The National Collegiate Athletic Association (NCAA) and the Pac-12 Conference don't have to pay a college football player minimum wage and overtime premiums under federal or California wage laws. The 9th U.S. Circuit Court of Appeals recently affirmed dismissal of the athlete's lawsuit for failure to state a legal claim.
The player sued the NCAA—a not-for-profit educational organization—and the Pac-12 Conference, arguing that they acted as joint employers by "prescribing the terms and conditions under which student athletes perform services," according to the proposed class action.
The appeals court, however, said that based on the economic realities of the relationship, the football players were not employees under the federal Fair Labor Standards Act (FLSA).
"Within the analytical framework established by the Supreme Court, the NCAA and Pac-12 are regulatory bodies, not employers of student-athletes under the FLSA," the 9th Circuit said, upholding a district court's ruling.
The district court also properly dismissed the player's California claims, the appeals court said, based on the California Legislature's decision to exclude student athletes from receiving workers compensation benefits and state appellate court interpretations of the legislation.
We've rounded up articles and resources from SHRM Online and other trusted media outlets on this topic.
Economic Realities Test
When reviewing the district court's order dismissing the football player's complaint, the 9th Circuit applied the "economic realities" test under the FLSA, which considers (1) the plaintiff's expectation of compensation, (2) the alleged employer's power to hire and fire, and (3) evidence that an arrangement was conceived or carried out to evade the law. Under this analysis, the 9th Circuit found that NCAA regulations providing a limitation on scholarships didn't create any expectation of compensation. Furthermore, the plaintiff didn't show that the NCAA or the Pac-12 had the power to fire or hire him or that NCAA rules were designed to evade wage and hour laws. Additionally, the court said, the revenue generated by college sports doesn't make the relationship between student-athletes and the NCAA an employment relationship.
(JD Supra)
Student Employment Questions Remain
The 9th Circuit didn't decide whether college athletes are the employees of individual schools. In this case, the plaintiff was a student at the University of Southern California (USC). "In this putative class action case, [the plaintiff] does not allege that he was an employee of USC, so the pure question of employment is not before us, and we need not consider whether he had employment status as a football player, nor whether USC was an employer," the appeals court said. "That question is left, if at all, for another day."
(Forbes)
Different Court Sided with Student Athlete
Although several courts have sided with the NCAA in similar lawsuits, the U.S. District Court for the Eastern District of Pennsylvania decided that a former college athlete could proceed with a claim for minimum wage under the FLSA. The athlete sued Villanova University and the NCAA for their failure to pay him a salary while he played on the university's football team. The court said the plaintiff, who received an athletic scholarship, could proceed with his minimum-wage claim.
[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]
The court noted that there is no amateurism exception in the FLSA, and the defendants' "self-serving assertion" that the tradition of amateurism within the NCAA precludes a finding that the plaintiff is covered by the FLSA was unpersuasive. The court ruled that the plaintiff was entitled to continue with the lawsuit, saying that it could not, at an early stage in the proceedings, say that the plaintiff was not an employee.
Misclassification Mistakes Can Be Costly for Employers
Whether an employer has erroneously classified a worker as an unpaid intern, an independent contractor or exempt from overtime pay under the FLSA, failing to properly pay employees minimum wage and overtime premiums can be a costly mistake.
Visit SHRM's resource pages on FLSA Exemption Classification and Independent Contractors.
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