Introduction
For some, the line between work and play is firmly etched into the fabric of time itself, typically around 5:00 PM (or maybe 4:00 on Fridays). But for others, the line can be fluid—what may appear as “play” to one person can still carry the hallmarks of “work” for another, especially when structured obligations are involved.
The Fair Labor Standards Act (“FLSA” or “Act”) provides protections to many American workers, but its intentionally vague language has forced courts to craft varying, fact-intensive tests to determine the Act’s scope. The Third Circuit in Johnson v. NCAA crafted their own set of factors to determine whether college athletes could ever be covered by the FLSA, while also suggesting the ultimate guidance on the question is an analysis of an athlete’s “economic realities.” While the test is an improvement on most alternatives, it still has the potential to be underinclusive and create a circuit split. The test could also be refined to better capture the essence of college sports.
The FLSA’s Broad Definitions
The Johnson decision is grounded in a long history of FLSA interpretations. Enacted in 1938 to address Depression-era labor conditions,[1] the FLSA defines “employee” and “employer” in broad terms:[2] an “employee” is “any individual employed by an employer,”[3] an “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”[4] Further, to “employ” is “to suffer or permit to work.”[5]
These broad definitions, though circular, align with the Act's “remedial and humanitarian” purpose.[6] The Supreme Court has noted that while the Act’s reach has limits,[7] its definitions cover many working relationships previously excluded from employer-employee consideration.[8] Although “work” is undefined, the Supreme Court in Tenn. Coal v. Muscoda broadly interpreted it based on common understanding, thereby extending FLSA protections to nontraditional labor arrangements.[9]
FLSA Precedent
Courts interpreting the FLSA have sometimes consulted other statutes, like the NLRA and ERISA.[10] In Walling v. Portland Terminal Co., the Supreme Court rejected the use of these other sources[11] and excluded individuals working “solely for personal pleasure” from FLSA coverage.[12] However, qualifying the restriction with the term “solely” limited the applicability of the ruling.[13]
The same year, Rutherford Food Corp. v. McComb established that employment relationships depend on the “circumstances of the whole activity,”[14] considering the “economic realities” rather than legal categories alone.[15] Courts have adopted this holistic approach, though no uniform formulation has been adopted, leaving judges significant discretion in interpreting economic realities.[16] In practice courts have applied varying, nonexclusive factor tests to give meaning to “economic realities.” Despite the Supreme Court’s guidance to avoid “isolated factors,”[17] courts interpreting the Act have historically honed in on facts and circumstances of each relationship that seemed situationally relevant leading to the development of various multi-factor tests based on the unique facts of each case.[18] Importantly, no factor in the economic realities test is ever dispositive,[19] as courts continuously emphasize the need to consider the totality of the circumstances.[20]
The College Sports Context
Before Johnson, courts applied different factors to assess college athletes’ employment status. In Berger v. NCAA, the Seventh Circuit, following Rutherford, used a totality of the circumstances approach and held that college athletes were not employees under the FLSA, emphasizing the tradition of “amateurism” in college sports and the Department of Labor’s inaction on similar cases.[21] Berger relied on the NCAA’s policy defining amateurism, though this reliance might differ post-Alston.[22] The Berger concurrence suggested that scholarship athletes in revenue-generating sports might present a different “economic reality.”[23]
In Dawson v. NCAA, the Ninth Circuit also found a college football player was not an FLSA employee.[24] The District Court, citing Berger, argued that athletes’ participation was “voluntary” and rooted in amateur tradition.[25] On appeal, the Ninth Circuit rejected revenue generation as a decisive factor and reaffirmed that non-payment was a cornerstone of amateur status.[26]
Johnson’s Facts Necessitate a Different Approach
In Johnson v. NCAA, the Eastern District of Pennsylvania allowed student-athletes’ FLSA claims for unpaid wages to proceed, applying the “primary beneficiary” test from Glatt v. Fox Searchlight Pictures Inc.[27] This test assesses whether a worker benefits more from the relationship than the organization, which would negate an employment relationship under the FLSA.[28] The court found a plausible joint employer relationship, choosing not to give the Department of Labor (DOL) field manuals the same weight as the Seventh Circuit did in Berger.[29]
Defendants appealed, disputing the district court's use of the Glatt test for student-athletes under the FLSA.[30] The Third Circuit rejected the Glatt framework, instead adopting an “economic realities” test based on more general, established principles.[31] The opinion noted that the Second Circuit presumed the activities of the intern in Glatt are “work”—a presumption the court argued is not necessarily applicable to college sports, which often involve recreational or personal pursuits.[32] Unlike the internships in Glatt, which provide specific educational benefits, the court reasoned that college sports develop general skills not directly related to educational advancement.[33]
Therefore, the Third Circuit developed its own four-part “economic realities” test, considering if the alleged employee (a) performs services for another, (b) primarily benefits the other party, (c) operates under the other party's control, and (d) receives express or implied compensation.[34] This hybrid approach, influenced by Rutherford Food, balances economic realities with precedent, distinguishing athletes who play for recreation from those whose activities may fall under FLSA protections. The factors, drawn from established employment cases such as Tenn. Coal and Tony & Susan Alamo Foundation v. Secretary of Labor, offer courts a familiar foundation for analysis.
