Appeals Court Ruling Leaves Door Open for College Athlete Employment Status
Last Updated on July 15, 2024
On Thursday, the U.S. Court of Appeals for the Third Circuit upheld the dismissal of the NCAA’s motion to dismiss in Johnson v. NCAA, rejecting the NCAA’s position that college athletes cannot be classified as employees. While the ruling does not go so far as to classify college athletes as employees explicitly, it sets a precedent for further consideration of their employment status in future legal proceedings. The case now returns to U.S. District Judge John Padova, where the district court – under the Third Circuit’s ruling – will apply an alternative test for determining whether college athletes should be classified as employees under the Fair Labor Standards Act.
Johnson v. NCAA was initially filed on November 6, 2019, in the U.S. Eastern District Court of Pennsylvania. The lawsuit was brought forth by Ralph Trey Johnson, a former Villanova football player, along with other current and former athletes. The athletes sued the NCAA and several Division I schools, arguing that they were employees under the FLSA and thus should receive compensation for their time participating in collegiate athletics.
As expected, the lawsuit immediately faced stark opposition from the NCAA and member institutions that insist on maintaining amateurism. The NCAA’s motion to dismiss the case was denied by the district court, which then prompted the NCAA to file an appeal. In February 2023, a three-judge panel in the Third Circuit held a hearing in which attorneys on both sides presented their arguments. During the hearing, the panel emphasized the significant level of control exerted over college athletes compared to their non-athlete classmates, which is a major factor in determining employment status under the FLSA.
Thursday’s ruling by the Third Circuit is significant because it not only paves the way for college athletes to potentially be classified as employees in future proceedings, but it also establishes a different legal test for U.S. District Judge Padova to apply in this case. Previously, Judge Padova applied the “primary beneficiaries” multifactor test, which originated from Glatt v. Fox Searchlight Pictures – a case involving unpaid student interns. The primary beneficiaries test balances several factors focusing on the economic relationship between the intern and employer. However, the Third Circuit found this case distinguishable from Glatt, arguing that internships are part of an educational program, whereas “interscholastic athletics are not part of any academic curriculum.”
Accordingly, the court determined that the appropriate employment test (i.e. an “economic realities analysis”) to be used for college athletes is whether they “(a) perform services for another party, (b) necessarily and primarily for the other party’s benefit, (c) under that party’s control or right of control, and (d) in return for express or implied compensation or in-kind benefits.”
Judge Padova found the NCAA’s arguments unpersuasive in previous proceedings and has advocated for a broad interpretation of the term “employer” under the law. The NCAA and its attorneys appear to be facing an uphill battle recently when persuading judges to rule in their favor on the athlete-employment issue.
If the case were to eventually reach the Supreme Court on appeal, it could mean trouble for the NCAA. While the Supreme Court has not heard a case directly addressing the employment status of college athletes, language from the decision in NCAA v. Alston in 2021 suggests that at least some justices may not find the NCAA’s traditional views on amateurism convincing. Justice Brett Kavanaugh, in a concurring opinion, wrote, “Traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated. The NCAA is not above the law.”
