Introduction

As aptly described in the title of John Talty and Armen Keteyian’s 2024 book, college athletics has entered an “era of chaos:”[1]

We are living in the Wild West of college sports. Name, Image and Likeness (NIL) endorsements, the transfer portal, collectives, conference realignment, the powerful influence of media companies have all rendered the notion of amateur athletics a quaint relic of the past, replaced by a Brave New World where money and self-interest rule.[2]

Indeed, during the latter half of 2024, the “Wild West” was not just a new host region for Atlantic Coast Conference games. In July, the National Collegiate Athletic Association (NCAA)—already staggering from the House v. NCAA[3] settlement—received a summons for a final shootout by way of Johnson v. NCAA, 108 F.4th 163 (3d Cir. 2024). 

With the notion of “amateurism” in college athletics posted on “WANTED” billboards since the U.S. Supreme Court’s landmark decision in NCAA v. Alston, 594 U.S. 69 (2021) (see, esp., Kavanaugh, J., concurring at 110), the Third Circuit’s interlocutory decision opening the door for collegiate athletes to be considered “employees” for purposes of the Fair Labor Standards Act (FLSA) was unsurprising in terms of the result.

However, the Johnson four-factor test is surprisingly inadequate in accounting for “economic realities” in the Brave New World of college athletics—especially considering the opinion’s own critique of existing multifactor tests. This characterization comes from the authors’ firsthand experience, one of us having played Division I volleyball[4].

The grueling day-to-day life for a Division I athlete now requires up to 22,226 miles of air travel in a single season[5], a figure that has peaked in 2024 but has defined the “services” performed by students for college sports teams for decades. Scholarships, NIL, and the ability to enter the “transfer portal” provide a patchwork of compensation, but no legislative or judicial assessment has captured the truth. College athletes “go pro” the moment they step on campus—a paradigm shift that requires a new sheriff in town. 

Analysis

The FLSA requires employers to pay all employees a specified minimum wage, and overtime of time and one-half for hours worked in excess of forty hours per week. The definitions at 29 U.S.C. § 203(e)(1) (“employee” is an “individual employed by an employer”) and 29 U.S.C. §203(g) (“employ” is “to suffer or permit to work”) are notoriously unhelpful in gray areas, but administrative agencies such as the Department of Labor offer guideposts[6] often cited by courts tasked with weighing the fact-intensive question of whether a given plaintiff qualifies as an “employee” for FLSA purposes. As a result, the decision in a FLSA categorization case will necessarily depend upon a fabric of statute, administrative guidance, case law precedent, and public policy concerns.

Economic Realities and Multifactor Tests

U.S. Supreme Court decisions regarding the “economic realities” evaluation that is outcome-determinative for the FLSA “employee” categorization center on three factors – (1) expectation of compensation, as set forth in Walling v. Portland Terminal, 330 U.S. 148, 152 (1947); (2) power to hire and fire, or alternatively, to be hired and fired – Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33 (1961), and (3) evidence that an arrangement was “conceived or carried out” to evade the law.  Portland Terminal at 153. 

The Johnson court held that an “economic realities” test is required to determine the potential employment status of college athletes, which analysis hinges upon four factors:

1.      Whether the athletes perform services for another party;

2.      Whether the athletes’ services are necessarily and primarily for the other party’s benefit;

3.      Whether the athletes are under the other party’s control or right of control; and

4.      Whether the athletes perform their services in return for express or implied compensation or similar benefits.

Johnson v. NCAA, 108 F.4th 163, 180 (3d Cir. 2024)

As the foregoing illustrates, any court assigned with fact-finding on the question of “employee” under the FLSA has a heavy load, and historically speaking, this burden increased in the NCAA context owing to a century of logical fallacy. This lineage was expressly considered by the Johnson court when it rejected existing tests and creating its own:

In a limited sense, we agree that existing multifactor tests are inadequate when applied to the college athlete… such tests either improperly assume that the alleged employee engages in compensable work or account for factors not relevant to college athletics. Johnson at 182.

Given this statement, and considering the interlocutory nature of the Johnson decision, it will be more fruitful to assess the underlying logic for the test itself rather than applying missing “facts” to each prong. 

