Potential Deja Vu for Student-Athletes to Become Employees

As of right now, student-athletes in the NCAA are not considered employees. Many argue that should change.

This is a hunch, but there is a chance student-athletes will make the jump to employees in a manner very similar to the one where they became allowed to be compensated for their name, image, and likeness.

How We Got to NIL Rights:

On September 30, 2019, California passed Senate Bill 206 which allowed NCAA athletes to be compensated for their NIL. The bill was to take effect on January 1, 2023. Then numerous other states passed very similar legislation that would allow athletes compensation for their NIL. This put some pressure on the NCAA, which at the time was the only reason athletes were not allowed to make money on their NIL. When these bills would take effect, the NCAA would then violate state law. However, at the time none of them were in effect.

Then on June 21, 2021, the Alston decision by the Supreme Court came out. The case consisted of athletes alleging that the NCAA had violated antitrust laws by restricting non-cash education-related benefits. Judge Wilken of the Ninth Circuit ruled against the NCAA and found that athletes could receive benefits beyond the previously-established full scholarships rule. The NCAA could not prevent athletes from receiving post-eligibility scholarships to complete undergraduate or graduate degrees. Wilken also established that the conferences within the NCAA could set other allowances. However, the NCAA could still limit cash or cash-equivalent awards for academic purposes, so there is no pay-for-play. The Supreme Court affirmed Wilkens decision and found against the NCAA. The Supreme Court however, did not attempt to make any judgment on whether student-athletes should receive further pay. [1]

The Supreme Court did not make the NCAA take away their restriction of NIL rights for college athletes, but they showed that the NCAA was restricting the athletes too much by only allowing a full scholarship. This gave further momentum, along with those states passing NIL laws to student-athletes getting the right to their NIL.

Then on June 30, 2021, just 9 days after the Supreme Court’s ruling, the NCAA approved the new interim NIL policy allowing student-athletes to be compensated for their name, image, and likeness.

Now Further Compensation for Athletes?

If history were to repeat itself, we might see a very similar situation that results in student-athletes being paid part of the revenue generated by their team.

On January 19th, 2023 California lawmaker Chris Holden proposed a bill labeled the College Athlete Protection Act that would require schools with major revenue-generating sports to create a fund that would pay the players a share of their teams’ annual revenue. The formula designed to create fair market value compensation for the athletes would be giving them half of the team's revenue either through grant-in-aid scholarship dollars or in revenue-sharing payments, after deducting what the team spent on scholarships.

For example, if the San Diego State basketball team generates roughly $6 million in revenue and spends roughly $500,000 on scholarships for its players, the school would have to set aside $2.5 million at the end of the year for the players.

Players could receive up to $25,000 in annual payments at the end of their season and any additional money would be held in a trust until they graduate. The bill also creates regulation about a 21-member state-run panel that regulates how schools give resources to protecting and educating their activities. Other areas of emphasis in the bill include: return to play, guaranteed scholarships, and restricting schools from cutting varsity programs if the athletic director makes more than $500,000 a year. [2]

The proposed bill does make it clear that athletes would not be considered employees. [3]

Employment Status:

On February 8, 2022, the National College Players Association (NCPA) filed a charge with the National Labor Relations Board (NLRB) claiming that the NCAA, Pac 12, and USC unlawfully violated the employee rights of college football and basketball players under the National Labor Relations Act. The NCPA complained that for the past 6 months, the employers have interfered with, restrained, and coerced its employees… by repeatedly misclassifying employees as “student-athlete’ non-employees.”

The NLRB has agreed to bring the charge against the NCAA, Pac-12, and USC. If a settlement is not reached the case will be heard by an administrative law judge. That decision would then likely be appealed to a five-person National Labor Relations Board in DC (which currently has a 3-2 Democratic majority), and then that decision could be appealed to a US District Court or even the US Supreme Court. If the NCPA were to win the case, student-athletes would be classified as employees and would be given all the rights of employees and must be paid to play. [4]

Getting to the Deja Vu:

It takes a stretch, but if you look at these scenarios from a broad perspective we see that NIL rights came about because California passed a law, other states passed similar laws, the US judicial system heard a case that somewhat had to do with what the laws revolved around, and it leads to the NCAA giving the states what they wanted.

Now, we have California’s proposed law and a potential case that could be heard by the US judicial system. I do not mean to say that athletes are going to be classified as employees, I just intend to show the similar characteristics that lead to the NCAA’s hand being forced.

Multiple factors will come into play when determining if student-athletes will be paid for their play; whether the California bill passed, other state legislation, any federal legislation, the result of the NCPA lawsuit, and the mindset of the new NCAA President Charlie Baker. The moral of the story is we are getting closer and closer to athletes being paid for the services they are providing for the schools. A big question might be, will the NCAA create its regulation concerning it, or are they once again going to wait for their hand to be forced?

Written by Logan Hughes, a second-year law student at Ohio Northern University. Twitter: @loganchughes23 Linkedin: Logan Hughes.

Sources:

[1] 135 Harv. L. Rev. 471 (2021)

[2] Dan Murphy, “New California bill pushes for college sports revenue sharing”, espn.com, Jan 19, 2023, https://www.espn.com/college-

sports/story/_/id/35483573/new-california-bill-pushes-college-sports-revenu e-sharing.

[3] Id.

[4] Michael McCann, “NCAA, PAC-12 Accused of Athlete Labor Violations in New Filing”, sportico.com, Feb 8, 2022, https://www.sportico.com/leagues/college-sports/2022/ncaa-pac-12-ucla-and-usc-1234660311/.