Pending NCAA Ruling Could Spell Change For Unpaid Interns

• Jurisdiction: United States,Federal
• Published date: 28 March 2023
• Subject Matter: Employment and HR, Media, Telecoms, IT, Entertainment, Employee Benefits & Compensation, Sport
• Law Firm: Sheppard Mullin Richter & Hampton
• Author: Mr Babak G. Yousefzadeh and Skyler Hicks
• topic: Antitrust and Competition,Civil Rights,Bankruptcy and Insolvency,Contracts,Admiralty,Administrative Law,Banking and Finance Law,Constitutional Law,Family Law,Trademark,Intellectual Property,Insurance Law,Corporate / Commercial,Tax Law,Labor Law,Criminal Law,Copyright law,Energy & Natural Resources,Entertainment Law,Federal,Health Law,Employment Law,Civil Procedure,Real Estate,Upcoming Legislation,Upcoming Regulations,Workers Compensation,Internet, Media and Communications

The U.S. Court of Appeals for the Third Circuit in February held oral arguments in a case that could decide whether student-athletes can be considered university employees under the Fair Labor Standards Act.

Its interpretation of the law might reverberate beyond the confines of college sports and could implicate whether unpaid student interns must also be treated as employees.

In late 2019, Ralph Johnson, a former Villanova University football player, initiated a class action in the U.S. District Court for the Eastern District of Pennsylvania in Johnson v. National Collegiate Athletic Association, asserting that student-athletes in Pennsylvania, New York and Connecticut qualify as university employees under the FLSA, and thus must be compensated for their time spent related to their athletic activities.

In early 2020, the university defendants filed a motion to dismiss on the grounds that:

• Student-athletes are amateurs;
• The U.S. Department of Labor already determined that studentathletes do not qualify as employees under the FLSA and
• Student-athletes do not meet the multifactor threshold for student employment under the Glatt test, which the U.S. Court of Appeals for the Second Circuit established in Glatt v. Fox Searchlight Pictures Inc. in 2016.¹

In 2021, the district court denied the motion to dismiss, finding that the student-athletes plausibly alleged a claim that they are employees of their universities.

In February 2022, the Third Circuit granted the university defendants' petition to appeal that decision to decide the following question:

Whether NCAA Division I student-athletes can be employees of the colleges and universities they attend for purposes of the Fair Labor Standards Act solely by virtue of their participation in interscholastic athletics.

While the U.S. Court of Appeals for the Seventh Circuit and the U.S. Court of Appeals for the Ninth Circuit previously considered and rejected the argument that college students are employees, much has changed in the last two years.

Namely, after numerous states passed laws to permit student-athletes to seek compensation in exchange for use of their name, image and likeness, the U.S. Supreme Court's 2021 decision in NCAA v. Alston rejected the NCAA's argument that all limits on student-athlete compensation are lawful.²

Soon after, the NCAA adopted an interim policy to allow student-athletes nationwide to profit off their name, image and likeness.

Wider recognition of the time student-athletes are required to devote to their teams, while some ' though certainly not all ' universities benefit financially from those efforts, may change how courts interpret who qualifies as an employee under the FLSA and relevant DOL regulations.

In fact, the district court here found that, if the plaintiffs' allegations are proven, then student-athletes would be more akin to...