The U.S. Court of Appeals for the Third Circuit today introduced a new test to determine whether college athletes are considered employees of their schools, entitling them to payment. Some estimates suggest that college athletes generate about $3 billion in revenue each year for their schools, conferences, and the National Collegiate Athletic Association (NCAA). Students, however, are prohibited from receiving wages for their athletic participation.
The question presented to the court was whether college athletes, because of their purported amateur status, are barred from bringing a claim under the Fair Labor Standards Act (FLSA). The court held that they cannot be prohibited from doing so.
The issue sprung from a 2019 complaint brought by athletes at multiple Division I schools alleging violations of the FLSA and state wage laws, arguing that they were entitled to minimum wage compensation. The schools and the NCAA moved to dismiss the complaint under Rule 12(b)(6), asserting that the athletes are not and have never been considered employees because of their “amateur” status. The district court denied the motion and the defendants appealed.
The appellate court, affirming in part but taking issue with the test applied by the district court, vacated and remanded the case. It ruled that the lower court erred in applying the test from Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016), a case that dealt with unpaid interns and the FLSA. The district court, after weighing the seven Glatt factors and considering the “economic reality” of the relationship by reviewing whether the NCAA and the schools or the athletes were the primary beneficiaries of the relationship, found that the athletes had plausibly pleaded that they may be employees.
The appellate court, however, noted that the facts in Glatt were not sufficiently analogous to the facts in play with the college athletes. Interns can expect educational or vocational benefits not necessarily expected from all forms of employment, while the supposed educational and vocational benefits the defendant schools and the NCAA argued as alternative payment to college athletes (increased discipline and work ethic, improved strategic thinking and time management, leadership, goal setting, and working collaboratively) are the same kinds of skills one would usually obtain in a work environment, said the court. Additionally, the court noted that interscholastic athletics are not any part of an academic curriculum the way internship training might be. In particular, the college athlete plaintiffs argued that their athletics actually hinder their education, in part, because college courses often conflict with their athletic obligations, sometimes even preventing them from fulfilling the requirements for certain majors.
The test ultimately outlined by the appellate court holds 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.’” (citations omitted). Continuing, “ultimately, 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.”
Additional Reading
US college athletes may be employees under new test, court rules, Reuters (July 11, 2024)
Johnson v. The National Collegiate Athletic Assoc.
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