Introduction

On July 11, 2024, in Johnson v. NCAA, the U.S. Court of Appeals for the Third Circuit waded into the complex and shifting landscape of collegiate student-athlete compensation. The court’s opinion provided guidance on one of the most promising avenues for such compensation: that student-athletes could be classified as employees under the Fair Labor Standards Act (FLSA) and thus be entitled to minimum wage and overtime pay.[1]  In Johnson, Plaintiff Division I athletes asserted claims against the NCAA for alleged failure to pay minimum wage. Defendants moved to dismiss, arguing that “athletes cannot be employees as a matter of law and therefore had failed to state a claim.”[2] While the opinion, which denied the motion to dismiss, steered clear of answering this pivotal classification question, it constructed a multi-factor test to evaluate employee status for student-athletes. Under the test, student-athletes could be classified as employees under the FLSA when they (a) perform services for another party, (b) necessarily and primarily for the other party’s benefit, (c) under that party’s control or right of control, and (d) in return for express or implied compensation or in-kind benefits.[3] 

The Merits of the New Framework

The Third Circuit’s novel test could be further refined, but aptly does away with the presumption undergirding alternative existing tests: that the alleged employee is indeed performing “work.” From the Third Circuit’s perspective, student-athletes are so uniquely positioned that no existing framework was appropriate for determining employee status. Assessing the Glatt test, commonly used in academic contexts to determine employment status for interns, the court found it ill-suited to analyze student-athletes, whose participation in varsity sports is independent of any academic curriculum.[4] Furthermore, the court dismissed the Glatt test because it assumes that those to which it is applied are performing “work,” whereas for student-athletes, such a determination had not yet been made.[5]  Other common tests used to evaluate employee status, such as California’s ABC Test, the Department of Labor’s economic realities test, or the common law agency test, suffer from this same fatal flaw.[6] Thus, the Court’s decision was logical and some iteration of this test, free of the assumptions burdening alternatives, was likely unavoidable. 

Second, the test is helpful because it shifts the focus away from the red herring argument that employment status might be different for revenue vs. non-revenue generating sports, and instead, presents factors that more suitably allow courts to view student-athletes as akin to work-study students. To be clear, “revenue generation” has never been a relevant factor in determining employee status and has been rejected by several courts.[7]

Finally, from an outcome-oriented, pro-athlete perspective, the test is a step forward because under it, many student-athletes will likely be deemed employees. Applying the first and second factors, student-athletes perform their services to the primary benefit of their universities and the NCAA.[8] Student-athletes’ services include providing athletic competition to the student-body, faithful alumni, and other fans across the globe. Because the demands of varsity sports make it more challenging for athletes to be students first, colleges and the NCAA are arguably the primary beneficiaries of this relationship. Furthermore, the marketing and investment in varsity sports are distinctly central to any college’s recruiting efforts, alumni relations, and overall brand. Applying the third factor, student-athletes are subject to the NCAA’s strict bylaws, follow rigid schedules set by coaches that limit their ability to pursue certain classes or extracurriculars, often practice 40 hours per week, and in many cases even complete timesheets.[9] Therefore, they are clearly under the control of the NCAA and colleges. Applying the final factor, many student-athletes participate in their sports in return for express compensation through scholarships. Walk-on student-athletes (along with scholarship student-athletes) also receive implied or in kind-benefits such as meals, travel accommodations, and access to facilities, gear, equipment, dietitians, and medical staff. Under this new framework, Division I student-athletes appear to convincingly satisfy the factors. While a strong starting point, this test must be further developed in subsequent cases for the reasons discussed below.

Sharpening the Third Circuit’s Multifactor Test

The Third Circuit’s use of “and” but nor “or” suggests that all four factors must be satisfied to have a finding of employee status. Interestingly, however, the court immediately proceeded to state that “[u]ltimately, the touchstone remains whether the cumulative circumstances of the relationship between the athlete and college or NCAA reveal an economic reality that is that of an employee employer.”[10] Does this statement suggest that no factor is in fact determinative, but should rather be seen as guideposts used to uncover the reality of the economic relationship at play? Or does the court’s use of “and” signify that each of the four factors must all be definitively met for there to be a finding of employee status?  The court’s intent here is unclear and must be further refined in subsequent cases, as this ambiguity could prompt the NCAA to implement workarounds that deflate the test’s purpose.

A Circumventable Framework?  

