Judge: NCAA athletes are not employees, so no minimum wage

Student athletes at an NCAA university are not employees. Therefore, they are not entitled to be paid minimum wage under the Fair Labor Standards Act. So says a federal judge in the Southern District of Indiana. Berger v. National Collegiate Athletic Association (02/16/2016). Three plaintiffs are current or past members of the women's track and field team at the University of Pennsylvania. They tried to assert a class action on behalf of all student athletes (men and women, all sports) against Penn, the NCAA, and 122 other NCAA Division I schools.

The plaintiffs argued that their status was governed by a 2010 U.S. Department of Labor "fact sheet" for determining whether certain internships qualify as employment under the FLSA. Two big problems with that argument:

  1. The Intern Fact Sheet is not intended to apply to student athletes. It has to do with students who are out in a traditional employment setting, not in an educational setting.
  2. Courts have refused to apply the test contained in the Intern Fact Sheet even to interns. Courts see the Intern Fact Sheet as being too rigid, and prefer a more flexible approach.

The District Court applied a flexible "economic realities" test, trying to capture the "true nature of the relationship" between the student athletes and the university. Part of this is the "revered tradition of amateurism in college sports." Also, "generations of Penn students have vied for the opportunity to be part of that revered tradition with no thought of any compensation," because it is a benefit to them without any monetary compensation. Finally, the U.S. Department of Labor, Wage and Hour Division, Field Operations Handbook § 10b03(e) says:

"[a]s part of their overall educational program, public or private schools and institutions of higher learning may permit or require students to engage in activities in connection with dramatics, student publications, glee clubs, bands, choirs, debating teams, radio stations, intramural and interscholastic athletics and other similar endeavors. Activities of students in such programs, conducted primarily for the benefit of the participants as part of the educational opportunities provided to the students by the school or institution, are not "work" [under the FLSA] and do not result in an employee-employer relationship between the student and the school or institution. Also, the fact that a student may receive minimal payment for participation in such activities would not necessarily create an employment relationship."

Thus, the court ruled that the student athletes were not "employees" of the University of Pennsylvania.

As for the NCAA and all schools other than Penn, the judge let them off the hook. The plaintiffs alleged that they were employees of Penn, not employees of any of the other defendants, so the plaintiffs lacked standing to sue those other defendants.

Hat tip: Robin Shea at Constangy, Brooks, Smith & Prophete, LLP's Employment & Labor Insider