The saga continues: Are student athletes employees?
This question, once settled, has seen increased scrutiny in recent years both from the National Labor Relations Board1 and courts that have considered the issue.2 One of those courts – the Third Circuit Court of Appeals, which covers Pennsylvania, New Jersey and Delaware – will soon have the opportunity to add its opinion to the mix as it considers whether student-athletes are employees for purposes of the Fair Labor Standards Act (FLSA) in Johnson, et al v. The National Collegiate Athletic Association, et al.
But, before we get to the facts in Johnson, we would be remiss if we did not note that intercollegiate athletics looks markedly different now than it did when the issue of student-athletes-as-employees first took shape, and this new landscape may impact how this weighty issue is ultimately decided. The trajectory of name, image and likeness rules (and laws) alone serves to highlight this evolution. From Board of Regents of the University of Oklahoma to O’Bannon to Alston, the rise of NIL may have paved the way for future seismic activity.3
So, what is Johnson about? The facts are rather straight forward: former and current Division I student-athletes are suing the schools they attended, and the NCAA, and are seeking compensation for their services. More specifically, they are seeking wages for their participation in Division I athletics under the FLSA and various state laws. Putting a finer point on it, the student-athletes are arguing that they were employees, in part because of the control the NCAA and the universities held (and hold) over their activities and the revenue generated by their sports.4
The schools and the NCAA moved to dismiss the complaint, but the District Court denied the motion and held that the student-athletes “plausibly allege[d]” that they were employees.5 Unhappy, the schools and the NCAA appealed the District Court’s decision, arguing, among other things, that the District Court improperly disregarded the 7th Circuit Court’s ruling in Berger, and improperly applied and weighed elements of the multifactor test used to evaluate the status of student interns.6
Recall that in Berger, the Seventh Circuit held that student athletes were not employees under the FLSA because (1) participation in collegiate athletics is entirely voluntary and (2) the long tradition of amateurism in college sports, by definition, shows that student athletes—like all amateur athletes—participate in their sports for reasons wholly unrelated to immediate compensation.7
What is the question before the Third Circuit? To start, the question is not necessarily whether student-athletes are employees. Instead, the question is whether the District Court properly denied the motions to dismiss. And while this could be a distinction without a difference, it is certainly possible that the Third Circuit issues its opinion without addressing the larger question of whether student-athletes are employees. That said, during oral argument, the court challenged counsel on a number of points that go to the very heart of the inquiry, including:
- Title IX. The NCAA argued that categorizing student athletes as employees would create a situation in which schools are caught between inconsistent standards under Title IX and Title VII with respect to Title IX’s mandate regarding equal opportunity to participate in athletics for men and women. The NCAA said that prong has the tendency to fall “disproportionately on female shoulders” because it may undo advancement. The Judges seemed unconvinced of this argument, noting that disparities are already prevalent.
- Substantial control. The Judges highlighted that the institutions appear to exercise substantial control over student athlete’s schedules. The NCAA could implement rule changes to lessen the control over student athletes and avoid the claim that student athletes are employees. For example, the Plaintiffs said that the NCAA could allow athletes to enroll in elective courses that conflict with practice schedules without fear of punishment.
- Scholarships. Following oral argument, the Third Circuit also asked the NCAA counsel to provide a supplemental letter brief regarding whether an athlete loses their scholarship if they quit or are removed from the team.8
In the end, the details of the Third Circuit’s ruling will likely dictate whether an appeal to the Supreme Court is in the cards, though at the motion to dismiss stage the record of the case is necessarily somewhat thin. Regardless, the Supreme Court’s decision in Alston undoubtedly looms large in any further appellate considerations.
What does this case mean for your campus? Right now, nothing specific. But, zooming out, there is considerable uncertainty in the student-athlete space, and institutions would do well to start thinking through how certain decisions will impact their campus and their stakeholders. What would happen on your campus if student-athletes were deemed employees? How would that impact your operations? Circling back to the Circuit Court’s question at oral argument, what would it mean for your Title IX compliance obligations?
Our team will continue to follow this issue. Stay tuned for updates regarding the Johnson v. NCAA decision, the NLRB’s actions and other developments regarding student-athlete compensation.
1 In December 2022, the NLRB found that an unfair labor practice charge against the NCAA, Pac-12, University of Southern California and UCLA had “merit” and that it would allow the complaint to move forward. Contemporaneously with that decision, the NLRB General Counsel, Jennifer Abruzzo, issued a statement that the universities, the NCAA and Pac-12 “as joint employers, have maintained unlawful rules and unlawfully misclassified scholarship basketball and football players as mere ‘student-athletes’ rather than employees entitled to protections under our law [the National Labor Relations Act].”
2 Two circuits – the Seventh and the Ninth – have opined that student-athletes are not employees under the FLSA. See Berger v. NCAA, 843 F.3d 285 (7th Cir. 2016), (holding that that student athletes were not employees and are not covered by the Fair Labor Standards Act.); Dawson v. NCAA, 932 F.3d 905 (9th Cir. 2019) (holding a student-athlete in a football program was not an employee of the NCAA or Pac-12 under the FLSA).
3 See O’Bannon v. NCAA, 802 F. 3d 1049 (2015)(holding that NCAA rules barring NIL were subject to antitrust laws); Alston V. NCAA, 141 S. Ct. 2141 (2021).
4 Notably, the FLSA broadly defines an “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1)
5 Johnson v. NCAA, 556 F.Supp.3d 491, 512 (E.D. Pa. Aug. 25, 2021).
6 See Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 538 (2d Cir. 2016) (whether student interns are “employees” under the FLSA depends on whether the student intern or the company that “hired” them is the “primary beneficiary” of the arrangement.).
7 Berger, 843 F. 3d at 293
8 On February 27, 2023, Counsel for Appellants submitted a letter clarifying that if an athlete is removed from the team, then the institution may be able to “reduce or cancel athletic aid if a student does not fulfill the terms of their aid agreement.” Supplemental Brief of Appellants, Johnson, et al v. Nat’l Collegiate Athletic Ass’n, et al. (No. 22-1223, ECF 74). The Appellants went on to explain that “it is up to each school to determine whether to grant, renew, reduce or cancel any form of aid” including athletic aid. Id.
This is for informational purposes only. It is not intended to be legal advice and does not create or imply an attorney-client relationship.Download PDF