While student-athletes continue to prosecute their antitrust challenges to the NCAA, student athletes continue to fight a second front against the NCAA and its member institutions with legal challenges asserting that student athletes are employees and are thus entitled to all the benefits and protections of such status under federal and state laws.
In October 2014, a former collegiate soccer player filed suit against the NCAA in Sackos v. NCAA et al., asserting that student athletes are temporary employees who must be paid minimum wage under the Fair Labor Standards Act (“FLSA”). The lawsuit, now titled Anderson et al. v. NCAA et al., followed on the heels of a National Labor Relations Board Regional Director’s March 26, 2014 decision in Northwestern University, NLRB Case No. 13-RC-121359, finding that Northwestern’s football players are “employees” under the National Labor Relations Act. As we noted in March 2014, the effects of the Northwestern decision, which is still pending before the Board, go beyond unionizing as it could lend support to the very argument asserted in Anderson: that student athletes of both public and private universities are employees under the FLSA and are thus entitled to back wages.
In April 30, 2015, the NCAA moved to dismiss the amended complaint in Anderson on multiple grounds asserting that “[v]irtually every forum to consider the question has concluded that student-athletes are not employees.” While acknowledging the NLRB Regional Director’s decision in Northwestern, the motion to dismiss notes the contradiction between the two cases:
Here, Plaintiffs do not allege that scholarships received by some student-athletes are compensation for their athletic activities; in fact, they explicitly allege the opposite. See Am. Compl., ¶ 10(i); see also 26 U.S.C. §§ 117(a) (“gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization.”); Rev. Rul. 77-263, 1977-2 C.B. 47 (athletic scholarships are not considered taxable income to student-athlete).
On June 11, 2015, the plaintiffs filed their response to the NCAA’s motion distinguishing sports sanctioned and regulated by the NCAA from interscholastic athletics that are student-organized and run. According to the plaintiffs, Department of Labor Fact Sheet #71, which addresses whether interns should be paid the minimum wage and overtime under the FLSA, should govern:
This is a case of first impression, too, applying the criteria set forth in DOL Fact Sheet #71 to the question of student athlete employee status for the first time. None of the dated cases cited by Defendants applies the criteria set forth in DOL Fact Sheet #71 to the question of student athlete employee status, let alone do so against the backdrop of NCAA Bylaws and today’s big business of NCAA regulated sports.
Similar to the allegations in the Northwestern case, the plaintiffs assert that because student-athletes are more strictly supervised and controlled by both the NCAA and university staff and that the NCAA and member institutions profit from NCAA sports, student-athletes should be compensated under the FLSA for the services they provided.
Needless to say, the future of the NCAA’s amateur athletic structure and millions of dollars in potential liability hang in the balance. Making matters more complicated is the very real possibility that the courts and the Board could reach conflicting conclusions, thereby creating legal and operational inconsistences and uncertainties that could take years to resolve and reconcile.