NFL Players’ Workers’ Compensation Offset Suit Revisited by Second Circuit

On April 19, 2013, the Second Circuit reopened a claim allowing injured former National Football League (NFL) players from teams including the Buffalo Bills, New York Jets, and Carolina Panthers to go forward with further litigation against the National Football League Management Council (council) over the size of workers’ compensation offsets that can be claimed by their former teams.

The NFL Players Association (NFLPA) and the council are parties to a collective bargaining agreement that incorporates a standard player’s contract into its terms which generally provide two remedies when a football-related injury prevents a player from playing: (1) the full payment of salary for the remainder of the season in which the player is injured and (2) if the player is unable to play in the season following the injury, the team may terminate the contract and pay a lesser salary.

Players, however, are entitled to seek workers’ compensation benefits under the terms of that agreement and a club is entitled to deduct workers’ compensation benefits received from the benefits it pays out.  “paragraph 10,” the source of the dispute in this claim, touches upon this issue and states (emphasis added):

 “Any compensation paid to Player under this contract or under any collective bargaining agreement in existence during the term of this contract for a period during which he is entitled to workers’ compensation benefits by reason of temporary total, temporary partial, or permanent partial disability will be deemed an advance payment of workers’ compensation benefits due Player, and Club will be entitled to be reimbursed the amount of such payment out of any award of workers’ compensation.”

The NFLPA and the council, however, have contested how much of an offset a player’s team may take.  The players assert that a team is only entitled to an offset for the period of time during which the player is receiving salary under the terms of the player’s contract a (a time offset).  The council, however, asserts that a team is entitled to recoup benefits until it has recovered the total amount of salary it has paid to the injured player, regardless of whether the player is under contract or not (a dollar for dollar offset).

In 2005, the NFLPA brought an arbitration proceeding before arbitrator Shyam Das, who ruled in favor of the players, thus limiting the amount of offset that can be taken by the team, but noted that there was an outstanding issue as to whether paragraph 10 pre-empted state workers’ compensation laws affecting the size of the offset.  The council then sought to seek dollar-for-dollar offsets as permitted by individual states.

In March 2011, the District Court for the Southern District of New York denied the NFLPA’s motion for contempt due to the council’s continued attempts to impose a dollar-for-dollar offset in jurisdictions where it is permitted, but stated that, although the arbitrator did not rule on the issue, paragraph 10 pre-empted any contradictory state law.

The council successfully appealed to the Second Circuit, which held that because the arbitrator did not rule on the preemption effect of Paragraph 10, that issue was not properly before the district court, which “in effect expanded the terms of the arbitration award.”  The court noted that arbitrator Das properly declined the resolve the question of preemption.  As such, the Second Circuit noted that the NFLPA was free to commence a separate action seeking a declaration that paragraph 10 preempts state law.

This case serves as an important reminder that the drafters of future collective bargaining agreements would be well-served to take into account choice-of-law and preemption issues involving workers’ compensation laws which greatly differ by jurisdiction and will serve the clarify the nature of any workers’ compensation offset claimed by an injured football player’s team. 

For more, see National Football League Players Association v. National Football League Management Council, 2013 U.S. App. LEXIS 7833 (2d. Cir., April 19, 2013).

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