U.S. appeals court ruling leaves open possibility of college athletes being considered employees
A federal appeals court on Thursday refused to rule out the possibility of college athletes being considered employees of their schools under minimum-wage law, as the NCAA had requested, but a three-judge panel sent the case back to a lower court for further consideration of the issue.
In an opinion that comes nearly a year and a half after the case was argued before the 3rd U.S. Circuit Court of Appeals, Judge L. Felipe Restrepo wrote:
"The issue raised by this interlocutory appeal is not whether the athletes before us are actually owed the protections of the Fair Labor Standards Act (FLSA), but rather, whether college athletes, by nature of their so-called amateur status, are precluded from ever bringing an FLSA claim. Our answer to this question is no."
But Restrepo added that the matter needs to return to a district court, which must re-consider the issue "for application of an economic realities analysis grounded in common-law agency principles."
Using verbiage from prior legal cases, the ruling set up a new test of sorts for determining whether the minimum-wage law applies to college athletes. It said the athletes "may be employees under the FLSA" when they perform services for another party, "necessarily and primarily for the [other party's] benefit," under that party's control or right of control and in return for "express" or "implied" compensation or "in-kind benefits."
"Ultimately," Restrepo wrote, "the touchstone remains whether the cumulative circumstances of the relationship between the athlete and college or NCAA reveal an economic reality that is that of an employee-employer."
Based on Thursday's ruling, it will be up to U.S. District Judge John R. Padova to make this determination.
The appellate panel's ruling was unanimous, with Judge Theodore A. McKee joining Restrepo without further comment and David J. Porter writing a concurring opinion in which he said the panel should not have accepted the matter for consideration.
In one part of the ruling Restrepo noted: "We have opted against using a term both parties employ liberally in briefing: 'student-athlete.' … As scholars have noted, the term is an NCAA marketing invention … [c]ontext makes this vividly apparent."
In August 2021, Padova rejected the NCAA’s and schools’ bid for dismissal, writing that that athletes’ complaint “plausibly alleges” that they are employees. That is a relatively low legal standard based on viewing the complaint in a way that is most favorable to the plaintiffs. And his ruling did nothing more than set the stage for the case to proceed to the evidence-gathering phase known as discovery.
The NCAA sought to appeal Padova’s refusal to dismiss the case, although such appeals generally are not allowed. But in this instance, in December 2021, Padova permitted the appeal. He acknowledged that his decision to not dismiss the case differed from the prior rulings that the NCAA and cited and that if the the 3rd Circuit appellate panel disagreed with him, the case would have to be dismissed.
Paul McDonald, a lawyer for the athlete plaintiffs in the case, said Thursday's ruling "confirms what we've been arguing — that college athletes can be both students and employees. Because students are employees in work-study programs and athletes meet the same criteria, we're confident they will be found to be employees like other students."
NCAA spokesperson Meghan Durham Wright said in a statement that read, in part: "The NCAA is expanding core guaranteed benefits for student-athletes to include health insurance, scholarships, academic counselling, mental health support, and career preparation. The Association is also advancing a proposal to allow schools to deliver far greater direct financial benefits to student-athletes.
"In modernizing college sports, student-athlete leadership from all three divisions agree that college athletes should not be forced into an employment model, which they expect will harm their experiences and needlessly cost countless student-athletes opportunities in women’s sports, Olympic sports, and sports at the HBCU and Division II and Division III levels. We look forward to working with all stakeholders — including Congress — to continue to promote needed changes in the best interest of all student-athletes.”
Gabe Feldman, director of the Tulane Sports Law Program and Tulane University's associate provost for NCAA compliance, said: "Broadly speaking, this is another dent in the amateurism armor of the NCAA. The NCAA has been under attack in other areas of the law. This is a sign that employment cases are just getting started."
The ruling comes amid a variety of issues the NCAA is facing with regard to athletes’ labor status, even as it reached a proposed multi-billion-dollar settlement of three athlete-compensation antitrust cases against the NCAA and the Power Five conferences.
In February, a National Labor Relations Board regional director ordered a union election for Dartmouth College men’s basketball players, writing that “because Dartmouth has the right to control the work performed by” the players and “because the players perform that work in exchange for compensation,” they are school employees under the National Labor Relations Act.
A month later, the Dartmouth players voted to unionize, although the school is pursuing an full NLRB review of the case and could pursue the matter in court.
In addition, the NLRB's Los Angeles office issued a complaint against the NCAA, the Pac-12 Conference and the University of Southern California, alleging they have unlawfully misclassified college athletes as “student-athletes” rather than employees. That case is pending with an administrative law judge.
These types of developments have captured the attention of Congress. Last month, the House Committee on Education and the Workforce approved a bill that would prevent college athletes from being considered employees of a school, conference or governing organization like the NCAA. The 23-16 vote approving the Republican-backed measure offered by Bob Good, R-Va., was along straight party lines. It now can be brought to the House floor.
Other members of Congress have filed several bills pertaining to college sports and circulated discussion drafts of several more. Much of this activity centers around athletes’ activities to make money from their name, image and likeness. Among the drafts is one from Ted Cruz, R-Tex., the ranking member of the Senate Commerce Committee, whose proposal also includes a provision that says college athletes shall not be considered an employee of an institution, conference or collegiate athletic association.
Thursday's ruling was in a case originally was filed in 2019 on behalf of Ralph “Trey” Johnson, a former Villanova football player.
In an amended form, its basic allegation is that players in major-college sports programs are “engaged in athletic work that is unrelated to academics; supervised by full-time, well-paid coaching and training staff; and integral to the billion dollar Big Business of NCAA sports.”
As such, the athletes argue that they are “student employees as much as, and arguably more than, fellow students employed in Work Study programs,” meaning that federal and state labor laws entitled them to be paid at least the minimum wage for the time they spend on sports.
Citing prior rulings in similar cases by the 7th U.S. Circuit Court of Appeals and a federal district court in California, the NCAA countered that athletes cannot be school employees because they are amateurs and they participate in sports without any expectation of payment. It also argued that the U.S. Department of Labor has determined that students’ participation in extracurricular activities, including varsity sports, does not create an employment relationship.
In addition, the NCAA said that even if those two arguments failed, there is a seven-factor legal test that could be used to determine whether college athletes are employees – and three of the seven factors “point decisively toward finding there is no employment relationship, and the rest are at the very least neutral.”
Overall, the NCAA and the schools said: “While student-athletes exert themselves mentally and physically, they do so for their own reasons, and their own benefit. And their schools—which are in the business of education, scholarship, and service — offer athletics as a part of their educational mission, not as an end in itself.”
In Thursday's ruling, Restrepo disagreed and, in doing so, suggested that athletes in sports that generate huge amounts of revenue may have a different relationship with their schools than athletes in other sports do.
"In sum," he wrote, "for the purposes of the FLSA, we will not use a 'frayed tradition' of amateurism … to define the economic reality of athletes’ relationships to their schools." This "highlights the need for an economic realities framework that distinguishes college athletes who 'play' their sports for predominantly recreational or noncommercial reasons from those whose play crosses the legal line into work protected by the FLSA."
This article originally appeared on USA TODAY: Appeals court addresses college athletes employee status in ruling
