Here is what I got from an "expert" on the status of Paxton today.  I mistakenly referred to the Cubs as his team, which explains some of this answer.  Of course, Paxton will be missing some time in April and perhaps May, so factor that into your decisions.  

"Paxton is still going to be on the 40-man roster for the Yankees. You said Cubbies, so not sure if you mean Cubs or you mean another player than Paxton. I don't know if you base your rules on the 40-man or the active roster of 26. I'm not sure I see the issue here. Paxton is not someone that should be eligible for FAAB unless you think he'll go undrafted. I don't see him going undrafted. But if he does, then I guess he would be eligible for FAAB if y'all don't use the 40-man roster as your basis of being in the Big Leagues. -Dave"