baseball has approved a sale of the team to a group led by Pittsburgh sports attorney Charles Greenberg and Hall of Fame pitcher Nolan Ryan. The problem is that the numerous creditors of the team are not convinced that this is the best deal that owner Tom Hicks can make. At one point, the commissioner sent a letter that reminded the creditors that their lending agreements required the creditors to honor any action the commissioner might take in the best interests of baseball. Some interpreted this letter as an implied threat that he might step into the deal and adjust the terms of the loans for the best interests of baseball.

Although this phrase, “the best interests of baseball,” carries with it broad authority for the commissioner, the creditors strongly objected and commented that such a decision would jeopardize available credit for Major League Baseball.

What lending institution would advance credit when the commissioner might substantially revise the deal?

Now that the issue is pending in Bankruptcy Court, the normal legal process will decide what to do about the sale of the team and the numerous interests of the creditors. The bankruptcy judge has the authority to order a new bidding process, to stay with the current buyer group or to grant other relief.

To the creditors, this situation is likely far preferable to the broad authority of the commissioner.  Creditors may see two potential errors of judgment by the commissioner: First, the approval of the sale of the team to this buyer group, as opposed to other potential buyers that may be offering a better financial package for the creditors, and, second, the threat of using the best interests of baseball clout to revisit the deal itself.

The court has issued a ruling that gives guidance to next steps for sale of the Rangers, but not in the form of the agreement that the parties presented to court, known as the prepackaged plan. The creditors have successfully argued that the court should reject that plan.

The creditors and the buyer group remain in mediation trying to negotiate a solution. We will keep track of the bankruptcy case for further interesting developments.

—June 30, 2010

Heed employer immigration laws—wherever you are, whomever you employ

 

The new immigration law in Arizona has generated plenty of controversy, even though—except for more aggressive enforcement—it does not change what already exists in federal law. It should be a reminder, though, that team owners in any state are obligated to verify employment eligibility of all employees, whether players or otherwise.

Generally, Major League and Minor League Baseball do a very careful job following the immigration process for foreign players. After all, the teams are paying millions of dollars for them. And keep in mind that baseball is employing not only Latinos but also Asians and players of other ethnic origins. Baseball also has many established programs for these players in their cultural transitions.

Remember that baseball teams at all levels must comply with immigration laws for all employees, not just the players. Until recently, immigration seemed to be a back-burner issue, so employers might have grown lax in requiring documentation from employees and completing Form I-9. It would be a good idea to ensure the paperwork is in order for all employees, including U.S.-born citizens. Information about employment eligibility verification can be found at the U.S. Citizenship and Immigration Services website, which includes information about electronic verification.

 —May 8, 2010

 

 
 
 
 
 

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.
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