The Third Circuit found the Glatt test ill-equipped to address the unique circumstances of student-athletes, whose participation in sports, unlike unpaid interns, is unrelated to academic benefit. But, in an effort to avoid a finding of employee status, might the NCAA circumvent the framework by simply providing academic credit for activities related to their participation in varsity sports? An obvious example would be offering physical education credit per semester of participation,[11] but this universe of academic credit could easily be expanded. Now that student-athletes are free to profit off their name, image, and likeness (NIL), it’s not difficult to imagine a world where in lieu of a lifting session, student-athletes attend a class for credit that could cover pivotal topics such as marketing, social media, branding, financial literacy, or basic contract and negotiation principles.[12] 

If academic credit were to become more integral to a student-athlete’s collegiate experience, would a court determine that student-athletes are now the primary beneficiary of the relationship? With athletic participation now hypothetically tied to academic curriculum, would courts reason they must revert to the Glatt test? This could muddle the situation, because even if student-athletes were to receive some academic credit, the remaining factors of the Third Circuit’s test clearly point in favor of a finding of employee status. Would receiving academic credit negate the salient reality that many Division I scholarship students are still economically dependent on their colleges, who, in conjunction with the NCAA, exercise significant control over these student-athlete’s lives? This again highlights the need to fine-tune the intent behind the new framework, and whether the focus should be on satisfying the factors or the economic reality of the employee-employer relationship more generally.

Walk–Ons and Ivy League Athletes

If the touchstone of the Third Circuit’s analysis is truly that of determining the economic reality between employee and employer, then the potential for employee status of walk-ons or Ivy League athletes feels less persuasive. The Department of Labor states that the goal of its economic realities test is to decide if the worker is economically dependent on the employer for work. For many Division I scholarship athletes, if they were to quit the team and correspondingly have their express compensation (i.e., scholarship) revoked, many students would have no choice but to drop out. While non-scholarship walk-ons and Ivy Leaguers arguably meet the four factors of the test, the principles of control and economic dependency that have historically been at the crux of the employee-employer relationship analysis are arguably lacking here. Colleges do not have the same hold over these non-scholarship students, as their ability to afford college is not inextricably linked to their on-field participation.

Again, refining the Third Circuit’s test will allow courts to better analyze these non-scholarship students. Maybe the answer is that walk-ons are not employees—but these players make up almost half of all Division I athletes.[13]  How might such a finding impact team morale, if, say, scholarship athletes were to receive minimum wage, while their walk-on counterparts (who devote the same amount of time and effort to their sport) did not?[14]

Enter Stage Right: The College Marching Band

As discussed above, under the multifactor test, certain student-athletes may well achieve employee status. While the court’s framework may resolve certain questions surrounding the classification of student-athletes, it simultaneously opens the floodgates for other students participating in comparably demanding collegiate activities. A prime example of this would be students participating in collegiate bands or orchestras. Many of these music departments are run like a sports team. Sure, the efforts of a marching band may not match the physical rigors readily apparent of, let’s say, the college’s Division I women’s basketball team. But to be clear, a student’s 40-yard dash time or max deadlift are not elements of the test.[15]  To illustrate this point, it is worth recapping the new framework in this hypothetical situation.

1)  Do band students perform services for another party? Certainly. “Services” is broadly defined.[16] Band students commit to long hours of practice in an effort to provide spectacular performances for the college, sports teams, and tens of thousands of cheering fans and alumni. This form of “work” can be clearly distinguished from the “play” seen in a college’s student-run music club, that might meet casually after class once per week, does not receive investment, and receives little to no oversight from the university.

2)  Are such services primarily for the other party’s benefit? Arguably yes. Similar to sports, such music programs provide immense benefits to any college or university. The band is used to help with college branding, marketing, and student recruitment. The band is a central component to major collegiate sporting events, where cheery fans and sentimental alumni light up at the sight of an epic halftime performance.[17] While revenue generation isn’t a factor here, it’s worth noting that colleges reap financial benefits through ticket sales for band performances and concerts.[18] It is true that certain students (e.g., music majors) may receive academic credit for their participation, but this is not the case with all band members.

3)  Are band students under that party’s control? Yes. The nation’s elite marching bands arguably have more demanding schedules than less-rigorous Division I sports teams. Some students devote over 25 hours a week to marching band.[19]  Like coaches, band directors have significant control over band members, such as through setting rigid practice schedules during the school week, and dictating when, where, and how the band performs.

4)  Do band students perform services in return for “express” or “implied” compensation?  Yes. Many college band programs provide scholarships to exceptional musicians. Along with express compensation, similar to varsity walk-ons, many band members will also receive implied benefits, such as travel accommodations, meals, and access to facilities, apparel, and instruments.

So, what is a court to do when scholarship-toting students of an elite band claim they are owed minimum wage? Conceivably, these students must be classified as employees too.[20] 

Conclusion

The Third Circuit’s ruling in Johnson should be seen as a win for the Plaintiffs. The Court created a workable framework that will likely result in many Division I student-athletes receiving recognition as employees entitled to the rights afforded under the FLSA. While the implementation of a new framework was a necessary step in this saga of FLSA litigation, the test must be fine-tuned in subsequent cases to more clearly explicate the intent of the framework and consider how the NCAA may artfully circumvent the classification factors.

