Court ruling calls for test to determine whether athletes are employees

PHILADELPHIA — Student athletes who primarily benefit their schools may qualify as employees entitled to a paycheck under federal wage and hour laws, a U.S. appeals court ruled Thursday in a setback for the NCAA.

In its latest challenge to the NCAA’s long-held notion of amateurism in college sports, the court said a test must be developed to distinguish between students who play collegiate sports for fun and those whose efforts “exceed the threshold of lawful achievement.”

“With professional athletes as the clearest indicators, sports can certainly be compensable work,” wrote U.S. Circuit Judge L. Felipe Restrepo. “Ultimately, the touchstone remains whether the cumulative circumstances of the relationship between the athlete and the university or NCAA reveal an economic reality that is that of an employee-employer.”

In a dissenting opinion, Judge David J. Porter questioned the difficulty of such a process, noting that nearly 200,000 students compete on nearly 6,700 Division I teams. The NCAA had hoped the case would be dismissed, but instead the case will go back to the trial judge for fact-finding.

The ruling follows a 2021 Supreme Court decision that prompted the NCAA to change its rules to allow athletes to profit from their name, image and likeness. In May, the NCAA announced a nearly $2.8 billion revenue-sharing plan that could send millions of dollars directly to athletes next year.

The Division I athletes and former athletes behind the Philadelphia lawsuit are seeking a more modest hourly wage, comparable to that of their colleagues in work-study programs. They allege that colleges are violating fair labor practices by not paying them for the time they spend on their sports, which they say can average 30 or more hours a week.

Attorney Paul McDonald, who represents the plaintiffs, has suggested that athletes can earn $2,000 a month or $10,000 a year by participating in NCAA sports. He said many students need the money for everyday expenses.

“The idea that college athletes can’t be both students and employees is just not true when you have student employees on campus,” McDonald said Thursday. “It’s just unfathomable that athletes wouldn’t be held to the same criteria as employees.”

A district judge had declined to dismiss the case, prompting the NCAA in Indianapolis to ask the appeals court to throw the case out. The three-member panel heard arguments in February.

Defendants include the NCAA and member schools including Duke, Villanova and Oregon. An NCAA spokesman did not immediately respond to messages seeking comment Thursday.

The unanimous Supreme Court decision that created the NIL payments lifted the ban on college compensation beyond full scholarships. Schools that recruit top athletes can now offer tens of thousands of dollars in education-related benefits, such as study abroad programs, computers and graduate scholarships.

“Traditions alone cannot justify the NCAA’s decision to undertake a massive fundraising enterprise on the backs of student-athletes who are not fairly compensated,” Justice Brett Kavanaugh wrote in a 2021 dissent. “The NCAA is not above the law.”

But that case did not answer the question of whether college athletes are employees entitled to direct payment. That is the core question before the U.S. 3rd District Court panel.

Baylor President Linda Livingstone said at last year’s NCAA conference that this model would allow coaches to become their players’ bosses.

“Converting student-athletes into employees will have a far-reaching, staggering and potentially catastrophic impact on college sports as a whole,” said Livingstone, chairman of the NCAA’s board of governors. “We need Congress to affirm the unique relationship that student-athletes have with their universities.”

The relationship is coming under increasing scrutiny.

In 2021, a top lawyer for the National Labor Relations Board said in a memo that student athletes should be treated as school employees.

And players have taken to social media to call for a cut of the hundreds of millions of dollars NCAA schools make from sports, with a campaign launched on the eve of the 2021 NCAA basketball tournament using the hashtag #NotNCAAProperty.

The NCAA compared the athletes at its conference to students who perform unpaid in theater groups, orchestras and other campus activities.

McDonald said these types of campus groups are led by students, while athletes’ time is managed by their coaches, in a manner similar to a job.

“The most policed ​​kids on any campus are the student-athletes,” he said earlier this year.