The Explainer: (Breached) contract labor

What can rider do if his team fails to live up to its commitments?

Dear Explainer,
Last year, I rode for a regional “professional” team that wasn’t all that professional in its dealings with its riders. I signed a contract to ride and to be available for promotional events and, of course, to spend time training in preparation for races. I was supposed to be paid a small salary and living expenses and equipment (and I guess maintenance) was to be covered by the team.

I was paid for about three months and then everything started coming apart. I actually had a paycheck bounce, but that was quickly corrected. Maybe that was a warning sign. By the time the season started, I was told that there was a “small problem” getting money from a local sponsor and that was supposed to be where part of my salary was coming from. Well, the small problem got bigger and bigger and soon I wasn’t getting paid anything; not my salary, not my living expenses and pretty soon I was doing all of the work on my bike and even paying for replacement tires and stuff.

I don’t know if it’s worth the trouble, but what can I do to get the money owed to me at this point? I guess if anything, I learned my lesson and decided racing as a “pro” wasn’t in the cards for me. I went back to college and am getting my degree, but I could still use the money. Is it worth going after the guy who organized the team? Can I go after him for the promised living and equipment expenses? Can I go after him for all of the time I spent training, since if you add that up, I probably wasn’t even paid minimum wage?
Anonymous

Dear Anonymous,
Well, first off I want to remind you that I am only offering a layman’s opinion and not legal advice on this one. The very basic advice that anyone can offer is that you need to speak with an attorney.

Fortunately, if the team, the management company or the manager are still involved in racing, your first option might not require an attorney at all. Take your problem directly to USA Cycling. As with problems riders encounter with unpaid prize money – or checks for prize money that bounce – you can raise the issue with your national governing body. If the governing body issues a license for a team or a race permit to that same person, you can raise the issue of unmet obligations and put the brakes on future licenses or permits.

Check with the federation first. See if your former manager is involved in the sport in any capacity. If he or she is, then raise hell about it.

Now let’s assume for a moment that your old team was managed by someone with merely a fleeting interest in the sport. Perhaps it was someone who just thought it might be nifty to own a sports team and they couldn’t afford an NFL franchise, so they “bought” a bike team, made wild promises, figured out that it wouldn’t work and then just vanished. It happens.

Now is the time to talk to a lawyer. While lawyers can be pricey, some do offer free consultations for your first visit. It is also worth checking to see if your school has a students’ attorney’s office or, better yet, a law school, where you can often get help from third-year law students working in clinics. With your lawyer’s input, you first have to decide if it’s worth the trouble.

Whether it is “worth it” really depends on how much you are owed. If, like some rider deals, yours was for a small salary, then it may not be worth the hassle and expense of pursuing a law suit. There are a few issues that you should probably keep in mind.

Let’s tackle your last question first, since it’s probably the easiest. Can you pursue a claim based on the Federal (or, if it’s higher, your state’s) minimum wage since you devoted so much of your time training and preparing for races? My guess is that you probably can’t. I say guess because you mentioned that you have a contract with your former team. That suggests that you probably won’t fall under the legal definition of an “employee” for purposes of the Fair Labor Standards Act (FSLA).

While there is some room for discussion as to precisely who can and should be defined as an employee and who is merely a contractor, we’ve covered that subject before in an earlier column. It would, however, be really cool if you had worked out an arrangement where you were actually being paid an hourly wage to ride your bike, but I doubt you did.

What is reasonable?

So, with the minimum wage issue aside, what can you go after? Well, look to the contract. If the contract says that you are to be paid $X for riding and you’d been paid less than that, you can go for the difference.

Since the living expenses and maintenance provisions were probably less clear, the court would probably consider what would be “reasonable” under the circumstances. In other words, if you were buying groceries, eating at local restaurants and staying at Motel 8 when you were out racing, then you could probably justify those as “reasonable” living expenses. Conversely, if you were to do a race in New Jersey, but felt compelled to stay at the Ritz-Carlton in Manhattan and were ordering lobster, Beluga Caviar and Dom Pérignon through room service, you might have a hard time justifying those expenses as “reasonable.”

The same standard would also apply to the maintenance provision of the contract. Tires, chains and replacement components are probably okay; a new Campagnolo Record-equipped Pinarello Prince probably isn’t.

Who’d you sign with?

The next big question is to look back and see with whom you have a contract. If it’s with the team’s manager — say your contract is between Anonymous Rider and Billy Bob TeamPromoDude – then you can go after Mr. TeamPromoDude directly.

The likely alternative, however, is that you signed your contract with a business, something akin to TeamPromoCorp, Inc. or TeamPromoDude, LLC. At first blush, those are a little more difficult to go after, especially since you may be suing an entity which appears not to be too flush on the asset side. Courts tend to treat companies like separate individuals (in ways more than just those that apply to campaign finance laws), so if your contract is with the company and the company is broke, your options may be limited.

One obvious option is to ask the court to look beyond the rugged individuality of the company and determine who is actually in control. Such “piercing” of the “corporate veil” can be done in the interest of justice. It is also not the only way an owner, director or officer of a company can be held responsible for the actions they did on behalf of the company.

You may be able to show that the company was really just a way to insulate the owner from liability and that the owner is truly the person – or entity – responsible for fulfilling the contract. There are a few issues the court will consider when looking at the relationship between Mr. TeamPromoDude and TeamPromoCorp, Inc. or even TeamPromoDude, LLC. The might first ask how formal the operation was. Was it merely a company in name only? One issue worth raising is whether or not the company was adequately capitalized when it was originally formed. Did they have enough money to operate as a team to start with? From the sounds of it, they didn’t. If that is the case, the court might be more sympathetic to your efforts to go after Mr. TeamPromoDude directly.

Again, this is just a thumbnail sketch and you really do need to talk to a lawyer about this one.

Above all, don’t blow it off, unless we’re talking about a really small amount of money. Team managers and directors are just like everyone else. They need to be held accountable and kept to the promises they make, no matter what excuses they come up with to justify their violation of the contract.


“The Explainer” is a regular feature on VeloNews.com. If you have a question related to the sport of cycling that our editors might be able to answer, feel free to send your query to CPelkey@CompetitorGroup.com and we’ll take a stab at answering. Not all letters will be published and some questions may be combined with those of other readers. Please include your full name and hometown.