Written By Robert Sheridan
In baseball, the beginning of spring means hope for fans of even the most hard luck teams. Unfortunately for one erstwhile fan, the first days of spring ushered in a dismissal of his putative wage and hour class action. The decision, Chen v. MLB, emerged from the Federal District Court for the Southern District of New York and its significance may lie less on the court’s reasoning and more on what it presages for the rising tide of litigation over the right (or lack thereof) of volunteers to compensation for time “worked.”
Plaintiff John Chen volunteered at Major League Baseball’s week-long FanFest in New York in July 2013 by attending some training sessions and greeting and directing FanFest patrons. For his participation, MLB provided Chen with souvenirs and FanFest passes. Chen filed a hybrid collective/class action on behalf of himself and other FanFest volunteers, alleging that MLB misclassified them as volunteers as opposed to employees, and that MLB was required to pay them at least the minimum wage under the Fair Labor Standards Act and New York Labor Law.
The Court dismissed Chen’s lawsuit, but not because MLB properly classified Chen and others as volunteers as opposed to employees; rather, as the Court found, Chen worked for an “establishment” exempt from the FLSA's protections. Specifically, FLSA has a “recreational or amusement” exemption, which applies to any employee employed by an amusement or recreational establishment operating for seven or less months a year. Chen claimed he actually worked for MLB, which operated for more than seven months a year. MLB claimed that Chen actually worked for FanFest, which operated as an establishment for less than the 7 month threshold.
The Court sided with MLB finding that FanFest qualified as an “establishment” -- the definition of which includes “a distinct physical place of business,” which can be part of a larger enterprise like the MLB. FanFest occurred at a discrete location (the Javits Center) over a discrete period of time (All Star Week), and it was of no consequence that MLB may have controlled the details of the event.
The decision demonstrates that employers must be keenly aware that the Fair Labor Standards Act and other similar state wage and hour laws are punctuated with little-known exemptions beyond the white-collar exemptions that should be explored before reaching a minimum wage/overtime eligibility determination.
This case was also noteworthy for what it didn’t discuss – whether Chen was a volunteer as opposed to an employee. While not discussed in this case, we are seeing a potential next wave of unpaid labor class action lawsuits by volunteers coming on the heels of the initial wave of unpaid internship class action lawsuits. Thus, employers should closely analyze whether their volunteer, internship or other unpaid labor programs meet the strict requirements of the FLSA or corresponding state wage and hour law.