Experts say there’s ‘no stopping’ employment train with NCAA sports

DALLAS – During the final panel at LEAD1 Association‘s annual spring meeting, two veteran employment and sports lawyers on Tuesday said it’s virtually inevitable student-athletes will be designated employees of their universities, their conferences or the NCAA.

“Is there a way of stopping the employment train? …” said Jon Israel, partner and co-chair of the sports and entertainment group at Foley & Lardner, LLP. “If you look at the external forces, which [SEC Commissioner Greg Sankey] had mentioned last night, there may not be a way to stop that train. You’ve got all these elements coming at you … I don’t know if there’s a path to stopping it other than some legislation. Because I think the external forces out there are going to push you in that direction.”

The other panelist, Sarah Wake, who advises universities on athletic compliance issues in her role as an attorney at McGuireWoods, concurred, saying: “I think there is no stopping the train. I think someone, somewhere is going to opine, officially, that student-athletes are employees. Whether or not that sticks, I think, is to be determined.”

The comments by Wake and Israel during the session titled “What could the future look like? Is Congress the only option?” echoed those made by LEAD1 CEO Tom McMillen, the former U.S. Congressman, to On3 last month. McMillen, whose association advocates on policy issues for all FBS schools, said college sports is on an “inexorable road” toward student-athletes being designated employees.

On its end, the NCAA has been appealing to Congress for a federal NIL bill, at least some antitrust protection and to help prevent student-athletes from being designated as employees of their schools, their conferences or the NCAA.

“I don’t think you’ll find very many student-athletes who want to be employees,” NCAA President Charlie Baker told McMillen during a Q&A session Monday at LEAD1 meetings. “I haven’t found many, and there are a lot of really good reasons for that. Obviously, there’s a lot of traffic in the courts at this point about this issue these days, which is going to limit what I would choose to say about it. But I think student-athletes want to be student-athletes. And it’s up to us to figure out how to make that work for them in a variety of environments and in circumstances that are different.”

Yet, the potential of that scenario unfolding in the coming years, according to an array of stakeholders, looms as the single biggest issue confronting the college sports enterprise. It would open the door to a wide range of landscape-shifting elements, everything from collective bargaining and revenue sharing to athletes being terminated and Title IX implications.

The NCAA hesitant to make a move

Slow-moving battles are ensuing on several related fronts. Among the most consequential: The plaintiffs in Johnson v. NCAA, former Villanova football player Trey Johnson and other Division I athletes, are asking that athletes be deemed employees subject to the Fair Labor Standards Act. The antitrust lawsuit House v. NCAA seeks financial rewards for athletes denied NIL pay dating to 2016 as well as revenue-sharing from television deals. And the National Labor Relations Board is investigating an unfair labor practice complaint involving the rights of USC football and basketball players.

At the same time, industry sources said, the NCAA in general has been hesitant to make any moves toward reshaping the landscape because it could trigger further litigation. As Big East Commissioner Val Ackerman said Monday, “We’re sort of paralyzed now in our inability to pass rules – that was Alston,” referencing the NCAA’s resounding U.S. Supreme Court defeat in 2021. “It called into question the NCAA’s rule-making authority. So that, I think, has been debilitating.”

This “paralyzation” is what Wake said has been most frustrating to her. Wake, who returned to McGuireWoods after spending more than eight years in the higher education sector, the last five of which at Northwestern, said college athletics is “not in a great space because what happened was, after the Alston decision, you saw this complete unraveling of everything. So, people are now afraid to do anything. Because they think no matter what they do, they’re going to get a lawsuit. The NCAA can’t make a move because everything is an antitrust violation.”

‘Solve your problems before somebody brings the hammer’

The message Wake and Israel sent to universities is that they must be prepared if and when student-athletes are deemed employees. It’s imperative, Wake said, for schools to be more proactive in terms of providing what’s fair to student-athletes. She said it’s important to think critically about “what we want to do before we’re told what we have to do.”

She referenced Elsa in the movie “Frozen” when it comes to loosening restraints and control on student-athletes, saying, “Let it go, right? How can we loosen the reins a little bit but still have our values?”

