For as long as intercollegiate athletics have existed, colleges and universities (and the NCAA) have maintained that college athletes are “student-athletes.” Students first, athletes second. Even with the introduction of athletic scholarships—which provide a scholarship in exchange for athletic performance—college athletes have not been viewed by courts as employees. While there have been dozens of legal challenges to the employment status of “student-athletes,” courts have historically sided with the NCAA and its member schools.  

There are currently three major legal actions that are pending which could classify college athletes as employees of their schools, their conferences, and/or the NCAA. The first is an Unfair Labor Practice charge against USC, the Pac-12, and the NCAA. The charge claims that the parties have violated the National Labor Relations Act (NLRA). If successful in that case, the athletes would have the ability to form a union and collectively bargain with their employer (USC and potentially the Pac-12 and NCAA). The second is a related NLRB unionization effort, where a regional director has recognized Dartmouth men’s basketball players’ right to elect a union.

The third is Johnson v. NCAA, a case that is currently ongoing and considers whether or not college athletes are employees for purposes of the Fair Labor Standards Act (FLSA). The analysis to determine whether or not an individual or group of individuals are “employees” differs between the FLSA and the NLRA. Thus, it is possible that the athletes could prevail in one case but not the other and be considered “employees” for purposes of the FLSA or the NLRA, but not both. In addition to the different tests to determine employment status, the NLRA and FLSA also grant different rights and abilities to employees. 

What is the Fair Labor Standards Act?

The FLSA provides certain rights and protections to qualified employees. Most important amongst the protections are the rights to receive a minimum wage and overtime pay for any hours worked above 40 per week. The FLSA does not provide employees the right to unionize or collectively bargain with their employers like the NLRA does. Moreover, it does not entitle employees to a competitive or fair market rate for their employment. The main protections that are available to employees under the FLSA are simply a minimum wage and overtime pay.

History of the Johnson case

On March 15, 2023, the U.S. Court of Appeals for the Third Circuit heard oral arguments from the athletes and the NCAA on the issue. Previously in the case, the district court denied the NCAA’s motion to dismiss, which led to its appeal to the 3rd Circuit. At this point in the litigation, the court is deciding whether or not the athletes’ case is “plausible.” If their legal arguments were deemed plausible, the case would proceed. If not, the NCAA would win and the case would be dismissed.

July 2024 Update

On July 11, 2024, the 3rd Circuit delivered an opinion in the ongoing Johnson v. NCAA case, considering whether college athletes, by nature of their “amateur status,” are precluded from ever bringing an FLSA claim. The court determined that no, student athletes are not precluded, and provided a new test to determine whether these athletes could be employees under the FLSA.

According to the court, a college athlete may be an employee under the FLSA when: “(a) they 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.’”

As has been more and more common in recent years, the court shot down the NCAA’s attempted argument of amateurism, stating the frayed and dubious history of amateurism no longer holds water to the economic realities of college athletes. Further, the court highlighted the need for an economic realities framework that distinguishes college athletes who play their sports for recreational or noncommercial reasons from those whose play crosses the legal line into work protected by the FLSA. However, the court does note that it is less confident that that students who receive athletic scholarships to participate in revenue generating sports such as men’s basketball and football would be able to make such a claim, but for the purposes of this case it need not be addressed.

Next Steps

The case has been remanded to the district court for further proceedings in compliance with the 3rd Circuit’s opinion. The parties will now conduct discovery to establish the facts, and if there is no material disagreement on the facts, the parties would each likely move for summary judgment. At that point, the district court would decide whether or not the athletes are employees as a matter of law. But the second time around, the question wouldn’t be through the lens of plausibility. Otherwise, the case would be decided on the merits.

Regardless of whether or not the district court finds that the athletes are employees, the case would most likely be appealed to the 3rd Circuit to decide again, with a different standard of review. Notably, if the appellate court finds that the athletes are in fact employees, a circuit split would occur. The 7th and 9th Circuits decided the same issue, in 2016 and 2019 respectively, and both courts found that the athletes were not employees for purposes of the FLSA.

Potential Further Appeals

If the circuit courts have different outcomes on the issue, there is a strong possibility that the Supreme Court would then decide to take the case for further review and resolution of the split decisions. Generally, the Supreme Court will resolve disagreements between the lower courts to promote uniformity of the law. If the 3rd Circuit eventually decides that the athletes are not employees, it is much less likely that the Supreme Court would decide to take the case.

Importantly, much has changed in college athletics since the 7th and 9th Circuit courts decided that college athletes were not employees for purposes of the FLSA. The most important development is that college athletes are now able to receive compensation for use of their name, image, and likeness, and some college athletes have even made millions in NIL deals. Paired with the NCAA’s since-modernized transfer portal rules, college athletes are a far cry from the “amateurs” they were perhaps once-thought to be. It is possible—and perhaps even likely—that the courts deciding this case will give weight to the fact that college athletes can now earn millions of dollars in compensation.

What would happen if the athletes ultimately win?

If the athletes are ultimately successful, they would be statutory employees of their universities (and/or their conferences and the NCAA) for purposes of the FLSA and would be entitled to earn the minimum wage plus overtime pay. The deciding courts would have to determine the appropriate scope of the ruling. It is possible that employment status could be limited to only college athletes playing at a certain level or in certain sports. For example, the decision could be limited to only Division I athletes or only FBS football and men’s and women’s basketball players. Universities would likely need to change the structure of their athletic departments to comply, while also complying with Title IX and antitrust law. Moreover, the Unfair Labor Practice charges currently pending may or may not be resolved before the Johnson case.