Federal Court Says College Athletes Should Be Considered Employees

In yet another step toward the professionalization of college athletics, a U.S. appeals court has ruled that student-athletes may be considered employees under the Fair Labor Standards Act (FLSA).

On July 11, the U.S. Court of Appeals for the 3rd Circuit, in Philadelphia, offered a unanimous opinion in favor of the plaintiffs in a suit arguing that athletes should be compensated as employees and earn a fair wage.

Naturally, the NCAA isn’t happy about the decision.

Filed in 2019, the case, Johnson v. NCAA, named for former Villanova football player Trey Johnson, involves a slew of Division I student-athletes who claim they are entitled to back pay and damages because the NCAA and its member institutions have profited at their expense.

Division I universities, plaintiffs argue, violate fair labor practices by failing to pay athletes for their time, which can total up to 30 hours per week or more.

The defendants include the NCAA and member schools such as Duke University, Cornell University, Purdue University, and the University of Oregon.

After a motion by the NCAA to dismiss was denied by a lower court, the NCAA appealed the decision to the 3rd Circuit.

Using the “economic realities” test, a three-judge panel of the court held that “college athletes may be employees under the FLSA when they (a) perform services for another party, (b) ‘necessarily and primarily for the other party’s benefit,’ (c) under that party’s control or right of control, and (d) in return for ‘express’ or ‘implied’ compensation or ‘in-kind benefits.'”

In other words, the long-held definition of amateurism proffered by the NCAA is now under serious scrutiny.

“Do efforts that provide tangible benefits to identifiable institutions deserve compensation?” the court wrote. “In most instances, they do. And yet athletes at our most competitive colleges and universities are told that their ‘amateur’ status renders them ineligible for payment.”

This case will continue, however, because the circuit court’s ruling simply affirms the lower court’s denial of the NCAA’s petition to dismiss. The district court will reconsider the case under the “economic realities” framework.

Should the plaintiffs ultimately prevail, the NCAA and colleges could be ordered to pay millions of dollars in foregone wages, paving the way for permanent employee status among student-athletes.

Meanwhile, the NCAA is involved in a similar case involving the National Labor Relations Board, the Pac-12 conference, and the University of Southern California, where several student-athletes wish to gain employee classification.

The matter of students as employees has gained the attention of Congress as well.

In May, U.S. Rep. Bob Good (R-Va.) introduced H.R. 8534, otherwise known as the “Protecting Student Athletes’ Economic Freedom Act.” The bill seeks to “prohibit a student-athlete from being considered an employee of an institution, a conference, or an association based on participation in certain intercollegiate athletics.”

For its part, the NCAA said in a statement that while it wants to help member institutions direct more financial benefits to athletes, it nonetheless believes employee status could “harm their experiences and needlessly cost countless student-athletes opportunities in women’s sports, Olympic sports, and sports at the HBCU (historically Black colleges and universities) and Division II and Division III levels.”

Recent events suggest this ship has already set sail. Last May’s historic agreement between the NCAA and the Power 5 conferences (Atlantic Coast Conference, Big Ten, Big 12, Pac-12, and Southeastern Conference) paved the way for universities to pay their student-athletes directly.

Whether those payments are afforded to “employees” remains to be seen, but what seems certain is the inexorable march toward the professionalization of big-time college sports.