The Modern Workplace

As much of the country wound down from Thanksgiving celebrations with friends, families and everything in between last month, football programs around the country were also recuperating from one of the most anticipated weekends of the season – the historic rivalry weekend which occurs just in time for the Thanksgiving tryptophan to wear off. As an added bonus, it also happened to be that time of year for many college programs when the afternoon football game is followed quickly by a basketball game in the evening. It is, for some sports fans, the “most wonderful time of the year” (move over, Andy Williams, Lee Corso is in town).

But this year’s post-Thanksgiving rivalry weekend may have been the last of its kind because the National Collegiate Athletic Association (NCAA) is preparing for its own showdown—but on (or perhaps more appropriately, in) a slightly different court than what we saw on ESPN after Thanksgiving.

On December 15, 2022, the U.S. Court of Appeals for the Third Circuit is slated to hear arguments in Johnson, et al. v. National Collegiate Athletic Association a.k.a., the NCAA, et al.¹, an FLSA collective and Rule 23 Class Action lawsuit on appeal from the United States District Court for the Eastern District of Pennsylvania, involving the potential classification of student-athletes as employees under the Fair Labor Standards Act (FLSA). The case is being brought by former student-athletes (the “Students”) alleging that not only should student-athletes be considered employees under the FLSA but that the Defendants (the NCAA and various private and semi-public colleges^2,3) are the Joint Employers of the Plaintiffs and each would share liability for violations of the FLSA. Johnson v. Nat'l Collegiate Athletic Ass'n, 556 F. Supp. 3d 491 (E.D. Pa. 2021), motion to certify appeal granted sub nom. Johnson v. National Collegiate Athletic Ass'n, No. CV 19-5230, 2021 WL 6125095 (E.D. Pa. Dec. 28, 2021).

The Defendants moved to dismiss the Students’ suit, arguing the Students failed to state a claim upon which the Court could grant relief, based largely on precedent from other federal circuits and the U.S. Department of Labor’s previous statements on student-athletes not being classified as employees. The District Court denied certain defendants’ (NCAA, Cornell University, Fordham University, Lafayette College, Sacred Heart University and Villanova University) Motion to Dismiss on August 25, 2021, which prompted those Defendants to bring an interlocutory appeal—an extraordinary remedy not usually granted by a District Court, but in this (one shining) moment, and after reconsideration, Judge Podova granted the Motion for Interlocutory Appeal as to only the following issue:

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.

In the opening appellate brief filed with the Third Circuit, the Defendants that appealed (the “Appellants”) pointed to a prominent 2016 holding from the U.S. Court of Appeals for the Seventh Circuit, which stated, “student-athletes are not employees” of the schools they attend “and are not covered by the FLSA” as a matter of law. See Berger v. National Collegiate Athletic Ass’n, 843 F.3d 285 (7^th Cir. 2016). Appellants then cited the recent United States Supreme Court case of National Collegiate Athletic Ass’n v. Alston⁴, in which the Supreme Court upheld a decision from the U.S. Court of Appeals for the Ninth Circuit, which rejected a claim that student-athletes should receive “unlimited payments unrelated to education, akin to salaries seen in professional sports leagues.” The Appellants argued that the student-athletes’ lack of compensation bargaining power prevented them from being classified as employees and chided the District Court for its refusal to acknowledge the flexible analysis that is to be applied to determine employment status under the FLSA. Appellants concluded by focusing on the Department of Labor’s “longstanding view” that student-athletes are not employees under the FLSA solely because they play a sport, such that no cause of action exists in the District Case, requiring dismissal.

For their part, Appellees (the Students) have argued that the District Court’s refusal to dismiss the claims against the NCAA and Attended Schools was proper and that the District Court case should be allowed to move forward. Interestingly, the Appellees also make quick reference to the Alston matter— arguing that it signals a change in a recent analysis of “amateur” student-athletes and the previous deference given to the NCAA’s use of amateur as a sword and shield. The Appellees also argued that the basis upon which the Berger holding rests—that is, comparing student-athletes to prisoners under a 1992 Seventh Circuit case—is erroneous and not applicable in the current matter. The Appellees have urged the Third Circuit to uphold the finding of the District Court, including its implementation of the “Multifactorial Economic Reality Test,” outlined in the Glatt matter.

Arguments will be heard from both parties on December 15, 2022, in Philadelphia, PA. If the Third Circuit upholds the District Court’s Order denying the Motion to Dismiss, the case will return to and continue forward in the District Court to the discovery phase (which one can assure will be wide-ranging). If the Third Circuit reverses, this may end the case altogether. However, in the event of a reversal, the issues raised by Students are not likely to go away.

Indeed, on September 29, 2021 (approximately one month after Judge Padova issued his ruling denying the NCAA and Attended Schools’ Motion to Dismiss), the General Counsel for the National Labor Relations Board, Jennifer A. Abruzzo, issued a memorandum (GC 21-08) discussing “Players at Academic Institutions⁵” (Student-Athletes). In that September memorandum, Abruzzo stated that although the NLRB previously declined to provide protections to Players at Academic Institutions (Abruzzo’s preferred title for student-athletes) at Northwestern University under the Act, it specifically “did so without ruling on their employee status.” Going even further, Abruzzo also stated, “the conclusion that such Players at Academic Institutions are employees is supported by the statutory language and policies of the NLRA…”

And while this author believes it unlikely that Zoom conference rooms, water coolers and timecards will dominate the sidelines of our favorite collegiate sports anytime soon, the student-athletes that we watch on Turkey Day 2023 could be found to be student employees.  

¹ Appellate Case No. 22-1223.

² Those schools named as Defendants in the First Amended Complaint are Bucknell University, Drexel University, Duquesne University, Fairleigh Dickinson University, La Salle University, Lafayette College, Lehigh University, Monmouth University, Pennsylvania Sate University, Princeton University, Rider University, Robert Morris University, Rutgers, State University of New Jersey, Saint Francis University, Saint Joseph’s University, The National Collegiate Athletic Association, University of Delaware, University of Pennsylvania, University of Pittsburgh, Villanova University and are collectively referred to herein as the “University Defendants.”

³ The named institutions to the Second Amended Complaint are Cornell University, Drexel University, Fordham University, Lafayette College, Sacred Heart University, Villanova University, University of Pennsylvania, University of Oregon, Tulane University, University of Notre Dame, University of Arizona, Pursue University, Duke University and Marist College, collectively referred to herein as the “University Defendants.”

⁴ For an interesting history of the formation of the NCAA, and the reasons therefore, the reader will take a look at this opinion.

⁵ As stated within the September 2021 memo, even the title of “student-athlete” may be found to result in a chilling effect under Section 7 of the Act, and as stated, “in appropriate cases, I will pursue an independent violation of Section 8(a)(1) of the Act where an employer misclassifies Players at Academic Institutions as student-athletes.”