Today I am feeling whelmed.
That’s because I just read the 65-page opinion in Johnson v. NCAA. The issue before the Third Circuit Court of Appeals was whether college athletes could plausibly be employees under the Fair Labor Standards Act (FLSA).
A massive class action had been brought, and the NCAA and other defendants filed a motion to dismiss. The district court denied it, allowing the case to move forward. The NCAA was allowed an immediate appeal, but the Third Circuit has affirmed and allowed the case to proceed.
Here’s why I am whelmed.
I am underwhelmed by the Third Circuit’s legal analysis, which has more faults than a novice tennis player learning to serve. I am overwhelmed by the massive unintended consequences that would flow from an eventual finding that college athletes are, in fact, employees.
Overwhelmed plus underwhelmed must equal whelmed, right?
The word overwhelmed comes from the Middle English whelmen, which meant “to overturn.” For speakers of Modern English, that’s nothing more than a fun fact, though, because we’d have a really hard time understanding anyone speaking Middle English anyway. Maybe you had to read The Canterbury Tales in school? Cliffnotes, please.
I am underwhelmed by the legal analysis for many reasons.
1. The Third Circuit acknowledges but then disregards the Supreme Court’s instruction in Walling v Portland Terminal that “[a]n individual who ‘without promise or expectation of compensation, but solely for his personal purpose of pleasure, worked in activities carried on by other persons either for their pleasure or profit,’ is outside the sweep of the Act [FLSA].”
2. The Third Circuit acknowledges but the disregards the Department of Labor’s longstanding position and guidance in its Field Operations Handbook, sec. 10b03(e), which says that the activity of college students participating in interscholastic athletics primarily for their own benefit as part of the educational opportunities provided to the students by the school is not ‘work.’”
3. The Third Circuit ignores the long-recognized concept that play is not work. The dictionary definition relied upon by the Supreme Court in the Walling case differentiated “work” from “something undertaken primarily for pleasure, sport, or immediate gratification….”
4. The Third Circuit butchers the well-established Economic Realities Test, which is the standard for determining employee status under the FLSA. The Third Circuit instead advocates for applying the common law test of agency, which, according to the Supreme Court, is not the test.
5. The Third Circuit pays little attention to the fact that students who elect to play sports do so with no expectation of payment, making them volunteers. Volunteers are not subject to the FLSA (whether at U. Tenn. or otherwise).
6. The Third Circuit makes up a new four-part test (out of thin air) for determining when “college athletes may be employees”:
We therefore hold that college athletes may be employees under the FLSA when they (a) perform services for another party, (b) “necessarily and primarily for the [other party’s] benefit,” Tenn. Coal, 321 U.S. at 598, (c) under that party’s control or right of control, id., and (d) in return for “express” or “implied” compensation or “in-kind benefits,”
I am overwhelmed by the massive unintended consequences that would flow from a ruling that 500,000 collegiate athletes across 1,100 schools are employees of their schools.
If these schools had to pay minimum wage and overtime to all college athletes, that would bust their athletic budgets. Sports that do not pay for themselves (essentially all except major football and some basketball programs) would have to be cut.
Remember when Title IX caused schools to cut unprofitable men’s sports like diving and swimming so they could equalize their offerings of men’s and women’s sports? If only football and men’s basketball are profitable, then schools will need to maintain equivalent women’s sports to comply with the mandates of Title IX. That means some women’s sports will survive, at a loss to offset the opportunities given to men in football and basketball, and the other men’s sports will be cut. If we have to pay, then you can’t play.
International students on F-1 visas would have to be cut from their teams, since their visas generally do not allow them to engage in compensable employment. (That’s why international students can’t take NIL money.) Or federal immigration law will need to be changed.
Unless other laws are changed, schools might be required to provide these employees with healthcare benefits, family or medical leave (paid in some states), reimbursement of expenses in some states, unemployment insurance, workers compensation, and a range of other benefits.
If the courts mess this up, which seems very possible, Congress will need to step in and enact a comprehensive set of rules applicable to college athletes.
For now, the immediate impact of this decision is limited. The Third Circuit did not rule that college athletes are employees under the FLSA. They ruled only that it is plausible that circumstances may exist under which college athletes could be employees under the FLSA. Procedurally, all that happened here is that a motion to dismiss was denied.
Next, the parties will fight over class certification, which could cause the case to fall apart, given the massively divergent situations of, say, a D-1 football player at Alabama and a D-3 bowler at Whatsamatta U.
The issue of whether college athletes are employees under federal wage and hour laws, federal labor laws (NLRA), and a myriad of other laws (state and federal) is not going away soon.
My fear, though, is that courts are (1) likely to apply the wrong legal analysis (as the Third Circuit did here, appearing completely lost), (2) likely to misapply laws that were never intended for this situation, and (3) likely to cause a cascade of unintended consequences that will lead to the end of college sports — unless Congress steps in. (Insert joke here.)
Now are you feeling whelmed?
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Who Is My Employee? 