The Ghost of Amateurism

The lingering sentiment that the NCAA’s raison d’être is to maintain “a clear line of demarcation between college athletics and professional sports,” as set forth in NCAA v. Board of Regents of University of Oklahoma, 468 U.S. 85, 122 (1984), was fully and finally exhumed by the unanimous Supreme Court in Alston.  594 U.S. 69 (2021)[7]. 

Standing on the shoulders of Alston, and in stark contrast to the glorification of the amateur status of its constituents’ athletes, contemporary thought suggests that the reduction or cancellation of financial aid as dictated by NCAA policy and procedure by those accepting money for playing in an athletic contest is symptomatic of the NCAA’s “fossilized view of college athletics,” and that the NCAA’s misclassification of college athletes as “amateurs” constitutes systematic wage theft[8]. 

Incorporating the historical argument set forth in the referenced briefs, it is possible that the next step is for the U.S. Supreme Court to resolve the forthcoming circuit split on the FLSA issue by holding that the “student-athlete” arrangement was “conceived or carried out” to evade the law.  Portland Terminal, 330 U.S. at 153. 

As the authors know, college athletes are the prime movers for a multi-billion dollar industry. Though they face the risk of physical, mental and emotional injuries that are considered occupational hazards for professional athletes, undergraduates’ efforts to unionize and monetize—though factually and rationally sound—have been categorically denied until the past decade.  This change is long overdue.

Evaluating the Third Circuit’s Performance

As set forth above, the task cut out for the Third Circuit in Johnson—where a group of then-current and former intercollegiate athletes led by Villanova football player Trey Johnson sued their colleges as well as the NCAA for categorization as joint employees of the NCAA and their institutions—included not only the weighty prospect of making an interlocutory call on the certified question, but also to do so in a way that captured the zeitgeist.

Like the narrator in the classic Country & Western tune “El Paso,” the authors find it helpful to imagine the Third Circuit judges on a hill overlooking their goal—i.e., putting an end to college athlete wage theft—but facing obstacles on all sides[9]. The Court’s predecessors—many of whom had the same outcome in mind—died on this hill. For example, the Seventh Circuit found it necessary to cite to precedent regarding involuntary servitude of incarcerated individuals; similarly, the Northern District of California found the Berger logic persuasive.[10] 

The Third Circuit seized upon an alternate route in Johnson. The Third Circuit, unlike its sister courts, deftly describes the FLSA potential “employee” spectrum from involuntary servant to independent contractor, showing that college athletes are neither prisoners nor pillow purchasers.[11] Moreover, they are not merely extracurricular participants.  Berger v. NCAA, (7th Cir. 2016) (Hamilton, J., concurring) (“[a broad theory including] not only any college athlete in any sport and any NCAA division, but also college musicians, actors, journalists, and debaters… is mistaken”).  Paying homage to the Berger concurrence and to Alston, the Johnson court refuses to sing the “same old song” of “amateurism:”

[T[he educational and vocational benefits of college athletics cited by [the NCAA] as alternative forms of remuneration (increased discipline, a stronger work ethic, improved strategic thinking, time management, leadership, and goal setting skills, and a greater ability to work collaboratively) are all exactly the kinds of skills one would typically acquire in a work environment. Johnson at 180.

Here we see the Third Circuit riding off into the sunset. Guns in holsters, the task has been achieved—the NCAA is not above the law.

Epilogue

Attending college in Music City, it is difficult to escape a time-tested lesson: all great country songs are based on “three chords and the truth”.  Put another way—timeless descriptions of the human experience fit universal truths into a familiar structure.

Devotees of the “frayed tradition” of amateurism in college sports played the same chords over and again, but eventually faded from the limelight.

The Third Circuit in Johnson takes the new chord structure and shows how the truth might fit in, somewhere down the line. This limitation is understandable, given the procedural posture, but cries out for NCAA athletes to continue to weigh in on these issues.

The hidden truth is the contemporary reality for many college athletes, who often face competition for their jobs from players currently at rival schools, handle online threats from degenerate gamblers and solicitations for NIL endorsements from unsavory characters, all while taking weekly flights around the country, nursing injuries that sometimes result in – not one, but two – shoulder surgeries, and attempting to string together passing grades in the classroom. 

