Tag Archive: CBA

Mar 15

MLB in Trouble

By Miller Lulow.

Just for a minute, let’s put ourselves in the shoes of Tony Clark, Executive Director of the Major League Baseball Players’ Association (the “MLBPA” or “Players”). The current Collective Bargaining Agreement (“CBA”) governing the relationship between the MLBPA and the Clubs expires December 1, 2016. Calculated speculation suggests that Bryce Harper, Right Fielder for the Washington Nationals, may be able to sign a $500M free agent contract in the winter of 2019. With Harper’s free agency lurking and the MLB seeing its most fruitful dividends in history, the MLBPA is going to be licking its chops going into the renewal of the CBA. When the MLBPA sits down with the MLB to restructure the CBA, the two positions butting heads will be: “We want a bigger piece of that pie” against “You’ve already had dessert.”

These conflicting positions raise an interesting debate: How much of the rising revenue are Players entitled to receive? The Clubs will assert that the rise in revenue is attributable to smart business decisions that capitalize on, and enhance, the product that the Players put out on the field. Conversely, the Players will argue that there would be no product to capitalize on if it were not for them. Thus, how can the Clubs overcome the Players’ argument that without the Players, the Clubs would not be owners?—they don’t. Instead, they agree and say, “Of course, you’re right, that’s why we pay you so much to begin with!”

The 2016 minimum salary in MLB will be $507,500. Tony Clark’s argument in favor of higher minimum salaries is that MLB players are employed 24/7/365. They are always on the company’s time. Even during the offseason, players are expected to work hard, become better at their craft, and get into better physical shape. Clark’s argument is very powerful once you consider that paying somebody $507,500 for 8,760 hours (1 year) of work means you are paying them $58 per hour. Though there are not many people who would turn down work for $58 an hour, think about working twelve to fourteen hours a day, traveling all over the country, rarely sleeping at home or seeing your family, and rarely getting more than five hours of sleep. Maybe $58 an hour does not seem all that great anymore. This goes to show the difficulty surrounding the impending restructuring of the CBA. As is the case every four years, the Players want more and the Clubs want more. How can we find common ground?

Maury Brown of Forbes.com says that MLB’s revenue grew $500M this year, bringing the total revenue close to $9.5 billion. So, if Harper signs a $500M contract, while he would not be paid all $500M up front, he would be signing a contract for 5.3% of the total MLB revenue. This idea is certain to make Clubs in smaller markets quiver. Harper has just about made it publicly clear that his intention is to be a Yankee—the Yankees have a rapidly declining payroll obligation that will culminate in the 2019 offseason to a mere $45.1M. Though all signs seem to point to the Yankees, because of the free agency system, the prices continue to drive themselves up.

So what ripple effect will a 10 year/$500M contract have on the rest of the players, or perhaps, on the rest of the Clubs? For one, do not think that the Players are ever rooting against each other in salary negotiations. The more money Player X signs for, the more money Player Y signs for, especially if they play the same position. But one player signing for $500M affects everybody, even the 6th-inning middle relievers, because the ripple is so massive. Therefore, the Players are rooting for Harper to sign as big of a deal as possible. On the other side of the table, while there are some Clubs that will pay that money for Harper, the overwhelming majority will not acquiesce. Such an amount would put a lot of pressure on the MLB to continue to raise its gross revenue.

Is it conceivable that one player could sign a contract worth $500M? It certainly looks like Bryce Harper will be that player in 2019. Indeed, this will pose some uncomfortable issues to be hashed out and hopefully agreed upon by the Players and the Clubs in the new CBA. It is interesting to see what kind of trouble it will bring for the MLB.

Oct 09

LERA Event Recap – “The Affordable Care Act on Collective Bargaining”

The Labor and Employment Relations Association sponsored a reception and panel discussion on “The Affordable Care Act on Collective Bargaining.” Many distinguished panelists participated, including: Jeff Stein, Alyson Mathews, and Frank Moss.

The discussion began with an analysis of the main characteristics of the Affordable Care Act (“ACA”); first, universal coverage; second, the requirements on insurance companies covering everyone and third, the government subsidies given to those who cannot afford coverage. The panel also discussed the penalties employers will receive when they does not provide their employees adequate coverage. Jeff Stein addressed a potential issue that may arise, if people who are covered by insurance companies are also trying to receive subsidies.

Other issues that may arise when the ACA comes into effect will involve collective bargaining agreements. The question of who to cover remains unanswered because of eligibility. Children are not eligible under the Act and spouses do not have to be offered care. Another potential issue arises with part time employees who work thirty hours a week. Employers are concerned with increased costs from the Act while unions are concerned that the Act does not provide sufficient compensation.

Alyson Matthews noted that, “the regulations implementing the Affordable Care Act change on an almost daily basis, which makes it difficult for employers and unions to develop collective bargaining strategies. The law will likely result in a lot of creative solutions as employers and unions navigate the impact of it on the overall collective bargaining framework.”

