College Athletes as Employees? College Athletes Being Paid.

Introduction

The landscape of college athletics in the United States stands on the brink of a seismic shift. On July 11, 2024, the U.S. Court of Appeals for the Third Circuit ruled in Johnson v. NCAA that could fundamentally alter the relationship between student-athletes and their institutions. This comprehensive article delves into the details of this landmark decision, its legal foundations, and the potentially far-reaching implications for college sports, focusing on how it might affect states with prominent athletic programs like California.

As we navigate through the complexities of this ruling, we’ll explore its historical context, examine the legal arguments at play, and consider the various stakeholders’ perspectives across the collegiate sports landscape. This decision has ignited a debate that could reshape the future of college athletics in America from the courts to the campuses, from athletes to administrators.

1. The Third Circuit’s Groundbreaking Ruling

In a decision that sent shockwaves through the world of college sports, the

The Third Circuit affirmed the dismissal of the NCAA’s motion to dismiss in Johnson v. NCAA. The court’s ruling allows college athletes to be classified as employees under the Fair Labor Standards Act (FLSA) and state laws.

The court emphasized the need for a test to differentiate between students who play college sports recreationally and those whose efforts “cross the legal line into work.” This distinction lies at the heart of the ongoing debate about the nature of college athletics and student-athletes status.

2. The Case at Hand: Johnson v. NCAA

The Johnson v. NCAA case, led by former Villanova football player Ralph “Trey” Johnson, represents athletes from over a dozen Division I schools. The plaintiffs argue that their athletic activities constitute work separate from their studies, and the control exerted over their time and labor qualifies them as employees under applicable legal tests.

This case challenges the NCAA’s long-standing position that college athletes are primarily students, not employees. The plaintiffs contend that the economic reality of their relationship with their schools and the NCAA is that of an employee-employer dynamic.

3. Legal Precedents and the Changing Landscape

The Third Circuit’s ruling in Johnson v. NCAA doesn’t exist in a vacuum. It builds upon and, in some ways, contradicts previous legal decisions. Let’s examine some key precedents:

1. NCAA v. Alston (2021): In this landmark Supreme Court case, the Court unanimously ruled that the NCAA’s restrictions on education-related benefits for student-athletes violated antitrust law. Justice Kavanaugh’s concurring opinion suggested that the NCAA’s other compensation rules might also violate antitrust laws.
2. Berger v. NCAA (7th Circuit, 2016): In this case, the court rejected the claim that student-athletes were employees under the FLSA. The Third Circuit explicitly disagreed with aspects of this ruling.
3. Dawson v. NCAA (9th Circuit, 2019): Similar to Berger, this case also ruled against classifying student-athletes as employees. The Third Circuit’s decision creates a circuit split on this issue.
4. O’Bannon v. NCAA (9th Circuit, 2015): While not directly about employee status, this case challenged the NCAA’s rules prohibiting student-athletes from receiving compensation for the use of their names, images, and likenesses.

The Third Circuit’s ruling acknowledged these precedents but emphasized that the legal landscape has evolved, particularly in light of the Supreme Court’s decision in NCAA v. Alston.

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4. The Economic Realities Test

A crucial aspect of the Third Circuit’s ruling is its instruction to apply an “economic realities” test grounded in common-law agency principles. This test considers whether athletes:

1. Perform services for another party
2. Do so primarily for the college’s benefit
3. Are under the college’s control
4. Receive express or implied compensation or in-kind benefits

This test departs from the “primary beneficiary” test previously applied in similar cases and could significantly impact how courts evaluate the employee status of student-athletes in the future.

5. Potential Financial Implications

The financial repercussions could be substantial if college athletes are deemed employees under the FLSA. They would be entitled to at least minimum wage for their labor and eligible for overtime pay. This could result in the NCAA and colleges being ordered to pay millions of dollars in unpaid wages and force a fundamental restructuring of amateurism rules.

The plaintiffs’ attorney, Paul McDonald, has suggested that athletes might make $2,000 per month or $10,000 per year for participating in NCAA sports. While these figures are speculative, they provide a sense of the potential compensation scale.

6. The NCAA as a Joint Employer

Another significant aspect of the Johnson case is the argument that the NCAA should be considered a joint employer. This classification is based on colleges following workplace rules set and enforced by the NCAA. If accepted, this could make the NCAA responsible for paying athletes if colleges fail, adding another layer of complexity to the situation.

7. Comparing Athletes to Work-Study Students

One compelling argument made by the plaintiffs is the comparison between student-athletes and their peers in work-study programs. They point out that some work-study students are paid for jobs like working at concession stands or ticket gates during games where the athletes are not compensated. This comparison highlights the perceived inequity in the current system.

8. Control and Restrictions on College Athletes

The Third Circuit judges noted the significant control colleges exert over athletes compared to other students. Athletes face more constraints in course selection and significant choices due to their athletic obligations. They also face restrictions on activities like hiring agents, which don’t apply to students pursuing careers in music, drama, or the arts.

This level of control is a key factor in the argument for employee status, as it resembles the kind of oversight typically seen in employer-employee relationships.

9. Potential for Discovery and Public Scrutiny

If the Johnson case proceeds to pretrial discovery, it could lead to unprecedented public scrutiny of college athletics. FLSA discovery tends to be public-facing, potentially requiring college officials, coaches, and staff to share materials like time sheets and practice schedules and answer questions under oath about athlete work.

