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Are Professional Athletes Covered Under New Overtime Rules?

    Client Alerts
  • August 03, 2016

Last week, a federal district court judge in California declined to certify a collective action claim by minor league baseball players who alleged they had not been paid overtime as required under the Fair Labor Standards Act and state law. With the minimum salary required to claim exemption under the FLSA set to more than double as of December 1, this claim raises the question of whether professional athletes are exempt from overtime requirements under the FLSA.

The FLSA contains no specific overtime exemption for athletes. Under the §541.302 creative professionals exemption, employees are exempt from overtime if they engage in “the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work.” The rule cites music, writing, acting and the graphic arts as examples of creative professional occupations.

Does this definition include professional athletes? Their occupations arguably involve talent, imagination and originality, but are professional sports an artistic or creative endeavor? Does the largely physical nature of most athletic activities remove them from the scope of the exemption? For very highly compensated professional athletes, the short form exemption found at §541.601 could apply if the employee performs one or more of the creative professional duties or responsibilities.

The current litigation focuses on athletes paid below this highly compensated level. This could include minor league baseball players, crew members on motorsports teams, and lesser known sports that do not pay the salaries associated with better known athletes.  While many of these athletes make the current $455 per week minimum salary, a significant percentage are paid less than the new $913 rate. Even if the creative professional exemption applies to professional athletes, failure to pay this minimum salary opens employers to overtime claims. For some athletes, time spent training, practicing and participating in charitable functions could result in significant overtime claims.

In response to these suits, several members of Congress recently introduced legislation that would create a special overtime exemption for minor league baseball players. The California court’s rejection of the collective action claim was based not on the underlying overtime exemption issue, but rather on the judge’s determination that the proposed class’ damages claims lacked sufficient commonality to be litigated as a group. Organizations employing professional athletes should continue to monitor this litigation, and determine their response to the new overtime rules.