As courts prepare for the fact-intensive exercise of evaluating the plethora of varied Division I programs across the country, colleges should simultaneously prepare to add student-athletes to their payroll. While much is yet to be settled, this is certainly an opportunistic time for student-athletes. After securing the long overdue right to profit off of their own NIL, many of these student-athletes will likely soon be justly compensated for their labor, too.

Nat Sherrick is the first-prize winner of the 2024 Conduct Detrimental Sports Law Writing Competition. She is a graduate of the Georgetown University Law Center Class of 2023. She can be found on LinkedIn here.

Sources:

[1] Johnson v. Nat’l Collegiate Athletic Ass’n, 108 F.4th 163 (3d Cir. 2024).

[2] Id. at 175.

[3] Id. at 180 (internal citations omitted).

[4] Id. (explaining that, unlike college athletes, unpaid interns “enter[] into the relationship with the expectation of receiving educational or vocational benefits that are not necessarily expected with all forms of employment”) (quoting Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 535–36 (2d Cir. 2016)).

[5] See Id. (“Glatt’s overall utility with respect to college athletes is undercut by its accurate presumption that unpaid interns all perform work for their employers.”).

[6] See e.g., Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 742–52 (1989) (applying the 11-factor common law agency test, in which the central question is whether the hiring party has the right to control “the manner and means by which the product is accomplished”); see also Department of Labor, Fact Sheet 13: Employee or Independent Contractor Classification Under the Fair Labor Standards Act (March 2024) (explaining that under the Department of Labor’s economic realities test, employee status under the FLSA is determined by looking at the economic realities of the worker’s relationship with the employer and if the economic realities show that the worker is economically dependent on the employer); Dynamex Operations W., Inc. v. Superior Court, 416 P.3d 1, 34 (Cal. 2018) (stating that the ABC test is often applied in the gig economy context).

[7] Dawson v. Nat’l Collegiate Athletic Ass’n, 250 F. Supp. 3d 401, 407 (N.D. Cal. 2017), aff’d, 932 F.3d 905 (9th Cir. 2019) (“[T]he premise that revenue generation is determinative of employment status is not supported by the case law.”); Livers v. Nat’l Collegiate Athletic Ass’n, No. CV 17-4271, 2018 WL 2291027, at *15 (E.D. Pa. May 17, 2018) (same). 

[8] As the opinion notes, work is “broadly” interpreted in the FLSA context. See Johnson, 108 F.4th at 178.

[9] Cal. Educ. Code § 67450(c) (finding that Division I student-athletes “generate large revenues for many athletic programs [and] spend approximately 40 hours per week participating in their respective sports”).

[10] Johnson, 108 F.4th at 180.

[11] See Kiah Haslett, Athletes Allowed to Play for Course Credits, The Daily Nebraskan, April 8, 2009 (reporting that student-athletes from the University of Nebraska and other Division I colleges have the option of receiving academic credit for participation in sports). 

[12] Arguably, for the protection and prosperity of student-athletes, such educational programs should already be in place.

[13] According to the NCAA, forty-six percent of Division I athletes are walk-ons. Discover, The Five Most Common College Walk-on Questions (Jul. 10, 2018) https://discover.sportsengineplay.com/recruiting/five-most-common-college-walk-questions.

[14] Although “team spirit” is not a legal factor a court might consider, teams should prepare for the real-world impacts that could stem from the application of this framework, including having a contentious effect on player dynamics. 

[15] To be clear, it is a well established employment law principle that work does not require exertion.  See IBP, Inc. v. Alvarez, 546 U.S. 21, 25 (2005) (“[E]xertion [is] not in fact necessary for an activity to constitute work under the FLSA. . .. [A]n employer, if he chooses, may hire a man to do nothing.”) (internal quotations omitted).

[16] See supra note 7.

[17] See, e.g., Ohio State University Marching Band, The Ohio State University Marching Band Performs their Hollywood Blockbuster Show, YouTube (Oct. 27, 2013) https://www.youtube.com/watch?v=DNe0ZUD19EE; Ohio State News, The Ohio State University Marching Band: Michael Jackson Tribute, YouTube (Feb. 17, 2014) https://www.youtube.com/watch?v=RhVAga3GhNM. 

[18] E.g., The Ohio State University Marching and Athletic Bands, Hometown Concert 2024 https://tbdbitl.osu.edu/events/hometown-concert (last visited Nov. 7, 2024).

[19] J.P. Cumberledge, The Time Usage of College Music Majors, Non-Music Majors, and Marching Band Participants, 7(2) Sage Open (2017).

[20] Arguably, this shouldn’t be too much of a challenge, considering that most colleges already have thousands of work-study students on their payroll. Also, should colleges effectively implement a system for determining and administering student-athlete wages, adding student-musicians to their payroll would be feasible.