The Third Circuit held that while college athletes are unique, they should not be categorically barred from FLSA protections.[35] Although not specifically tailored to college sports, rooting the test in more generalized, established precedent gives the potential for more consistent results and interpretations going forward, as creating new tests for each unique factual circumstance tends to create more confusion than clarity.
Practical Considerations of the Johnson Test
The Third Circuit’s decision in Johnson diverges from the Berger and Dawson rulings, which denied FLSA employment status to college athletes. While Johnson stopped short of deciding that college athletes are employees, it left that possibility open, creating potential conflict across circuits. This inconsistency poses challenges for the NCAA, as it could have to manage competition between athletes of varying employment statuses. Such a split could lead the U.S. Supreme Court to address the issue, given its significant impact on many college athletes. A lack of nationwide agreement would introduce unequal protections and incentives, affecting college recruiting and potentially encouraging forum shopping based on jurisdictional standards.
Applying the Johnson test universally could resolve this, but other challenges remain. The Third Circuit signaled their belief that the test must weed out those who “play” their sports from those whose sport is “work.”[36] A future factfinder applying factor (b) could come to different conclusions for two teammates with different playing time, even if subject to the same control and team expectations. The “economic reality” for a non-scholarship, walk-on, FBS football player is likely very different from the full-tuition-comped star two spots ahead of them on the depth chart. While their expectations of in-kind benefits might differ, the expectations of performance would not. The economic reality in each situation may be different, but would a new evaluation of a player’s employment status be required mid-season if the walk-on secures the starting job? A system in which a player’s employment status could change over the course of a season while their job requirements remain the same seems inherently flawed.
Female athletes might also face disadvantages if Johnson became the standard. Even if factors like control and benefits remain consistent across genders, applying the “primary beneficiary” analysis may prejudice female athletes. Lower funding and revenue for women’s sports, historically rooted in systemic bias, could skew interpretations of who truly benefits from their participation simply because university revenues might be lower than their male equivalents.[37] Even if a female athlete was granted employee status, there could be issues with other legal requirements necessitating equal pay protections amongst genders.[38] A uniform application of Johnson may yield varied rulings regarding benefits in women’s sports, especially where profitability and fan engagement weigh heavily.
Further, factor (b) likely creates more issues than it would solve. Although it moves away from the “solely” in the employer’s interest language from Walling, judging who receives the “primary” benefit is equally confusing and seems rooted in the same primary beneficiary analysis used by Glatt, which was rejected. If the Johnson test is uniformly applied to questions of college athlete employment status, there will inevitably be issues of uneven impact for athletes on the same teams, at the same schools, and within the same conference. Conferences or Divisions that do not provide athletic scholarships could see their athletes miss out on FLSA protections under factor (c) due to the absence of in-kind benefits. This shift could alter how schools structure their athletic programs and intensify administrative challenges for compliance offices. The increased costs associated with paying athletes would put financial strain on athletic departments, potentially leading to significant restructuring or cuts in sports programs.
A Market-Based Approach Could Enhance the Johnson Test
The Johnson factors could be improved by incorporating additional considerations to bring clarity and consistency to future cases.[39] An enhanced test might include an “open market approach,” estimating an athlete’s demand in a hypothetical open market for their services, thereby providing a measurable value they contribute to a university. This would add repeatability and clarity for judges applying Johnson in the future. For instance, while a collegiate fencer may not generate significant gate receipts, they may provide intangible benefits like prestige or marketability that hold quantifiable economic value. Framing the test in monetary terms offers a more workable standard than the broad notion of “benefits.” If the value produced reaches a significant threshold, this factor would weigh in favor of granting employee status.
