United States: Seventh Circuit Agrees: Student-Athletes Are Not Employees Under The FLSA

David Santeusanio is a partner in Holland & Knight's Boston office

Max A. Sternberg is an Associate in Holland & Knight's Chicago office

HIGHLIGHTS:

  • A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit has affirmed a district court's decision that track and field student-athletes at the University of Pennsylvania were not employees of the school under the Fair Labor Standards Act.
  • The court affirmed dismissal of the student-athletes' complaint in its entirety. In its decision, the court relied on the "long tradition of amateurism" in collegiate athletics and the reality that student-athletes play sports voluntarily and "without any real expectation of earning income."
  • The decision follows a series of other legal wins for the NCAA and its member institutions, and is a setback to student-athlete litigants seeking status as employees under the law.

A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit in Gillian Berger, et al. v. National Collegiate Athletic Association, et al, 16-1558 (7th Cir. 2016) has affirmed a district court's decision that track and field student-athletes at the University of Pennsylvania (Penn) were not employees of the school under the Fair Labor Standards Act (FLSA). In its decision, issued on Dec. 5, 2016, the court relied on the "long tradition of amateurism" in collegiate athletics and the reality that student-athletes play sports voluntarily and "without any real expectation of earning income." The decision is the latest win for the National Collegiate Athletic Association (NCAA) and its member institutions, which have consistently argued that student-athletes should not be considered employees.

Background and Decision

Two former members of the Penn women's track and field team filed this putative class action in the U.S. District for the Southern District of Indiana. Gillian Berger, et al, v. National Collegiate Athletic Association, et al, 1:14-cv-01710-WTL-MJD (S.D. Ind.). They sued Penn, the NCAA, and more than 120 NCAA Division I universities and colleges, arguing that they were employees of Penn and therefore should have been paid minimum wage under the FLSA. As athletes at an Ivy League institution, the plaintiffs did not receive athletic scholarships.

All of the defendants moved to dismiss. The district court dismissed the claims on the grounds that the plaintiffs: 1) lacked standing to sue the NCAA and its member schools (other than Penn), and 2) failed to state a claim against Penn because they were not employees of the school under the FLSA. (See Holland & Knight's alert, " Court Rules That Student-Athletes Are Not Employees Under the FLSA," March 1, 2016.) The plaintiffs appealed to the Seventh Circuit.

The Seventh Circuit affirmed the dismissal. The court concluded, as an initial matter, that the plaintiffs lacked standing to sue the NCAA and its member schools because the connection between the student-athletes and the NCAA and its members was "far too tenuous to be considered an employment relationship." As a result, the court concluded the plaintiffs could not have "plausibly alleged any injury traceable to, or redressable by," the NCAA or any member school other than Penn.

The court then proceeded to affirm the district court's dismissal of claims against Penn on the ground that the student-athletes were not employees of Penn under the FLSA. The court rejected the plaintiffs' argument that the court should apply the multifactor test used to determine whether an "intern" is an employee under the FLSA, as set forth by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2015). The court concluded that the Glatt test is inapplicable to student-athletes because it did not take into account the true nature of the relationship between student-athletes and the school.

In concluding student-athletes are not employees, the court endorsed the U.S. Supreme Court's statement in NCAA v. Board of Regents, 468 U.S. 85 (1985) that there exists "a revered tradition of amateurism in college sports." Amateurism, according to the court, "defines the economic reality of the relationship between student athletes and their schools." The court concluded that student-athletes participate in intercollegiate athletics "for reasons wholly unrelated to immediate compensation" and "without any real expectation of earning an income." Accordingly, the court concluded that the student-athletes were not employees of Penn under the FLSA.

The court also relied on decisions in other contexts – including in workers' compensation cases – in which courts concluded that student-athletes were not employees. Additionally, the court relied on guidance in the U.S. Department of Labor's (DOL) Field Operations Handbook setting forth DOL's position that participation in intercollegiate athletics does not create an employer-employee relationship under the FLSA.

The court concluded its analysis by explaining why the student-athletes' activities did not qualify as "work" under the FLSA. The court stated:

"Student participation in collegiate athletics is entirely voluntary. Moreover, the long tradition of amateurism in college sports, by definition, shows that student athletes – like all amateur athletes – participate in their sports for reasons wholly unrelated to immediate compensation. 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. Simply put, student-athletic 'play' is not 'work,' at least as the term is used in the FLSA."

The court affirmed dismissal of the complaint in its entirety.

Judge David F. Hamilton concurred to add a "note of caution." He distinguished track and field student-athletes at Penn – who do not receive athletic scholarships or participate in a so-called "revenue sport" – from Division I men's basketball players and Football Bowl Subdivision players who receive scholarships and play in programs that generate revenue for their schools. Here, non-scholarship athletes in a non-revenue sport pursued a "broad theory," and "the logic of their claim would have included not only any college athlete in any sport and any NCAA division, but also college musicians, actors, journalists, and debaters." Judge Hamilton concluded that this broad theory is "mistaken" and agreed with the dismissal.

What the Ruling Means

Berger is a clear victory for the NCAA and its members, and a setback to student-athlete litigants seeking status as employees under the law. The court expressly endorsed the "long tradition of amateurism" in college sports in support of its conclusion that student-athletes are not employees. The decision provides further support for the NCAA and its member institutions as they continue to defend cases in which student-athletes seek to receive pay.

This victory for the NCAA and its institutions follows a series of other legal wins. Last year, the National Labor Relations Board dismissed a petition by Northwestern University scholarship football players seeking to unionize. (See Holland & Knight's alert, NLRB Decision on Student-Athlete Unionization a Win for Colleges, But Title IX Still in Play," Aug. 26, 2015.) A month after that decision, the U.S. District Court of Appeals for the Ninth Circuit in O'Bannon struck down a district court's order requiring that Division I men's football and basketball programs establish a system to pay student-athletes deferred compensation of up to $5,000 per year. (See Holland & Knight's alert, " Title IX Implications of the O'Bannon Decision," Oct. 27, 2015.) While many of these issues continue to play out in the courts and reform efforts, Berger represents an express endorsement of amateurism – the principle at the core of the legal defenses of the NCAA and its member institutions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.