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    Seventh Circuit Says Division I College Athletes are Not Entitled to Pay

    Joe Forward

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    Student-Athletes

    Dec. 8, 2016 – The U.S. Court of Appeals for the Seventh Circuit, which covers Wisconsin, has ruled that student-athletes are not employees entitled to a minimum wage under the Fair Labor Standards Act, rejecting claims by former student-athletes.

    Gillian Berger and Taylor Hennig, former track and field athletes at the University of Pennsylvania (Penn), sued Penn, the National Collegiate Athletic Association (NCAA), and more than 120 Division I universities and colleges, arguing for pay as employees.

    They argued that Division I student-athletes are considered “employees” under the Fair Labor Standards Act (FLSA) because sports are activities that constitute “work.” A federal district court in Indiana granted the NCAA’s motion to dismiss.

    In Gillian v. NCAA, No. 16-1558 (Dec. 5, 2016), a three-judge panel for the Seventh Circuit Court of Appeals ruled the plaintiffs did not have standing to sue any school besides Penn and, in any event, they were not “employees” entitled to compensation.

    The panel noted that the FLSA requires employers to pay “employees” a minimum wage of $7.25. The FLSA defines “employee” as “an individual employed by an employer,” an unhelpful and circular definition, according to the panel.

    Nevertheless, the panel agreed that to qualify as an “employee,” an individual must perform “work,” which is not defined in the FLSA. In this case, Berger and Hennig needed to allege facts establishing that they performed “work” for the school.

    The panel declined to apply a multifactor test that some courts have used to determine whether an individual is an employee, instead examining the economic reality of the alleged employment relationship to conclude that student-athletes are not employees.

    The panel noted that the NCAA has created an elaborate system of eligibility rules to maintain a “tradition of amateurism,” recognized by the U.S. Supreme Court.

    “The multifactor test proposed … simply does not take into account this tradition of amateurism or the reality of the student-athlete experience,” wrote Judge Michael Kanne, noting that a majority of courts, in different contexts, have ruled the college athletes are not employees (citing a recent article in the Marquette Sports Law Review).

    “Although two courts reached the opposite conclusion over fifty years ago, they did so, at least in part, because the student athletes in those cases were also separately employed by their universities,” Judge Kanne explained.

    Guidance from the Department of Labor, which the panel found persuasive, also notes that “interscholastic athletics” are “are not work of the kind contemplated by the [FLSA] and do not result in an employer-employee relationship between the student and the school. The panel rejected the argument that “interscholastic sports” means “club sports” run by students and not NCAA-regulated sports that are run by university staff.

    “Although we do not doubt that student athletes spend a tremendous amount of time playing for their respective schools, they do so – and have done so for over a hundred years under the NCAA – without any real expectation of earning an income. [S]tudent-athletic ‘play’ is not work, at least as the term is used in the FLSA,” Kanne wrote.

    Thus, the panel held, as a matter of law, that “student athletes are not employees and are not entitled to a minimum wage under the FLSA.” Based on this holding, the panel noted that plaintiffs could not state a claim for which relief could be granted.

    Concurrence

    Judge David Hamilton wrote a concurring opinion. He agreed that this case should be dismissed but added a note of caution, suggesting a future case could lead to different results.

    He noted that Ivy League schools like Penn do not offer athletic scholarships and the plaintiffs participated in a nonrevenue sport, track and field.

    “In this case, therefore, the economic reality and the sometimes frayed tradition of amateurism both point toward dismissal of these plaintiffs’ claims,” Judge Hamilton wrote.

    “I am less confident, however, that our reasoning should extend to students who receive athletic scholarships to participate in so-called revenue sports like Division I men’s basketball and FBS football. In those sports, economic reality and the tradition of amateurism may not point in the same direction.”

    Hamilton noted those sports involve billions of dollars and “athletic scholarships are limited to the cost of attending school.” He said there may be room for further debate.