U.S. appeals court leaves open possibility of college athletes being deemed employees

A three-judge federal panel has left open the possibility of college athletes being considered employees of their schools.

The opinion Thursday by the United States Court of Appeals for the Third Circuit is considered a big win for athletes being considered employees under minimum-wage law. The matter goes back to a district court, which must re-consider the issue “for application of an economic realities analysis grounded in common-law agency principles.”

“The issue raised by this interlocutory appeal is not whether the athletes before us are actually owed the protections of the Fair Labor Standards Act (FLSA), but rather, whether college athletes, by nature of their so-called amateur status, are precluded from ever bringing an FLSA claim,” Judge L. Felipe Restrepo wrote in his opinion.

“Our answer to this question is no.”

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 FLSA. That requires covered employees to be paid minimum wage and overtime pay, much like non-athletes at colleges who participate in work-study programs. 

Sam Ehrlich, a sports law professor at Boise State, confirmed the opinion is positive for the plaintiffs.

“Affirmed and remanded, which is a big win for the plaintiff-athletes,” Ehrlich said. “There is a concurrence, but it appears to be on a procedural issue.”

What does Johnson v. NCAA opinion mean?

While the case’s focus is narrow, a determination that college athletes are employees would be monumental.

“It would fundamentally change the collegiate athletics model,” Mit Winter, a college sports attorney at Kennyhertz Perry in Kansas City, told On3. “It would have broad implications for other pending proceedings and for college athletics as a whole.”

A ruling in the plaintiffs’ favor, Winter said, would not automatically lead to the formation of college athlete unions and collective bargaining, all elements the NCAA is hell-bent on preventing. But it would lead to athletes being subject to various employment laws and workplace protections.

“Reading the tea leaves, if the actual employment question comes before this court it will hold that some athletes are employees,” Winter said Thursday. “Likely athletes in revenue-generating sports like football and basketball.”

In response to the ruling, the NCAA said in a statement that its focus remains on the ongoing efforts to “modernize college sports.”

“The NCAA is expanding core guaranteed benefits for student- athletes to include health insurance, scholarships, academic counselling, mental health support and career preparation,” the NCAA said. “The Association is also advancing a proposal to allow schools to deliver far greater direct financial benefits to student-athletes. In modernizing college sports, student-athlete leadership from all three divisions agree that college athletes should not be forced into an employment model, which they expect will harm their experiences and needlessly cost countless student- athletes opportunities in women’s sports, Olympic sports, and sports at the HBCU and Division II and Division III levels. We look forward to working with all stakeholders – including Congress – to continue to promote needed changes in the best interest of all student-athletes.”

The Johnson case is playing out at the same time as other unrelated National Labor Relations Board cases are addressing the athlete employee question.

In March, the Dartmouth men’s basketball team voted to unionize, a move toward opening the door to collective bargaining with the college. The proceedings are now immersed in what could be a lengthy review process – one that could ultimately land in the U.S. Supreme Court.

Additionally, the NLRB trial involving USC, the Pac-12 and the NCAA has concluded its hearings. A decision on whether USC’s football and men’s and women’s basketball players are employees is expected in the coming months. USC, the Pac-12 and NCAA are charged with misclassifying those athletes as student-athletes rather than employees.

How did Johnson case begin?

The Johnson case – originally filed in the U.S. Eastern District Court of Pennsylvania in November 2019 – is among the ongoing proceedings in what many legal experts believe is a slow march toward an employee model for college athletics. That paradigm would dramatically reshape the contours of the enterprise, ushering in collective bargaining and revenue sharing for athletes. 

In February 2023, both sides made oral arguments before the three-judge panel on the U.S. Court of Appeals for the Third Circuit in Philadelphia. It was clear from the judges’ line of pointed questions that they found the NCAA’s arguments pertaining to why athletes are not compensated suspect and unconvincing. In fact, they signaled that they believe at least some athletes are indeed employees of schools and potentially the NCAA.

The judges illuminated the circular nature of the NCAA’s time-honored contention that student-athletes are not professional athletes because they don’t expect compensation from the school. It’s an argument that was surgically unpacked in the Alston case by U.S. Supreme Court Justice Brett Kavanaugh and other attorneys since then.

Athletes are not professionals because they don’t expect compensation. They don’t expect compensation because the NCAA stipulated that they are amateurs who don’t receive compensation from schools.  

High stakes in NCAA v. Johnson case

NCAA attorney Steven Katz said a victory for the athletes would result in a “minefield of unforeseen consequences.” He specified that those adversely affected would be female athletes and raised questions related to Title IX.

Judge Theodore McKee rebutted by noting that vast discrepancies already exist in college sports, referencing the disparate resources and weight room accommodations for men and women basketball players in the NCAA tournaments. 

A point of emphasis for judges was the level of control schools and coaches exert over athletes. The question of control over athletes is a key element not just in this case, but also in the case involving Dartmouth men’s basketball players and the unfair labor practice charges facing USC, the Pac-12 and the NCAA.

In recent years, the 7th Circuit and 9th Circuit courts have ruled that college athletes are not employees in Dawson v. NCAA and Berger v. NCAA. 

But it’s now a brave new world when it comes to challenging the NCAA, especially after the U.S. Supreme Court’s unanimous ruling two years ago in the Alston case and after Justice Kavanaugh effectively encouraged court challenges when he said the NCAA’s business model would be “flatly illegal in almost any other industry in America.”