What The Third Circuit's Looming Decision Regarding Whether College Athletes Can Constitute "Employees" Will Mean For Universities And Employers Of Unpaid Student Interns

• Jurisdiction: United States,Federal
• Law Firm: Sheppard Mullin Richter & Hampton
• Subject Matter: Employment and HR, Consumer Protection, Media, Telecoms, IT, Entertainment, Employee Benefits & Compensation, Education, Sport
• Author: Mr Babak G. Yousefzadeh and Skyler Hicks
• Published date: 23 January 2023

The Third Circuit is expected to soon make a decision as to whether student-athletes can be considered university "employees" under the Fair Labor Standards Act ("FLSA"). But 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 Eastern District of Pennsylvania, Johnson et al. v. National Collegiate Athletic Association et al., 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 (1) student-athletes are amateurs; (2) the Department of Labor already determined that student-athletes do not qualify as employees under the FLSA; and (3) student-athletes do not meet the multifactor test for student employment under Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016). 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."

The Third Circuit is scheduled to begin oral arguments on January 18, 2023.

While the Seventh and Ninth Circuits 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 Supreme Court's decision in NCAA v. Alston, 141 S. Ct. 2141 (2021) rejected the NCAA's argument that all limits on student-athlete compensation are lawful; and soon after, the NCAA adopted an interim policy to allow student-athletes nationwide to profit off their name, image, and likeness. Further, wider recognition of how many hours student-athletes are required to devote to their teams while some universities greatly...