As each panelist expressed his or her predictions on the long-term effects of the ACA, it became clear that much of the Act’s effect on employer, union, and employee relationships remains answered. This event was an excellent exploration of the possible ramifications of the Affordable Care Act and it was educational for students and practitioners alike.

Jun 25

NYU 66th Annual Conference on Labor

gregory-076St. John’s Center for Labor and Employment proudly co-sponsors NYU’s Annual Conference on Labor and held a kickoff reception the night prior to the conference. The keynote speaker at the reception was Lorelei Salas, Legal Director of Make the Road New York (MRNY).

MRNY is is a not-for-profit, membership-led organization based in Bushwick, Brooklyn; which builds the power of Latino and working class communities to achieve dignity and justice through organizing, policy innovation, transformative education, and survival services. As Legal Director for MRNY, Ms. Salas heads the housing and benefits litigation team, the employment team, the health advocacy team, and the newly formed immigration unit. In that capacity, she directs litigation, supervises the provision of direct legal services, and helps develop policy and campaign work around issues that affect the MRNY community.

Ms. Salas spoke to the group of students, friends of the CLEL and distinguished guests at a reception on June 3, 2013 about the opportunities and transformation that she is a part of for MRNY. She spoke about how her career and life experiences had shaped her passion for worker’s rights and a recent success, the organization of cash wash workers in New York City who have recently signed their first union contract.

The kickoff reception preceded NYU’s 66th Annual Conference on Labor brings together top government officials and leading attorneys in the fields of labor and employment law in a unique and practical two-day program offering practical learning and CLE credit.

Jan 21

Drop the Puck: An Overview of the New NHL CBA

The National Hockey League (NHL or League) has officially begun its new season.  As pucks dropped across the NHL Saturday night, a new collective bargaining agreement (CBA) was in effect.  Negotiating the agreement led to a lockout which lasted more than one hundred days[1] and had far reaching costs (as discussed here).  Much of the previous CBA will remain unchanged, however, there have been some important changes made to certain aspects of the relationship between the League and the National Hockey League Players Association (NHLPA or Union).  These changes are highlighted below.

The new CBA is a ten-year agreement[2], making it the longest agreement to be signed between the League and the Union[3].  Each side has a right to terminate the agreement in 2019[4].

Two of the central sticking points during negotiations – the division of hockey-related revenue and a pension plan for players – were resolved through the new agreement[5].  Under the previous CBA hockey-related revenue (HRR) was divided with a slight advantage for the players, who received 57%[6].  The new agreement splits HRR evenly between the players and the League[7].  Additionally, a defined benefit pension plan will be created[8].  A defined benefit plan is one that provides recipients with retirement benefits for the remainder of their lives[9].

Along with a new split in HRR, the agreement creates a new structure for revenue sharing, including the creation of a Revenue Sharing Oversight Committee (the Committee)[10].  The revenue sharing pool will equal 6.055% of HRR per year and will obtain half of its funds from the ten teams that have the highest gross revenue[11].  The remainder of the funds will be made up of money from league revenue and gate receipts for playoff games[12].  The Committee will control the revenue sharing program and will exercise oversight authority over any team that generates less than 75% of the league average in gate revenues[13].  The new agreement also creates an Industry Growth Fund (the Fund) which will provide assistance to any team that is struggling with generating revenue[14].

Individual player contracts (called Specific Player Contracts or SPCs) will remain the same for the remainder of the 2012-13 season, despite the shortened season[15].  After the end of this season, any player contract that provides for a lower salary for any given season that is lower than the minimum salary for that season will be adjusted so that the player receives the minimum[16].  The minimum salary begins at $525,000 and increases to $550,000 for next season[17].  After that, it increases by an additional $25,000 every two years until it jumps by $75,000 between the 2016-17 and 2017-18 seasons[18].  It then increases by $50,000 every other year until the end of the contract[19].  After four seasons players will be eligible for salary arbitration under the system that existed in the previous CBA[20].  The existing system of free agency is also carried over to the new agreement, meaning after seven seasons or at the age of 27 players become free agents and are able to talk to any team[21].

In addition to minimum salaries for individual players, the new CBA creates payroll ranges for the teams[22].  The upper limit, midpoint, and lower limit are set for the first two seasons, after which the three amounts are set through a formula[23].

