A stripper, an intern, and a minor league baseball player walk into a bar . . . Where is this joke going? To court of course; this is a family-friendly legal blog! What do all three have in common – lawsuits under the Fair Labor Standards Act.
A group of former minor league baseball players are suing Major League Baseball for failure to pay minimum wages and overtime in violation of the federal Fair Labor Standards Act and similar state laws. The case is in its preliminary stages and the parties are wrangling over procedural issues. The former players claim that Major League Baseball pays most minor league players $3,000 to $7,000 over a five-month season, during which the players regularly work fifty to seventy hours per week. The players allege that they play six or seven games per week, in addition to practice, strength and conditioning training, mandatory pregame activities and bus travel. The players also claim that Major League Baseball fails to pay them for mandatory spring training sessions and other off-season training and instructional sessions. With varying success, Major League Baseball has traditionally relied on a defense under the FLSA for amusement and recreational establishments. Baseball is hedging its bets and is lobbying Congress to amend the FLSA to create a specific exemption for baseball players.
Suits by unpaid interns for minimum wage payments have been in the news the last several years, most notably a suit by interns working on the movie Black Swan. Courts deciding the issue have generally applied the Department of Labor’s six factor test to determine if the interns are “trainees” instead of employees. Recently, a federal appellate court with jurisdiction over New York rejected the DOL’s six factor test and applied its own test, which focuses on whether the intern or the employer is the primary beneficiary of the relationship. The appellate court’s test focuses on what the intern receives in exchange for the work and gives the court flexibility to examine the economic reality that exists between the intern and the employer. Some of the factors to consider are the intern’s expectation of compensation, whether the training the intern receives is similar to what would be provided in an educational environment, whether the internship is tied to the intern’s educational program, the length of the internship, whether the intern’s work complements rather than displaces the work of paid employees, and whether the intern understands that there is no promise of a paid job at the end of the internship.
The battle strippers have waged under the FLSA has focused on their status as employees versus independent contractors. On July 15, the DOL issued guidance on the classification of employees under the FLSA. The guidance suggests that most workers are employees and not independent contractors. The guidance reiterates the economic realities test that has been in use for years. While not changing the applicable balancing test to determine employee status under the FLSA, the DOL is putting its thumb on the scale to tip the balance in favor of employee status. The DOL states: “Most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor.” Time will tell what deference court’s afford the DOL’s guidance, although there is little doubt that disgruntled Uber drivers and other participants in the demand economy will rely on the DOL’s guidance to advance their claims for recognition as employees.