Third Circuit Holds that NCAA Athletes Can Be Employees Under the FLSA
07.23.24
On July 11, 2024, a Third Circuit panel held in the seminal decision Johnson v. NCAA that National Collegiate Athletic Association (NCAA) athletes can be employees of universities for purposes of the Fair Labor Standards Act (FLSA) solely by virtue of their participation in interscholastic athletics. As part of its decision, the Third Circuit rejected the “frayed tradition” of amateurism as a defense to shield FLSA claims from college athletes.
This case originated in 2019, when athletes at several NCAA Division I member schools, including Villanova football player Ralph “Trey” Johnson, filed a complaint against the NCAA and various member schools asserting violations of the FLSA and state wage laws. The plaintiffs argued that they were entitled to federal minimum wage compensation for the time they spent representing their schools. The District Court determined that the athletes had sufficiently pleaded facts that, under a multifactor balancing test, might allow them to be classified as employees under the FLSA and denied the defendants’ motion to dismiss.
The Third Circuit affirmed the District Court’s decision but rejected the original balancing test applied by the District Court. The Third Circuit instead applied an “economic realities” test and explained that in determining whether a college athlete is an employee under the FLSA, a court must consider to what extent the individual: performs services for another party; necessarily and primarily for the other party’s benefit; under that party’s control or right of control; and in return for “express” or “implied” compensation or “in kind benefits”.
Additionally, the Third Circuit held that college athletes cannot be barred as a matter of law from asserting FLSA claims by virtue of the tradition of amateurism in college athletics. The Third Circuit described amateurism as a “marketing invention” designed to conjure the nobility of amateurism, assert the precedence of scholarship over athletics and obfuscate the nature of the legal relationship at the heart of a growing commercial enterprise.
Following the United States Supreme Court’s 2021 decision in NCAA v. Alston and the subsequent NCAA name, image and likeness (NIL) rules, Johnson v. NCAA reflects the continued evolution of our courts away from the NCAA’s historical amateurism defense relating to compensation for college athletes. We will continue to monitor decisions applying the “economic realities” framework in the Third Circuit and recommend universities consider the potential impact of certain athletes being categorized as employees under the FLSA in the wake of this decision.
Co-authors Bill Matthews, chair, and Elizabeth Bucilla, associate, are members of the education practice group at Klehr Harrison.