The new CBA divides the discussion of discipline into two distinct sections – on-ice discipline and off-ice discipline[24].  The amount of fines that may be levied against a player for on-ice infractions is increased[25].  Further, the new agreement provides for an appeals process players can access if they are subject to discipline[26].  The first step in appealing on-ice discipline is going to the Commissioner; in certain cases, there may be an additional right to have an appeal heard by a neutral arbitrator[27].  There are a number of reasons a player may be disciplined for off-ice conduct, including participating in conduct that can ultimately harm the game of hockey[28].  In such a case a player may be subject to a range of penalties, from suspension to paying a fine to the nullification of the player’s contract[29].  If a player wishes to appeal discipline for off-ice conduct, the appeal goes directly to a neutral arbitrator[30].  The standard of review for all disciplinary appeals is substantial evidence[31]

The final major area covered by the new CBA is health and safety concerns.  The agreement begins by tackling substance abuse through a review of the Substance Abuse and Behavioral Health Program (the Program)[32].  A player who tests positive for drugs at “dangerous levels” must be referred to the program; the agreement sets a deadline by which the Program must create a definition of “dangerous levels[33].”  The list of banned substances is expanded and the testing program is expanded[34].  Additionally, the parties commit to a study of HGH testing[35], something that has been controversial in many professional sports.  Players will now be subject to four types of testing: testing during training camp, “team testing” during the regular season, random individual testing (which can occur at any point, including during the off-season), and testing based on reasonable belief the player is using a banned substance[36].  In order for the final type of testing to be utilized, probable cause must exist[37].  Importantly, a player who refuses to comply with drug testing is seen as having tested positive[38].  The strict liability provisions found in the old CBA remain in effect but the new agreement changes the defenses available to players who test positive[39].

The new CBA creates an Owner-Player Relations Committee which will meet at least twice each year to discuss a multitude of issues that affect both parties and the game of hockey as a whole[40].  Given the difficulty the two parties seemed to have during the most recent negotiations and lockout, this type of committee will hopefully help to foster a better working relationship between the League and the Union.

The remainder of the changes deal with issues like how a team may conduct fitness testing, how long training camps may last, the number of days off players get during the season, the amount of insurance coverage players and their families are eligible to receive, and other playing conditions[41].

The new CBA between the NHL and the NHLPA alters some significant portions of the relationship between the parties.  It is a document of compromise.  The players lost 7% of the HRR they received under the old agreement and the owners had to agree to the creation of a defined benefit pension plan.  However, each side received in return something that was important to it.  It will be interesting to see how some of the open-ended issues are resolved (i.e.: testing for HGH) and how the new provisions end up impacting the game.

[1] Katie Strang, NHL, union have tentative agreement, ESPN, January 8, 2013, available at http://www.espn.go.com/nhl/story/_/id/8817955/nhl-nhlpa-reach-tentative-agreement.

[2] NHLPA, Summary of Terms, January 10, 2013, available at http://www.cdn.agilitycms.com/nhlpacom/PDF/Summary-of-Terms-1-10-13.pdf.

[3] NHLPA Staff, NHL, NHLPA Sign Collective Bargaining Agreement, Press Release, January 12, 2013, available at http://www.nhlpa.com/news/nhl-nhlpa-sign-collective-bargaining-agreement.

[4] NHLPA, Summary of Terms, supra at note 2.

[5] Rick Baert, NHL players score new defined benefit plan, Pensions & Investments, January 21, 2013, available at http://www.pionline.com/article/20130121/PRINTSUB/301219982/nhl-players-score-new-defined-benefit-plan.

[6] Steve Zipay, NHL, players reach tentative deal; ratification would end lockout, Newsday, January 6, 2013, available at http://www.newsday.com/sports/hockey/nhl-players-reach-tentative-deal-ratification-would-end-lockout-1.4412276.

[7] NHLPA, Summary of Terms, supra at note 2.

[8] Id.

[9] Colleen E. Medill,  Introduction to Employee Benefits Law: Policy and Practice (2011).

[10] NHLPA, Summary of Terms, supra at note 2.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] Id.

[38] Id.

[39] Id.

[40] Id.

[41] Id.

Sep 15

Checking: Is There Potential for Unintended Ramifications from the NHL Lockout Challenge?

The last few years have been active for those interested in labor-management relations in the world of professional sports.  Last year saw the lockout of NFL players and a delay of the NBA season because of a breakdown in negotiations.  Only the MLB and the MLB Players Association seemed able to amicably negotiate a new collective bargaining agreement.

This year’s conflict has been the negotiation of a new collective bargaining agreement (CBA) for players in the National Hockey League (NHL).  The current agreement was set to expire at midnight Saturday.[1]  While the parties have continued discussion in recent days and weeks, it has been reported that they remain far apart on compensation and revenue sharing[2], the two central issues in the negotiations.[3]  Now it appears the parties have ceased the bargaining process altogether.[4]  The players have stated they would gladly continue to play while a new agreement is negotiated[5], however, the owners have already voted to implement a lockout if a new agreement is not reached today.[6]

During previous lockouts in other sports, the union and its player-members have attempted to find ways around the lockout in an effort to ensure the players continue to receive paychecks while an agreement is being negotiated.  Last year NBA players attempted to decertify their union, which would have allowed them to bring an anti-trust claim against the league to end the lockout.[7]  Now, the NHL Players Association (NHLPA), along with a number of players, is attempting to partially block the lockout through an application filed with the Quebec Labor Relations Board.[8]

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