This level of transparency could have far-reaching implications for how college athletic programs operate and are perceived by the public.

10. Implications for California’s College Athletics

For California, home to numerous high-profile college athletic programs, this ruling could have significant implications:

1. Financial Impact: California universities may need to budget for potential back pay and future wages for athletes.
2. Competitive Landscape: The ruling could affect recruiting dynamics, potentially giving California schools an advantage if they can offer employment benefits before other states.
3. Legal Compliance: California institutions may need to rapidly adjust their policies to comply with employment laws regarding student-athletes.
4. State Legislation: California, known for its progressive stance on athlete rights (e.g., the “Fair Pay to Play Act”), may need to consider new legislation in light of this ruling.

11. The Circuit Split and Potential Supreme Court Intervention

The Third Circuit’s ruling creates a circuit split with the Seventh and Ninth Circuits, which previously rejected claims that college athletes were FLSA employees. This disagreement among circuit courts increases the likelihood that the U.S. Supreme Court may eventually take up the issue.

Given this issue’s nationwide importance and its potential to fundamentally alter the landscape of college athletics, Supreme Court intervention could provide much-needed clarity and uniformity across the country.

12. The Changing Legal Landscape

The Third Circuit emphasized that the legal landscape has evolved since earlier rulings, citing the Supreme Court’s decision in NCAA v. Alston and the National Labor Relations Board’s position that college athletes may be employees under the National Labor Relations Act (NLRA).

This acknowledgment of the changing legal context suggests that courts are increasingly willing to reconsider long-held assumptions about student-athletes’ status.

13. Parallel Developments: The Dartmouth Case and Beyond

The Johnson ruling doesn’t exist in isolation. Other recent developments include:

1. Dartmouth Case: A National Labor Relations Board regional director found Dartmouth College men’s basketball players to be employees under the NLRA, leading to their unionization (though the school is appealing).
2. USC Case: An administrative law judge in Los Angeles is considering whether USC football and men’s and women’s basketball players are employees within the meaning of the NLRA.

These parallel cases demonstrate that student-athlete employment status is being contested on multiple fronts.

14. Looking Ahead: Potential Outcomes and Challenges

As the Johnson case returns to the district court, several potential outcomes and challenges loom:

1. If athletes are deemed employees, it could fundamentally change the nature of college sports.
2. The NCAA and member institutions may face significant financial liabilities.
3. The case could take years to resolve, potentially reaching the Supreme Court fully.
4. Colleges must navigate complex issues, including FERPA obligations, to notify current and former student-athletes about the case.

The resolution of this case could have profound implications for the future of college athletics, potentially reshaping the relationship between athletes, schools, and sports governing bodies.

Frequently Asked Questions (FAQ)

1. Q: What exactly did the Third Circuit rule in Johnson v. NCAA? A: The court ruled that college athletes whose efforts primarily benefit their schools may qualify as employees deserving pay under federal wage-and-hour laws. It also ordered the district court to apply an “economic realities” test to determine employee status.
2. Q: Does this ruling mean all college athletes will now be paid? A: No, the ruling doesn’t automatically make athletes employees. It calls for a test to determine which athletes’ efforts “cross the legal line into work.”
3. Q: How does this ruling differ from the recent NIL (Name, Image, Likeness) changes? A: NIL allows athletes to profit from their brand, while this ruling could lead to direct pay from schools for athletic participation.
4. Q: What’s the NCAA’s stance on this ruling? A: The NCAA has traditionally opposed classifying athletes as employees, arguing it would fundamentally change the nature of college sports.

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1. Q: How might this ruling affect college sports programs financially? A: If implemented, it could significantly impact athletic department budgets, potentially leading to cuts in some programs or increased university costs.
2. Q: Could this ruling affect all college sports equally? A: Likely not. Revenue-generating sports like football and basketball might be more affected than others.
3. Q: What’s the next step in this legal process? A: The case will return to a trial judge for further fact-finding and potentially developing a test to determine employee status.
4. Q: How might this ruling affect college sports in states like California? A: States with prominent college athletic programs, like California, could see significant changes in how they manage and fund their sports programs.
5. Q: Could Congress get involved in this issue? A: Yes, some NCAA officials have called for Congressional intervention to clarify student-athletes status.
6. Q: How does this ruling relate to other recent cases about student-athlete compensation? A: This ruling builds upon recent cases like NCAA v. Alston but potentially classifies athletes as employees rather than just allowing additional education-related benefits.

Conclusion

The Third Circuit’s ruling in Johnson v. NCAA represents a potential watershed moment in the history of college athletics. By allowing student-athletes to be classified as employees, it challenges fundamental assumptions about the nature of college sports and the relationship between athletes and their institutions.

For states like California, with its rich tradition of collegiate athletics and progressive stance on athlete rights, this ruling could accelerate changes already underway. As the case progresses, stakeholders across California’s higher education and athletic landscapes must closely monitor developments and prepare for potentially transformative changes in how college athletics operate.

The coming months and years are likely to see continued legal battles, policy debates, and possibly legislative action as stakeholders grapple with the implications of this landmark ruling. Whether through further court decisions, NCAA policy changes, or Congressional action, the resolution of this issue will likely shape the future of college sports for generations to come.

As we stand at this crossroads, one thing is certain: the world of college athletics is on the brink of potentially seismic change. How institutions, athletes, and governing bodies navigate this shifting landscape will determine the future of a beloved American institution and impact the lives of hundreds of thousands of student-athletes across the nation.

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