NCAA Wins “Employment” Case,  But the Debate About Paying Student-Athletes is Far From Over NCAA Wins “Employment” Case,  But the Debate About Paying Student-Athletes is Far From Over

NCAA Wins “Employment” Case, But the Debate About Paying Student-Athletes is Far From Over

A recent ruling in the NCAA’s favor may have subtly shifted the debate about whether student-athletes should be paid.
On the cusp of “March Madness,” a court in Indianapolis handed the NCAA an important victory on February 16, 2016. The Federal District Court for the Southern District of Indiana dismissed a first of its kind lawsuit against the NCAA and its member institutions (Berger, et al. v. NCAA, et al., 1:14-cv-1710-WTL-MJD). The lawsuit claimed that athletes at NCAA schools are actually “employees” of the schools for purposes of the Fair Labor Standards Act (FLSA), which would entitle them to minimum wages and overtime pay for all of their athletic activities.
The named plaintiffs in the lawsuit were current and former members of the University of Pennsylvania track and field team, but the lawsuit was seeking to certify a collective action under the FLSA, proposing a class of all current and former NCAA Division I student-athletes. Needless to say, if the lawsuit had been successful, it would have had immediate and major implications for student-athletes, the colleges and universities they attend, and the NCAA. As it stands, the case was dismissed in its entirety, so the implications are more subtle, but perhaps just as important to the ongoing debate about paying student-athletes.
The fundamental legal question addressed by the court was whether student-athletes are really “employees” under the FLSA? The proper framework of analysis, according to the court, required looking at the real nature of the relationship between institutions of higher education and student-athletes. The court found that the relationship is fundamentally an “educational experience” for the student-athletes and that the “economic reality” of the relationship has traditionally been founded on concepts of amateurism. Moreover, the US Department of Labor has long taken the position that extra-curricular activities at colleges and universities are simply not considered “work,” as defined by the FLSA. Ultimately, the court dismissed all the claims holding that “the fact that the Plaintiffs participate in an NCAA athletic team at Penn does not make them employees of Penn for FLSA purposes.”
Although the plaintiffs’ claims failed at every level of legal analysis, the court’s ruling clearly left room for the debate about paying student-athletes to continue, and perhaps leaving a subtle clue about some aspects of the future debate. Before addressing the narrow legal issue of whether student-athletes should be considered “employees” under the FLSA, Judge William T. Lawrence made an insightful observation. Judge Lawrence was clear to differentiate between the legal issue and the philosophical one. The court’s ruling on the motion to dismiss was limited to the legal question of employment status of student-athletes under the FLSA. Judge Lawrence went on to state that the court’s order should not be read as expressing any particular view about whether “college athletes in general, or particular groups of college athletes whose teams generate substantial revenue should be compensated in some way.” That issue, according to Judge Lawrence, is not properly resolved by a court in a case like this, but rather is left for a broader “societal debate.”
While separating the ruling in Berger from the ongoing debate, Judge Lawrence nevertheless explained the traditional foundation of that societal debate, as part of the basis for his ruling. Citing a Supreme Court case from 1984, the court stated “that there exists in this country a ‘revered tradition of amateurism in college sports….’” The real nature of the relationship between institutions of higher education and student-athletes is that students want to be part of that revered tradition “with no thought of any compensation.” These facts, the court opined, “cannot be reasonably disputed.” Although it may be accurate to say that current student-athletes do not expect compensation and engage in college sports pursuant to the ideals of amateurism, the more subtle question is whether this traditional foundation will begin to crumble as the debate about paying college athletes advances.
Every few years, the rules about what student-athletes are allowed to receive change a bit. Some athletes receive scholarships, along with room and board, and small gifts and SWAG are approved for some tournament appearances and bowl games. Such exchanges have traditionally been justified as either being provided as part of the educational experience (in the case of scholarships) or as de minimus (in the case of bowl SWAG). But if student-athletes are offered actual compensation in direct exchange for their athletic services, the rationale for the court’s holding in Berger begins to look less stable. It is fair to say that we are still at a point where the tradition of amateurism is revered in this country, though perhaps less and less so all the time. But if student-athletes begin to receive some form of compensation for services rendered, regardless of how small it may be, the foundation of amateurism is far more fragile. The obvious debate has been about the difference between “amateur” and “professional” athletes; the more subtle debate may be about the difference between “students” and “employees.” If institutions begin to compensate athletes, then the “economic reality” relied on in Berger to describe the amateur relationship between student-athletes and their institutions perhaps can be “reasonably disputed.”
Although the dismissal of the Berger employment lawsuit is clearly a victory for the NCAA and its member institutions, it also reveals a potential and subtle shift in the nature of the debate. Time will tell if judges will be able to continue to say that student-athletes simply want to be part of the “revered tradition” of college athletics “with no thought of any compensation.”
Paul Sinclair is a partner in the Labor and Employment Group of Ice Miller LLP. Mr. Sinclair graduated from Brigham Young University, where he also played football. Contact Paul at or 317-236-2176.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

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