USC football wages ruling may not be final word

Last month, a California federal district court granted the defendants' motion to dismiss claims for unpaid wages brought by a former USC football player on the ground that student athletes are not employees.

In Dawson v. National Collegiate Athletic Association, 16-cv-05487-RS (N.D. Ca. April 25, 2017), the plaintiff, Lamar Dawson, sued the NCAA and the PAC-12 Conference for their alleged violations of the federal Fair Labor Standards Act (FLSA) and the California Labor Code, both which require employers to compensate individuals for labor performed.

Dawson argued that the NCAA and PAC-12 jointly employed him when he played college football for USC, and that during that time "he was denied full pay for all hours worked, including overtime pay, and was frequently permitted to work without receiving required minimum wage payments." Dawson's lawsuit also included derivative claims under California's Private Attorneys General Act and California's Unfair Competition Law. Dawson sued on behalf of an "FLSA Class," which consisted of all Division I FBS football players in the United States, and a "California Class," comprised of all student athletes in football programs at NCAA member schools in California.

Dawson argued, among other things, that Division I football players should be regarded as employees because they "earn 'massive revenues' for their schools." He also argued that an NLRB regional director found that football players receiving grant-in-aid scholarships were employees under the provisions of the federal National Labor Relations Act.

The NCAA and PAC-12 moved to dismiss Dawson's claim on the ground that he lacked standing to sue because only employees can suffer injuries resulting from an employer's violation of the FLSA and the California Labor Code. Dawson, they argued, was never their employee.

Therefore, as a preliminary matter, the district court focused on the threshold question: Was Dawson an employee during his tenure as a USC college football player? The district court answered in the negative, joining a majority of courts across the nation on this issue, including the 7th U.S. Circuit Court of Appeals.

The district court elected to dismiss Dawson's claims. In reaching its conclusion, the district court appears to rely on historical jurisprudence ? a philosophy placing heavy weight on how the law in a particular area has been applied traditionally ? as well as the Department of Labor's formal stance on the issue.

For example, the district court relied, in part, on the 7th Circuit's decision in Berger v. National Collegiate Athletic Association, 843 F.3d 285 (7th Cir. 2016), which emphasized that, "the long tradition of amateurism in college sports, by definition, shows that student athletes ? like all amateur athletes ? participate in their sports for reasons wholly unrelated to immediate compensation." In similar vein, the district court also cited to Berger for the proposition that participating in college sports is "entirely voluntary" and that although "student athletes spend a tremendous amount of time playing for their respective schools, they do so ? and have done so for over a hundred years under the NCAA ? without any real expectation of earning an income." The district court further noted that the federal Department of Labor, which agency is charged with enforcing the FLSA, has indicated that "athletes are not employees under the FLSA (citing to Chapter 10 of the FLSA's Field Operations Handbook on that issue).

As for Dawson's argument that student football players should be regarded as employees because they generate a great deal of revenue for their schools, the district court declined to find employment status on this ground alone as doing so would "not [be] supported by the case law." The court also declined to lend any weight to the NLRB regional director's finding that college football players can be deemed employees since such finding was never adopted by the National Labor Relations Board, and the facts of that case were distinguishable.

Finally, the district court noted that both California statutory and decisional law have consistently rejected the notion that student athletes are employees. As an example, the court cited to California Labor Code Section 3352, which excludes student athletes from the definition of "employees" under California's workers' compensation law. The district court also noted that California case law has unequivocally held that student athletes are not employees for purpose of the California Tort Claims Act and the California Fair Employment and Housing Act, citing Townsend v. State of California, 191 Cal. App. 3d 1530, 1537 (1987), and Shepard v. Loyola Marymount Univ., 102 Cal. App. 4th 837, 846 (2002).

Takeaways: Although the Dawson decision has been well-received by colleges and universities in California, they are cautioned to keep their victory celebration under wraps for now. Since the ruling was issued by a federal district court, there is still the very real possibility that the decision will be appealed to the 9th Circuit. As such, a wait-and-see approach for schools falling within that circuit's geographical scope is best.