The month of March is synonymous with spring, new beginnings, and St. Patrick’s Day. In the world of sports, it’s synonymous with March Madness: the three-week period where student-athletes from sixty-eight different Universities across the nation compete to be crowned champion of the National Collegiate Athletic Association’s (NCAA) basketball tournament. Last year’s tournament brought the NCAA its highest average viewership in 22 years and business is expected to carry on as usual in a few weeks. Heading into its marquee event, the NCAA won a victory off the court as a result of District Court Judge William T. Lawrence’s recent dismissal of a lawsuit brought by former University of Pennsylvania student-athletes against the NCAA.
The three plaintiffs in the case were former members of the women’s track and field team at the University of Pennsylvania (Penn). Plaintiffs’ complaint alleged that during the time they participated on the Penn team as student-athletes, they were employees under the Fair Labor Standards Act (FLSA). Plaintiffs based their argument on a 2010 Department of Labor (DOL) fact sheet put out by the DOL to help determine whether interns are employees within the Act. Plaintiffs argued that all of the factors which tend to establish an unpaid internship on the fact sheet are glaringly absent in the case of student-athletes, and therefore, their athletic endeavors performed for the financial benefit of their universities were done neither as interns, nor student-athletes, but as employees.
So why does the label matter?
The answer to that is simple. If plaintiffs were employees under the FLSA, they were entitled to be paid at least the minimum wage and compensated at the overtime rate for hours worked over forty in a workweek. Moreover, if the court were to determine that the three lead plaintiffs were employees, then so too were the thousands of other student athletes across the nation from 2012 to the present whom the plaintiffs sought to eventually include in their class action lawsuit. Take a second and calculate the number of athletes in the last four years across the various different NCAA sports multiplied by the unpaid straight-time and overtime wages and you can see why the NCAA was breaking a sweat worse than Dick Vitale before a Duke-North Carolina game.
Per Judge Lawrence, the “FLSA defines ‘employee’ in a circular fashion, as ‘any individual employed by an employer.’ “Employ,’ in turn, is defined by the Act as ‘to suffer or permit to work.’” Because the FLSA’s definitions are of little to no help, Courts routinely examine the “economic realities” of the relationship reviewing several different factors in order to determine whether an individual is an employee under the Act. Even though plaintiffs argued the factors listed on the intern fact sheet established their standing as employees, Judge Lawrence explained “there is not even one set of immutable factors that applies to all interns in all situations, and there is certainly not one test that applies equally to interns and student athletes.” Instead, the Court determined a flexible support considering the totality of the circumstances should be used.
Unfortunately for plaintiffs, the circumstances indicated that they were not employees. Judge Lawrence supported his “finding that student athletes are not employees… [by] the fact that the existence of thousands of unpaid college athletes on college campuses each years is not a secret, and yet the Department of Labor has not taken any action to apply the FLSA to them.”
This decision marks another setback for current and former student athletes’ attempts to gain recognition as employees. Six months ago, the National Labor Relations Board (NLRB) declined jurisdiction over a case brought by Northwestern football players seeking the right to organize and join labor unions. Although the NLRB punted on the substantive question, it effectively closed the door on the case as the NLRB’s decision is not subject to appeal.
The case is Gillian Berger, et al. v. National College Athletic Association, et al. in the United States District Court for the Southern District of Indiana, Case No. 1:14-cv-1710-WTL-MJD.
 The DOL recently addressed the need to apply a economic realities test in order to determine whether a worker is an independent contractor or an employee. We covered it here.