However, revenue distinctions alone fail to capture athletes’ labor inputs accurately, even if courts view their efforts as “play.” Therefore, caution is necessary when considering Justice Hamilton’s note from Berger. [40] The financial state of a business unit as a whole should not undermine the labor of its employees; a startup coder is clearly working, even if the company hemorrhages money and the worker is compensated in deferred stock options rather than cash.[41]
The FLSA protects both traditional and historically overlooked employment contexts and does not necessarily extend to all relationships involving control or benefit. This could lead some to argue that the test stretches the FLSA beyond its scope by treating students, primarily academic participants, as workers because of institutional control in certain areas, such as athletics. This could risk opening claims from other student groups (e.g., musicians, debaters) who also serve their universities but don’t traditionally meet the definition of “employee.”
On balance, the Johnson test may be preferable to many alternatives. Rooted in traditional precedent, the factors will likely be familiar to judges handling future cases, promoting more consistent outcomes than a set of highly specific factors tied to college athletics, as seen with the Glatt test. While it may lead to some inconsistencies and could under-include certain athletes, it strikes a balance between established precedent and the unique college athlete-university relationship.
Conclusion
The Third Circuit in Johnson acknowledges that flaws and inequities exist in college sports today. In crafting its test for college athlete FLSA employee claims, they diligently draw from a long line of fact-specific precedent interpreting the vague and broad Act at hand. In doing so, they rightfully address the factual distinctions of college athletes compared to other potentially similar work-like conditions. While the factor test in Johnson is useful and opts for simplicity, going back to more traditional roots, additional factors could be added to more accurately capture the potential work done by college athletes.
Caleb Clifford is the second-place winner of the 2024 Conduct Detrimental Sports Law Writing Competition. He is also a graduate of USC Gould School of Law for the class of 2024.
Sources:
[1] See The Fair Labor Standards Act of 1938, as amended 29 U.S.C. 201, et seq. (The Act’s purpose is “to provide for the establishment of fair labor standards in employments in and affecting interstate commerce, and for other purposes.”); see also Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 578, 62 S. Ct. 1216, (1942) (quoting 81 Cong. Rec. 4983 (1937) (“Accordingly, it gives specific, non-waivable minimum protections to individuals to ensure that each covered employee receives "[a] fair day's pay for a fair day's work.”).
[2] See Johnson v. NCAA, 108 F.4th 163, 176 (3d Cir. 2024) (quoting United States v. Rosenwasser, 323 U.S. 360, 363 n.3, 65 S. Ct. 295 (1945) (“Accordingly, “the term ‘employee’ means any individual employed by an employer,” 29 U.S.C. § 203(e)(1), a definition that has been described as “the broadest . . . that has ever been included in any one act.”).
[3] 29 U.S.C. § 203(e)(1).
[4] Id. at § 203(d).
[5] Id. at § 203(g).
[6] See Tenn. C. v. Muscoda, 321 U.S. 590, 597, 64 S. Ct. 698, 703 (1944); see also Martin v. Selker Bros., 949 F.2d 1286, 1293 (3d Cir. 1991).
[7] See Walling v. Portland Terminal Co., 330 U.S. 148, 152, 67 S. Ct. 639, 641 (1947) (“The definition ‘suffer or permit to work’ was obviously not intended to stamp all persons as employees who, without any express or implied compensation agreement, might work for their own advantage on the premises of another. Otherwise, all students would be employees of the school or college they attended, and as such entitled to receive minimum wages.”).
[8] Id. at 330 U.S. 148, 150 (“comprehensive enough to require its application to many persons and working relationships which, prior to this Act, were not deemed to fall within an employer-employee category.”); see Rosenwasser, 323 U.S. 360 (We have said that the Act included those who are compensated on a piece rate basis); see also Williams v. Jacksonville Terminal Co., 315 U.S. 386, 391. (We have accepted a stipulation that station "redcaps" were railroad employees.).
[9] Tenn. C. 321 U.S. 590, 598 (“we cannot assume that Congress here was referring to work or employment other than as those words are commonly used -- as meaning physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.”).
[10] See Johnson, 108 F.4th 163, 179.
[11] See Walling v. Portland Terminal Co., 330 U.S. 148, 152, 67 S. Ct. 639, 641 (1947) (“But in determining who are “employees” under the Act, common law employee categories or employer-employee classifications under other statutes are not of controlling significance.”); see also N. L. R. B. v. Hearst Publications, 322 U.S. 111, 128-129.