Israel, who previously was assistant general counsel at the NBA, said a world in which student-athletes earn employee status will be a world replete with lawsuits and fighting legislatures for changes. But, he added, universities need to be thinking about what they are doing on the ground, with their student-athletes overall and the programs they are developing specifically, to position themselves as a “facilitator to solve your problems before somebody brings the hammer.”

“If you are open-minded and listening to what their [student-athletes’] needs and wants are, and loosening the restrictions, trying to do something different, involving them in the process is psychologically huge,” Israel said. “We see it in employee management all the time as almost probably the No. 1 way to continue to build goodwill with your personnel, your players. Involve them, and hear what they are saying.”

Title IX applies to athletes as employees

Wake does not believe that an employee model would doom Olympic sports, forcing them to be eliminated or reduced to the club level. Additionally, she noted that designating someone an employee does not mean that they all needed to be treated the same. It warrants creative thinking, she added, such as perhaps rethinking how scholarships are handed out. Instead of awarding scholarships, would schools give athletes money that equates to the amount of a scholarship?

“I don’t like the doomsday of ‘This is going to make all of our Olympic sports go away, [or] all the women’s sports are going to go away,'” Wake said. “That’s when I hear a lot of fear-mongering about Title IX and it sends me into a stratosphere of rage.”

When asked during the panel about Title IX concerns if athletes are deemed employees, Wake said, “I’m 100% positive – like, I’d bet my shoe collection on it, right – Title IX applies to employees. Period. Full stop. End of story … You just can’t eradicate women’s sports and have that like not be a problem.”

But there are other concerns related to Title IX, the federal law that bars discrimination on the basis of sex for any educational program or activity receiving federal financial assistance.

“Do we have to pay the men the same as the women? If you’re a school that receives federal financial assistance …,” Wake said, “then, yeah, you’re going to have to be a little bit careful to treat the men and the women differently under Title IX.”

‘Don’t touch with a 10-foot pole’

Another area that could raise Title IX concerns is if a university establishes too close of an affiliation with a donor-driven NIL collective. Wake said she’s “very concerned” about those relationships that could develop. She said the more entrenched a school gets with a collective, the more problematic it is.

Her advice to colleges: “Stay out of it. Don’t touch it with a 10-foot pole.”

Israel echoed that concern, adding that Title IX issues could become more pronounced the more integrated a school becomes with the collective. 

“Are they getting special benefits to the athletic department?” Israel said. “Are you doing sweetheart sponsorship deals and putting up tents for the collective? The question then becomes is that going to be enough to suggest that you are so affiliated or involved with this collective that it is part of the institution. And, therefore, they’re only supporting and delivering dollars to male student-athletes or the football team or the 10 offensive linemen or whoever they are sponsoring. Have you crossed the line?”

Wake said it is possible to have a revenue-sharing model in college sports without student-athletes being designated employees. But a revenue-sharing model could carry its own set of thorny issues.

Wake believes it would undoubtedly open a “Pandora’s Box. If you start revenue sharing, the Power Five [conferences] will separate,” she said. “And I think that’s what scares people are these big media contracts, and people with the big revenue media contracts will be able to give more. That will give a recruiting advantage. And that’s why I think people are afraid to pull the thread a little bit because they think if you pull the thread a little bit, this will all unravel.”

Israel said restraints placed around a revenue-sharing model will potentially create more issues because “there will still be those external forces that (sports lawyer) Jeff Kessler‘s in the world that will take any inch you give and be prepared to take another 10 feet when it comes to antitrust issues.”

Federal NIL legislation could lead to lawsuits

In the meantime, the NCAA clings to its rapidly eroding amateur model, looking to Congress for a lifeline. Why Congress? It may be out of options. If there is a backup plan, it’s unclear what that looks like. 

“In a perfect world, which clearly this is not, Congress is not the right solution,” Wake said. “Congress is the solution that people are left with because of where we are. I don’t think, if anybody was really being honest, I don’t think people really want Congress to solve the problem. I think their backs are up against a wall. And they’re worried that any decision that they make is going to lead to a lawsuit and people don’t know the way out … I get why Congress might be a solution for a federal NIL law, but you don’t really want Congress to tell you how to treat your student-athletes or what they are, right? You want to decide that for yourselves.”