Third Circuit Hears Case on Whether College Athletes May Be Employees

Current and former college athletes are suing the National Collegiate Athletic Association (“NCAA”) over the NCAA’s failure to pay them an hourly wage.  Last week, the Third Circuit heard argument about whether student athletes may be considered employees under the Fair Labor Standards Act.  (“FLSA”). 

The case before the Third Circuit is not unique.  In 2016, college track athletes sued their university, the NCAA, and more than 120 NCAA Division I member schools alleging that student athletes are “employees” within the meaning of the FLSA.  The underlying district court dismissed the case, and  the Seventh Circuit confirmed that “student athletes are not employees under the FLSA.”  Similarly, in 2019, a college football player claimed that he was entitled to minimum wage and overtime pay.  The Ninth Circuit equally upheld the underlying decision,  concluding that student athletes were not employees of the NCAA. 

So what’s different this time around?  In June 2021, the United States Supreme Court opened the door to student-athlete compensation, eliminating the NCAA restriction on student athletes receiving education-related benefits.   Justice Kavanaugh noted in his concurring opinion that the argument “that colleges may decline to pay student athletes because the defining feature of college sports . . . is that the student athletes are not paid is circular and unpersuasive.” 

Unlike the underlying decisions in the Seventh Circuit and the Ninth Circuit, the U.S. District Court for the Eastern District of Pennsylvania, citing the new SCOTUS decision, ruled that student athletes may be considered employees under the FLSA and permitted them to proceed with their claim.

If the Third Circuit allows the student athletes’ lawsuit to go forward, the decision will create a circuit split, making it more likely that the Supreme Court will weigh in.

The NCAA faces pressure not only from the courts, but also from the National Labor Relations Board, which issued a memorandum in September 2021 setting forth that certain student athletes may be employees under the National Labor Relations Act and entitled to collective bargaining. 

At this time, student athletes are not employees under law.  While their future status remains unclear, it is certain that any ruling will have rippling effects on the college sports industry.