College Athletes May Qualify as Employees, Court Rules in Blow to NCAA

College athletes whose efforts primarily benefit their schools may qualify as employees deserving of pay under federal wage-and-hour laws, a U.S. appeals court ruled Thursday in a setback to the NCAA.

The court, challenging the NCAA’s “amateurism” notion in college sports, suggested developing a test to differentiate between students playing for fun and those whose effort “crosses the legal line into work.”

“Playing sports can certainly constitute compensable work,” U.S. Circuit Judge L. Felipe Restrepo wrote. “The touchstone remains whether the relationship between the athlete and college or NCAA reveals an economic reality that is that of an employee-employer.”

A concurring opinion highlighted the challenge, noting nearly 200,000 students compete on nearly 6,700 Division I teams. The NCAA had hoped to dismiss the case, but it will return to the trial judge for fact-finding.

This ruling follows a 2021 Supreme Court decision that allowed athletes to profit from their name, image, and likeness. In May, the NCAA announced a nearly $2.8 billion revenue-sharing plan that could direct millions of dollars to athletes by next year.

The Division I athletes behind the suit in Philadelphia seek modest hourly wages similar to those earned by work-study students, arguing colleges violate fair labor practices by not paying them for dedicating 30+ hours per week to sports.

Lawyer Paul McDonald, representing the plaintiffs, suggested athletes might make $2,000 per month or $10,000 per year for participating in NCAA sports, stressing many students need the money for everyday expenses.

“This notion that college athletes cannot be both students and employees is not accurate,” McDonald said Thursday. “It’s beyond belief that athletes would not meet the same criteria as employees.”

A district judge had refused to throw out the case, prompting the NCAA to ask the appeals court to stop it from going to trial. Defendants include the NCAA and member schools like Duke University, Villanova University, and the University of Oregon.

The NCAA stated it has been expanding benefits for athletes and wants to help schools steer more direct financial benefits to them. However, it noted concerns that the employment model could “harm their experiences and needlessly cost countless student-athletes opportunities in women’s sports, Olympic sports, and sports at the HBCU and Division II and Division III levels.”

The unanimous Supreme Court decision that allowed NIL payments lifted the ban on college compensation beyond full-ride scholarships, enabling schools to offer tens of thousands of dollars in education-related benefits.

“Traditions alone cannot justify the NCAA’s decision to build a massive money-raising enterprise on the backs of student athletes who are not fairly compensated,” Justice Brett Kavanaugh wrote. However, the case did not resolve whether college athletes are employees entitled to direct pay — the key issue before the 3rd U.S. Circuit Court panel.

Baylor University president Linda Livingstone, speaking at the NCAA convention last year, warned that this model would turn coaches into their players’ bosses and have a “catastrophic impact on college sports broadly.”

In 2021, a top lawyer for the National Labor Relations Board said in a memo that college athletes should be treated as school employees. Players have also taken to social media to argue for a share of the NCAA schools’ sports revenue, using the hashtag #NotNCAAProperty.

The NCAA compared athletes to students in theater groups, orchestras, and other campus activities without pay. McDonald countered that those groups are student-led, while athletes are controlled by their coaches in a way that resembles employment.

“The most controlled kids on any campus are the student-athletes,” McDonald said earlier this year.