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NCAA Athletes Still Looking for Big Win in Pay for Play Claims

Aug. 16, 2019, 10:01 AM

The NCAA fended off another bid to upend its “student-athlete” model this week as a federal appeals court said it doesn’t have to pay college football players.

The U.S. Court of Appeals for the Ninth Circuit ruled that the National Collegiate Athletic Association and the PAC-12 conference aren’t employers according to federal or California wage-and-hour law.

The NCAA’s amateurism rules have endured a series of legal challenges under federal wage, labor, and antitrust laws that haven’t succeeded in forcing fundamental change to allow athletes to be paid for their play as if it was work.

The durability of the student-athlete model raises questions whether reformers have the ability to force the NCAA to revamp its pay system through legal action, although some observers and advocates hold out hope that there’s still a path that runs through the courthouse. Others look to legislation at the state and federal level as the more realistic possibility for an overhaul of pay rules.

“This is something that has been debated and struggled with in the court system over the past two decades,” said Andrew Zimbalist, a sports economist at Smith College. “I don’t think there are any easy answers.”

The NCAA, which reported more than $1 billion in annual revenue in 2018, has come under increasing pressure to change its rules so that athletes—especially football and basketball players—receive a fair share of the money reaped from big-time college sports.

“Legal cases have brought the public’s attention to the need for reform within college athletics; and in particular, the tension between commercialism and education that has become more apparent,” Warren Zola, a sports business professor at Boston College, said via email.

The NCAA didn’t respond to requests for comment. In court filings, the association said it preserves the tradition of amateurism by preventing students from competing in NCAA-sanctioned events if they’re paid. They are allowed to receive compensation for education-related expenses, it noted.

Wage, Labor Law Losses

Bids to reform the NCAA’s student-athlete model through wage-and-hour lawsuits have thus far fallen flat.

The Ninth Circuit’s ruling from this week said the economic reality of the dynamic between the NCAA and college football players didn’t amount to an employment relationship under the Fair Labor Standards Act. The court also said the athletes aren’t employees under California law.

The court’s opinion turned on a traditional view of the student-athlete and an old-fashioned application of FLSA and California precedents, said Michael LeRoy, a University of Illinois at Urbana-Champaign law professor who’s written on labor and antitrust issues in sports.

“These cases are not inapposite but many are from the 1940s through 1980s, long before the advent of hyper-commercialized college football,” LeRoy said via email. “With the exception of a paragraph on California’s Student Athlete Bill of Rights, enacted in 2012, the opinion reads like it could have been written decades ago.”

The Ninth Circuit’s ruling follows a 2016 decision from the Seventh Circuit saying neither universities nor the NCAA employed college athletes under the FLSA.

Federal labor law looked like it might provide college athletes a way to potentially force systemic change in 2014, when a National Labor Relations Board regional director ruled that Northwestern University football players were employees who could unionize.

But the Obama-era NLRB ultimately declined to assert jurisdiction over the case, saying it wouldn’t promote labor stability to create unionizing rules for football players at private colleges. Public colleges, which fall outside of NLRB jurisdiction, make up more than 85% of the NCAA Division I football teams, the board said.

Partial Antitrust Wins

College athletes seeking greater compensation have won two antitrust lawsuits against the NCAA, but the results have come short of the sweeping changes they sought.

U.S. District Judge Claudia Wilken in 2014 ruled in favor of former UCLA basketball star Ed O’Bannon and other players who claimed the NCAA illegally prevented them from making money off of their names and likenesses. Colleges could pay athletes for the full cost of college and set aside $5,000 in a trust fund for them after they leave school, Wilken said. The Ninth Circuit, however, reversed the trust-fund portion of Wilken’s remedy a year later.

Wilken in March again ruled that the NCAA violated antitrust laws, but her remedy lifted caps on education-related expenses rather than allowing student-athletes to be paid on an open market. The NCAA has appealed her ruling to the Ninth Circuit.

If upheld on appeal, that ruling would provide “at least $200 million more per year in educational compensation benefits to the class, including a package of benefits and cash academic rewards worth more than $100,000 per athlete,” Jeffrey Kessler of Winston & Strawn, who represents the athletes in the case, said via email.

Kessler, who litigated an antitrust case that led to the National Football League revamping its free agency system, said antitrust law remains a meaningful tool to winning improvements for college athletes.

The two decisions finding that the NCAA violated antitrust law “opened the door for future plaintiffs” and “facilitate future courts to issue broader rulings with broader remedies,” said Marc Edelman, a law professor at the City University of New York who has written on sports and antitrust law.

“I have not given up hope on antitrust,” Edelman said.

Legislative Efforts

But antitrust law is too ambiguous and convoluted to answer what’s essentially a public policy question about the proper role of college athletics in our economy and culture, said Zimbalist, the Smith College sports economist. Congressional action is needed, he said, perhaps in the form of a commission to study the reform of college athletics.

Pending legislation would provide college athletes with greater opportunities, even as the proposals fall short of allowing schools to cut them paychecks.

At the federal level, Rep. Mark Walker (R-N.C.) in March introduced a bill that would force the NCAA to change its rules by changing the tax code to remove the restriction on student-athletes selling the use of their names and likenesses. But that bill hasn’t seen any movement in the House and has just three co-sponsors.

Similar legislation is moving in California, though. The state Senate in May approved a bill that would allow college athletes to sell their likeness or sign endorsement deals.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Simon Nadel at snadel@bloomberglaw.com; Terence Hyland at thyland@bloomberglaw.com