The following is a guest contribution from Andrew Harmes, a JD candidate of the Class of 2016 at Osgoode Hall Law School.
The Canadian Hockey League (CHL), the primary developmental league for the National Hockey League, is facing legal scrutiny as the subject of an unprecedented class action lawsuit alleging that the organization and its sixty teams conspired to have young players sign standard playing contracts that violated minimum wage laws.
A statement of claim filed in a Toronto court seeks compensation of $180 million attributable to outstanding wages, overtime, holiday and vacation pay, that should have been paid to active players. It is alleged that the CHL and its member teams had players sign contracts that they knew to be unlawful, and that “such conduct was high-handed, outrageous, reckless, wanton, deliberate, callous, disgraceful, wilful and in complete disregard for the rights of the [players].”
Player Compensation
Players competing in the CHL are between the ages of 16 and 20 and are compensated on fixed terms according to their age and whether they play in the Western Hockey League, the Ontario Hockey League, or the Quebec Major Junior Hockey League – all of which fall under the CHL’s umbrella.
Players are generally paid between $50 and $120 a week, with additional expenses such as room and board, educational materials and post-secondary tuition being covered. The CHL also has an education package which provides scholarship funding for players who register in post-secondary education within 18 months of their last game in the league. The Ontario Hockey League following a potential unionization movement last year, had recently revamped their player benefit package to include a reimbursement plan covering further incidental expenses such as gas and clothing, for up to $470 a month. The education package was also modified to help make the 18 month time constraint less onerous for players wishing to take their chances at a professional playing career before moving on to full-time academic study.
Player Status: Employees or Independent Contractors/Student Athletes
While the education package and its restrictions are at issue, the crux of the class action lawsuit will be centred on whether players should be legally classified as employees. The CHL has previously maintained that players should be considered independent contractors, amateur student athletes, or a classification similar to low-paid interns training for a professional position.
Under Ontario statutory law, a person can only be classified as an intern and therefore not subject to minimum wage requirements if each of five listed criterions are met. Among them, the CHL can be expected have the most difficulty demonstrating that “the person providing the training derives little, if any, benefit from the activity of the individual while he or she is being trained.”
The statement of claim alleges that teams in the CHL benefit from “hundreds of millions of dollars in revenues annually,” earned as a result of the efforts of the young players. Although the totality of that assertion is questionable given the small-market nature of some CHL teams, there is the Tax Court of Canada ruling in McCrimmon Holdings Ltd v Minister of National Revenue. In this decision, where a CHL team was found to be an employer for the purposes of employment insurance, the court stated that while the emphasis on supporting players’ education is commendable, this is “simply the business of hockey. [The team] is a commercial organization…carrying on business for profit.”
To say that the CHL and its member teams derive little, if any, benefit from their players, is unlikely to find much support. The Calgary Hitmen, Quebec Remparts, and London Knights, the three teams that led their respective CHL leagues in attendance last year, averaged between 7,500 and 10,000 fans per game.
In determining whether players are employees or are in fact independent contractors and therefore also not subject to protection under provincial employment standards legislation, the court will consider a series of factors, among them being the “level of control the employer has over the worker’s activities.” In McCrimmon, the court’s accepted description of player-team relations was one characterized by a high degree of control on the part of the team’s coaches and management. For example, “players are subject to a curfew and are closely monitored both in and out of school…players who finished high school but have not chosen to attend college or university must come to training sessions 6 days a week from 12:30 pm to 5:30 pm each day…players are permitted one 2:00 am weekend curfew each month.”
The Case at Hand
The representative plaintiff in the lawsuit is Sam Berg, who played in the CHL last year for the Niagara IceDogs of the Ontario Hockey League. Berg claims to have signed a contract where the team agreed to a four-year scholarship that was enforceable once he played a single game. Berg and his father, a former NHLer, believed the scholarship to have been guaranteed. Berg only played eight games last year before being sent to a lower league where a shoulder injury rendered him out of competitive hockey and unable to report to Niagara’s training camp this year.
The statement of claim alleges that the contract Berg originally signed was never sent to league offices for approval, and that once he was hurt, it was unilaterally revised to reduce the scholarship package to half a year. In response, Niagara claims that by missing training camp it is Berg who breached the contract.
The statement of claim further alleges that because of league imposed restrictions on the education package, teams on average payout only $30,000 a year – “an amount equivalent to four former players per team actually reaping the benefits of the education package.” CHL president David Branch denied the allegations, saying that teams in the Ontario league paid out more than $2 million in scholarship funding last year alone.