[12] Tony & Susan Alamo Found., 471 U.S. at 295 (quoting Walling, 330 U.S. 148, 152).
[13] Merriam Webster defines “Solely” to mean “to the exclusion of all else.” “Solely.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/solely. Accessed 4 Nov. 2024.
[14] Rutherford Food Corp. v. McComb, 331 U.S. 722, 730, 67 S. Ct. 1473, 1477 (1947).
[15] Id.
[16] See Geoffrey J. Rosenthal, College Play and the FLSA: Why Student-Athletes Should Be Classified as “Employees” Under the Fair Labor Standards Act, 35 Hofstra Lab. & Emp. L.J. 141, 141–42 (2017) (citing Marshall v. Regis Educ. Corp., 666 F.2d 1324, 1328 (10th Cir. 1981); Mendel v. City of Gibraltar, 727 F.3d 565, 569, 571 (6th Cir. 2013)).
[17] Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947).
[18] See Johnson v. NCAA, 108 F.4th 163, 177 (3d Cir. 2024); see also
Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 141-43 (2d Cir. 2008).
[19] See Johnson v. NCAA, 108 F.4th 163, 177 (3d Cir. 2024) (“Ultimately, 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.”).
[20] Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983) (citing Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33, 81 S. Ct. 933, 936, 6 L. Ed. 2d 100 (1961)).
[21] Berger v. NCAA, 843 F.3d 285, 293 (7th Cir. 2016).
[22] Much like the seemingly bizarre interpretations of baseball as local entertainment rather than a business activity in Fed. Baseball Club, Inc. v. Nat'l League of Prof'l Baseball Clubs, 259 U.S. 200, 207, 42 S. Ct. 465, 465 (1922), creating the oft criticized “baseball exemption” to antitrust, courts and judges today show a similar hesitation to be the one to end the traditions of college sports that are so pervasive in the nation.
[23] Berger v. NCAA, 843 F.3d 285, 294 (7th Cir. 2016).
[24] Dawson v. NCAA/PAC-12 Conference, 932 F.3d 905 (9th Cir. 2019).
[25] Dawson v. NCAA, 250 F. Supp. 3d 401, 405 (N.D. Cal. 2017).
[26] Dawson v. NCAA/PAC-12 Conference, 932 F.3d 905, 910 (9th Cir. 2019).
[27] Johnson v. NCAA, 556 F. Supp. 3d 491, 509 (E.D. Pa. 2021).
[28] Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 536-37 (2d Cir. 2015).
[29] Johnson v. NCAA, 556 F. Supp. 3d 491, 506 (E.D. Pa. 2021).
[30] Id.
[31] Id.
[32] Id.
[33] Id.
[34] Johnson v. NCAA, 108 F.4th 163, 177 (3d Cir. 2024).
[35] Id.
[36] Id.
[37] Jeffrey T. Ramsey, Big Men on Campus: Administrative Response to Title IX and the Development of Women 's Sports in the Big Ten Conference, 1972-1982, at 105 (2014) (P.h.D. Dissertation, Marquette University), https://epublications.marquette.edu/cgi/viewcontent.cgi?article=1356&context=dissertations_mu.
[38] EEOC, Equal Pay/Compensation Discrimination, https://www.eeoc.gov/equal-paycompensation-discrimination.
[39] Johnson v. NCAA, 108 F.4th 163, 184 (3d Cir. 2024) (Porter, J. concurring) (“The question presented necessarily invites finding, weighing, and balancing a multitude of as-yet undeveloped facts that will vary widely across many thousands of student-athletes, teams, sports, colleges, and universities.”).
[40] Id. at 182 (citing Berger, 843 F.3d at 294 (Hamilton, J., concurring) (“In sum, for the purposes of the FLSA, we will not use a “frayed tradition” of amateurism with such dubious history to define the economic reality of athletes’ relationships to their schools. Instead, we believe that the amateurism that Judge Hamilton calls into question in his “note of caution” highlights the need for an economic realities framework that distinguishes college athletes who “play” their sports for predominantly recreational or noncommercial reasons from those whose play crosses the legal line into work protected by the FLSA.”).
[41] The coder would have an expectation of compensation that potentially differs from that of a college athlete even though the business is losing money, but the coder’s line of business has not been subject to artificial wage suppression since its inception as is the case in college sports.