As described in Ed O’Bannon’s own book, Court Justice, as well as in The Price, the remedy sought by the class of athletes whose NIL rights were infringed upon by the “NCAA” video games required a star turn—which, in this case, O’Bannon was happy to provide after much soul-searching—in order to put a face to the quest[12]. In the unionization battle, this “face” was Kain Colter, who testified in front of the National Labor Relations Board about the August training schedules (waking up at 8 am and finishing practice at 10 pm) for Northwestern football players[13].

Fast-forward to that fateful season of late summer 2024, when sports lovers worldwide who downloaded EA Sports College Football 25 could rest assured that 11,000 college football players had the chance to opt in for NIL payment[14].  All thanks to O’Bannon, who chose to put himself in the right place at the right time.

The spotlight is on and the stage is set for the next star. Who will it be?

Jonathan Safron, Associate Attorney

Jonathan believes his job is to help put issues his clients face in the rear-view mirror.  His sports law experience includes negotiating settlements during baseball salary arbitration from the player side; building on his experience with the firm’s Construction Service Group, he also advises as to contracting and municipal partnerships for sports facility / mixed use development construction projects. 

Olivia LaPorta, Associate Attorney

As a former Division 1 college athlete, Olivia is known as a both a team player and a tough competitor. These are the traits that help her achieve favorable results for clients.  In addition to advising on NIL contracts, Olivia is a member of the firm’s Transportation & Logistics Service Group. 

Opinions expressed in the foregoing article are our own opinions and do not reflect the views of our employer.  We are not spokespeople for our employer, and our employer does not prevent the legitimate exercise of our right to express personal opinions under the National Labor Relations Act.

Sources:

[1] The Price: What It Takes to Win in College Football’s Era of Chaos (2024).

[2] Available at https://www.amazon.com/Price-Takes-College-Footballs-Chaos/dp/0063345250 (Amazon summary).

[3] House v. NCAA, N.D. Cal. 4:20-cv-03919; settlement of House and related matters approved in principle in May 2024, whereby Judge Claudia Wilken cleared the way for $2.78 billion in retroactive damage payments.

[4] To a lesser extent of applicability, the other author worked as an athletics marketing intern as an undergrad.

[5] Being a College Athlete Now Means Constant Travel and Missed Classes, New York Times, October 30, 2024 (Witz, B.) available at https://www.nytimes.com/2024/10/30/us/college-football-conference-realignment.html

[6] DOL, Wage & Hour Div., Fact Sheet #71, Internship Programs Under the Fair Labor Standards Act (April 2010), available at http://www.dol.gov/whd/regs/compliance/whdfs71.pdf

[7] See also O’Bannon v. NCAA, 802 F.3d 1049, 1063 (9th Cir. 2015) (concluding that the Board of Regents discussion of amateurism was dicta).

[8] Brief of Professor Michael H. LeRoy as Amicus Curaie in Support of Plaintiffs-Appellees, Case 22-1223 [40] p. 3.

[9] “Off to my right I see five mounted cowboys / Off to my left ride a dozen or more” Marty Robbins, “El Paso” (1960)

[10] Dawson v. NCAA, 932 F.3d 905, 909 (9th Cir. 2019) (analyzing Berger v. Nat’l Collegiate Athletic Ass’n, (7th Cir. 2016)

[11] See Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376 (2d Cir. 2015), amended and superseded by 811 F.3d 528 (2d Cir. 2016), which multifactor test regarding interns on the film Black Swan was rejected by the Johnson court, and which opinion describes a highly specific unpaid intern task assigned by director Darren Aronofsky.

[12] Excerpt available at https://www.nytimes.com/athletic/232846/2018/02/09/book-excerpt-in-court-battle-with-ncaa-ed-obannon-took-the-stand-hoping-to-send-a-message/

[13] Links to Daily Northwestern coverage of Northwestern players union legal hearings available at https://dailynorthwestern.com/sports/northwestern-nlrb-union-effort/

[14] Available at https://www.espn.com/college-football/story/_/id/39574788/players-opting-ea-sports-college-football-25-get-600