In the recent years of college sports, change has been the only constant. The explosion of NIL deals, the rise of the transfer portal, conference realignments, and the new 12-team playoff in college football are just four examples that come to mind. Throughout this era of change, the National Collegiate Athletics Association (“NCAA”) has continued to classify college athletes as “amateurs” rather than “employees.” This means they are not entitled to receive wages from their universities for athletic participation, nor are they afforded certain rights and protections provided by federal employment laws. However, recent legal developments have called into question the viability of this classification, opening the door for the so-called “end of amateurism” to be the next domino to fall in the ongoing disruption of college athletics.
College Athlete Employment Status: The Third Circuit’s Johnson v. NCAA Decision
In the federal case of Johnson et al. v. NCAA et al., a class of college athletes sued the NCAA, alleging that they were employees under the Fair Labor Standards Act (“FLSA”), which establishes the right to a minimum wage for most employees.
In July 2024, on an appeal, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) made three consequential rulings:
- The court expressly rejected the “‘frayed tradition’ of amateurism” that the NCAA has historically used as its legal justification for claiming that college athletes do not qualify as employees.
- The court held that, as a matter of law, college athletes could qualify as employees entitled to compensation under the FLSA.
- The court adopted a new test for determining whether college athletes qualify as employees under the FLSA.
The New Employee Test Under The FLSA
Under the new employee test adopted by the Johnson court, a college athlete could be considered an employee under the FLSA if they:
- Perform services for the university and/or NCAA,
- Which are necessarily and primarily for the university and/or NCAA’s benefit,
- Under the university and/or NCAA’s control or right of control, and
- Are in return for express or implied compensation or in-kind benefits.
The Johnson court summarized the critical inquiry under this test as “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.”
The court’s forceful rejection of “amateurism” as the defining classification of college athletics is noteworthy. This has been the foundation upon which the NCAA and, by extension, universities, have built the system of college athletics. While the new test still needs to be applied in court, the path has seemingly been widened for the college athletes in Johnson and, ultimately, college athletes across the country, to be considered employees.
What Happens Next?
After issuing its new legal test, the Third Circuit remanded the case to the U.S. District Court for the Eastern District of Pennsylvania for further proceedings. On November 4, 2024, the plaintiffs in the Johnson case filed an amended complaint in which they claimed that the student-athletes in the case were employees under the Third Circuit’s new test. Unless the case settles or is dismissed, both of which seem unlikely at this stage, the district court will have the opportunity to apply the new test to the plaintiffs and make a determination on their employment status.
Additional Employment Developments: The Dartmouth Men’s Basketball Team and Collective Bargaining
In 2021, the general counsel for the National Labor Relations Board (“NLRB”) took the position in a memorandum that some college athletes should be considered employees under the National Labor Relations Act (“NLRA”), which is a distinct federal law from the FLSA. While the FLSA entitles workers to wages and provides related protections, the NLRA gives employees the right to unionize and engage in collective bargaining activities.
Earlier this year, an NLRB regional director found that men’s basketball players at Dartmouth College are employees under the NLRA due to the significant control exercised by the university over the players, and the work they perform in exchange for forms of compensation, such as equipment and institutional support. The Dartmouth players voted to unionize shortly after.
Since this unionization vote, Dartmouth has declined to bargain with the players. It maintains that the players are not employees and cites its continued legal challenges to the players’ employee status. In response, the union representing the players filed an unfair labor practice charge with the NLRB against Dartmouth in August. They alleged that its decision not to negotiate with the union violates the NLRA. This ruling is still making its way through the NLRB’s appeals process and is pending review before the Board.
Takeaways
Currently, the NCAA continues to classify college athletes as “amateurs” and continues to vigorously argue for that position in court. However, the Third Circuit in the Johnson v. NCAA case has opened a path for college athletes to qualify as employees by rejecting the NCAA’s reliance on “amateurism” and implementing a broad test under the FLSA for determining employee status. Meanwhile, the developments before the NLRB have brought the question of college athlete collective bargaining to the forefront of this changing landscape.
With these two distinct but parallel tracks of employment law developments, it seems likely that the U.S. Supreme Court will eventually take up one of these cases. It could provide the final answer to whether college athletes should be considered employees. Congress could also step in and implement national legislation to resolve these questions of amateurism and employee classification in one direction or another.
With the momentum toward reclassifying college athletes increasing, the outcome may be that at least some will be considered employees. If so, a collective bargaining system could be implemented in college athletics, mirroring that of professional sports. For now, the only guarantee is that there will be more changes to come.
Berenzweig Leonard LLP will continue to monitor and provide updates on the legal developments across college sports.
Charles Bonani is an Associate at Berenzweig Leonard who works on a range of legal matters, including employment law and government contracting. You can reach him at cbonani@berenzweiglaw.com or (571) 615-0430.