Court Ruling Declares College Athletes May Qualify as Employees for Pay

In a pivotal ruling against the NCAA, a U.S. appeals court has determined that college athletes whose efforts primarily benefit their respective schools may be classified as employees eligible for payment under federal wage-and-hour laws.

A recent ruling by the Third Circuit Court of Appeals has dealt a significant blow to the National Collegiate Athletic Association (NCAA), opening the door for college athletes to potentially qualify as employees deserving of compensation. The court's decision challenges the NCAA's long-held concept of "amateurism" in college sports.

Central to the court's ruling is the need to establish a test to differentiate between student-athletes who engage in college sports for recreational purposes and those whose contributions extend beyond recreational activities and constitute "work" in a legal sense.

Court Ruling Declares College Athletes May Qualify as Employees for Pay

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

Recognizing the complexities of such a process, one of the judges who concurred with the majority opinion expressed concerns about the challenges of applying a universal test to the vast number of student-athletes across the country.

"Nearly 200,000 students compete on nearly 6,700 Division I teams," the judge remarked.

The NCAA had hoped for a dismissal of the case, but the decision instead mandates a return to the trial judge for fact-finding and further proceedings.

This legal challenge follows a 2021 Supreme Court ruling that compelled the NCAA to modify its regulations, allowing athletes to profit from their name, image, and likeness (NIL). Furthermore, the NCAA recently announced a substantial revenue-sharing plan that could transfer millions of dollars directly to athletes by the following year.

The plaintiffs in the current case, a group of Division I athletes and former athletes from Philadelphia, seek more modest hourly wages comparable to those earned by students participating in work-study programs. They contend that colleges are violating fair labor practices by withholding compensation for the substantial time they dedicate to their sports, averaging 30 or more hours per week.

According to Paul McDonald, the attorney representing the plaintiffs, athletes could potentially earn approximately $2,000 per month or $10,000 per year for their participation in NCAA sports. He emphasized the financial need of many students to cover essential expenses.

"This notion that college athletes cannot be both students and employees is just not accurate when you have student employees on campuses," McDonald asserted. "It's just beyond belief, the idea that the athletes would not meet the same criteria as employees."

The district judge's refusal to dismiss the case prompted the NCAA to request intervention from the appeals court to block it from reaching trial. A three-judge panel presided over oral arguments in February.

The defendants include the NCAA and member institutions such as Duke University, Villanova University, and the University of Oregon. The NCAA has declined to comment on the ruling at this time.

The Supreme Court's landmark NIL decision removed the prohibition on college compensation beyond full-ride scholarships. Universities now have the ability to provide prospective athletes with substantial educational benefits, including study-abroad opportunities, computers, and graduate scholarships.

"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," Justice Brett Kavanaugh noted in a concurring opinion. "The NCAA is not above the law."

However, the previous case left unresolved the question of whether college athletes are entitled to direct payment as employees – the pivotal issue before the 3rd Circuit Court.

Baylor University President Linda Livingston, while addressing the NCAA convention in January, expressed apprehension about the potential consequences of declaring student-athletes as employees, predicting a detrimental impact on college sports and a transformation of coaches into employers of their players.

Despite these concerns, the relationship between college athletes and their universities has come under increasing scrutiny. In 2021, a top official from the National Labor Relations Board argued in a memo that college athletes should be considered school employees.

Athletes have actively advocated on social media for a share of the substantial revenue generated by NCAA schools, including a campaign prior to the 2021 NCAA basketball tournament under the hashtag #NotNCAAProperty.

In an attempt to draw parallels with other campus activities, the NCAA compared student-athletes to individuals involved in theater groups, orchestras, and other unpaid activities.

However, McDonald countered this argument by highlighting the unique level of control exercised over athletes by their coaches, comparable to that found in an employer-employee relationship.

"The most controlled kids on any campus are the student-athletes," he stated earlier this year.

The Associated Press contributed to this report.