Are college athletes employees?

For decades, college athletes were shut out and received no compensation under the guidelines of the National Collegiate Athletic Association (NCAA). While schools and conferences did business as usual, generating billions of dollars over the years through broadcasting, ticket sales, and merchandising rights of college sports. Meanwhile, many college athletes spent grueling hours training, playing, and traveling on behalf of their schools and conferences, that they could not currently legally have claimed to work for.

Finally, the tide is turning regarding the potential employment status of our college athletes, most notably due to a landmark Supreme Court ruling (American Athletic Conference et al. v. Alston et al.) and a unique memo from the National Labor Relations Board (NLRB) in 2021, which speaks to statutory protections to certain college players as employees under the National Labor Relations Act.

Recent ground-breaking developments in the federal courts as well as from the NCAA in February better indicate what might be players' employment protections and rights. Additionally, they provide an initial playbook for colleges and universities and their coaching staff to use to avoid egregious penalties.

Employment Matters Reach a New Round in Federal Court

In mid-February, the question of whether Division I college athletes are employees under the Fair Labor Standards Act (FLSA) was debated in the procedural hearing in the U.S. Court of Appeals for the Third Circuit in Philadelphia, Pennsylvania.

The plaintiff in Johnson v. NCAA is Trey Johnson, a former Villanova football defensive back who - along with others - is seeking compensation as a revenue-generating collegiate employee.

Echoing the resolutions from Alston and the NLRB memo, the three-judge panel has indicated that they recognize students as employees - just as they would recognize those who work in a university library or a study lab. The lawyer for the NCAA argued that if student-athletes are also considered employees, it would create a ripple effect that would include, among other things, gender inequities. The court didn't seem persuaded or frankly interested in anything the NCAA lawyer presented.

The Johnson case is one of many where current and former college players want to gain the right to wages and proper overtime pay. This procedural hearing, however, will ultimately address whether a prior federal district court correctly denied the NCAA's motion to dismiss in 2020. Either way - the result will send both parties back to the courtroom of Pennsylvania Federal District Court Judge John Padova for either pretrial discovery (a "win" for plaintiffs) or a new case (more in favor of the NCAA).

Given the tone and questioning from the three-judge panel, it seems more likely that our college players will gain significant legal ground. While change may be years coming, if pretrial discovery leads to an actual trial, it could be the game-changer that signals an era where the NCAA and universities will be joint employers for our college athletes.

Effective or Not, Learn from NIL Enforcements

Recognizing athletes as employees is a concept entangled with the ability to be properly and fairly compensated for name, image, and likeness (NIL) rights. NIL was and is a hot topic in the aforementioned federal case. According to The New York Times, the lawyer for Johnson, Michael Willemin of Wigdor LLP, addressed the elephant in the room that NIL is used to recruit athletes - something the NCAA will have to lean into if it wants to be able to gnash any teeth. Willemin said it is "not reasonable" to believe colleges are not involved with NIL.

That statement seemed to have resonated and was addressed on Feb. 24, 2023 when the NCAA made a highly publicized NIL ruling against two of the most popular current female college athletes and top NIL earners, twin sisters Haley and Hanna Cavinder. Forbes reported that the Cavinders have more than 4 million followers on their joint TikTok account and are estimated to have earned close to $2 million thanks to NIL endorsements and deals.

The basketball players transferred from Fresno State to the University of Miami in April 2022. At the time, Hanna Cavinder had told Front Office Sports that the reason for the transfer was to "have the best opportunity to get to the March Madness tournament," and not the promise of more lucrative NIL endorsements.

More alleged details have emerged on what may have led up to the transfer. Following an investigation, the NCAA announced penalties against Miami Hurricanes women's basketball regarding "impermissible contact" between booster John Ruiz and the Cavinder twins during their recruitment. Evidence of the meeting emerged when Ruiz posted a picture to social media of him meeting the twins for dinner. Part of the fallout included Hurricanes coach Katie Meyer missing the first three games of the season.

A statement from the NCAA detailed the other penalties:

• One year of probation.

• A $5,000 fine plus 1% of the women's basketball budget.

• A 7% reduction in the number of official visits in women's basketball during the 2022-23 academic year.

• A reduction of nine recruiting-person days in women's basketball during the 2022-23 academic year.

• A three-week prohibition against recruiting communications by women's basketball staff beginning with the open date of the Transfer Portal (from March 13 through April 2, 2023).

• A 10% suspension (three games total) for the head coach, which was served during the first three contests for the 2022-23 season.

Sports and culture journalists like NBA analyst and former Orlando Magic coach Stan Van Gundy rightly called foul on the NCAA for various glaring reasons. For starters, in an industry dominated by males, the NCAA penalized females - who also happen to be among the most prestigious from the NIL-perspective.

"Not at all surprising that the first team to be sanctioned for violations of NIL improprieties is a women's basketball team," Van Gundy tweeted, sarcastically. "Rest assured that no violations have occurred in football or men's basketball. It is women's sports the NCAA has to clean up."

Whether one agrees with the penalties or not, the NCAA found an area where it could enforce rules and make an example of the parties involved, which also included the school and coaching staff.

Outside counsel and personal lawyers should use this instance of gesturing as the first of what will undoubtedly be more penalties doled out to others. The easiest knowledge to jokingly pass on is, for everyone's sake, no stakeholder should be so quick to post every dining experience.

Still in the First Quarter of Employment and NIL Rights

The rulings in federal court and from the NCAA may not yet be "game changers," but they do signal how far the NCAA is willing to go to enforce rules and where they are willing to negotiate.

Players and schools should act very carefully and within the law, which can be a challenge since there are multiple sets of rules to consider and no clear guidance.

Lawyers have an opportunity to demonstrate their reliability in this still-unstable and shaky NIL ground. There is a long history of financial and legal exploitation on the backs of all of our collegiate athletes, and through our actions and honesty, lawyers can show that they have the best interests of the school, and most important, our college players, in mind.