College Athletes Could Be Denied Worker Rights Under Trump Order

The Labor Department could soon declare that student athletes are independent contractors and not full-fledged employees, a move that would draw legal challenges and potentially shake up the fast-changing college sports landscape, according to lawyers following the issue.

President Donald Trump in his July 24 executive order on collegiate athletics tasked the DOL with “clarifying the status” of scholarship athletes at colleges and universities. Management-side attorneys say the agency isn’t looking to disrupt the world of college sports and will likely declare they are independent contractors in its forthcoming guidance, continuing to deny them wage protections and other key rights as employees.

“They’re going to be more inclined to look at the status quo than really coming out and saying broadly that we think that we should start treating some of these athletes as employees,” said Joshua Nadreau, regional managing partner and vice chair of Fisher & Phillips LLP’s Labor Relations Group.

Putting college athletes in the same box as independent contractors— who are considered in business for themselves —will open its own can of worms, given the amount of control higher education institutions wield over athletes’ schedules and education, attorneys say. It may require a unique test for determining their status as a contractor or employee.

“The reality is: they are told when to show up; they are controlled; there are rules they must follow,” said Meredith Dante, an attorney at Ballard Spahr’s Philadelphia office. “They don’t really have any indicia of being an independent contractor.”

Shifting Landscape

Issues surrounding worker classification have roiled the modern labor and employment landscape, especially with the rise of independent contractor relationships fueled by the gig-economy, including in collegiate sports.

Court rulings, settlements, and state laws have redrawn the lines surrounding what types of compensation college athletes can receive, allowing students to enter into lucrative contracts with schools and brands over the use of their name, image, and likeness.

These agreements, as well as a recent landmark $2.8 billion settlement between the National Collegiate Athletic Association and former college athletes, have prompted questions about the legal relationship athletes have with their schools and whether they should be considered employees.

Treating a student athlete or any worker as an employee can trigger significant requirements for employers, including minimum wage, overtime, workers’ compensation, and collective bargaining obligations.

The nature of the relationship between schools and students, and the conditions expected of them as an athlete, usher in a slew of new questions about how labor law should apply in these circumstances.

“To be a student athlete, you have to attend class. That’s a requirement that the institution is putting on you. Does class now become work time? It’s a condition of your quote, unquote employment,” said Alex MacDonald a shareholder at Littler Mendelson PC. “It raises all kinds of sticky problems just because these laws were not written for this context.”

While the DOL has waded into the issue of worker classification for all industries—a subject that has led to multiple rulemakings and litigation— the agency hasn’t issued guidance specific to those participating in collegiate sports.

The DOL’s Field Operations Handbook, which instructs inspectors in its Wage and Hour Division on how to approach employment cases, states that schools may “permit or require” students to engage in activities like interscholastic athletics without creating an employment relationship. This particular chapter was last updated in 2018.

Unique Field

Any forthcoming directives from the DOL will have to address the unique circumstances surrounding college athletics, like whether class time counts towards working hours and what activities are purely academic, attorneys say.

The guidance could require a modified test that differs from the typical worker classification analyses used by the courts and federal labor agencies, which look at multiple economic factors of the relationship like control over working conditions and opportunities for profit.

Right now the classification tests typically point to student athletes being employees, said Nadreau, who advises NCAA Division I institutions and conferences on navigating compliance with name, image, and likeness laws as well as student-athlete employment challenges.

“We need to look at this through a different lens,” he added.

The US Court of Appeals for the Third Circuit attempted to tackle this issue last year by laying out a four-part test to determine whether student athletes are employees under the Fair Labor Standards Act.

The court considered: whether athletes perform services for another party; if those services are primarily for their school’s benefit; if those services are under the school’s control; and whether the students receive any sort of compensation for their work. That analysis is limited to the Third Circuit.

Even if agencies settle questions surrounding athletes’ classification, colleges and universities will have to be wary of Title IX anti-discrimination implications when entering into agreements with players—an issue recognized in Trump’s executive order and that has cropped up in the NCAA’s recent settlement with former student athletes.

Some observers are concerned that allowing college athletes to receive compensation will lead to higher education institutions investing only in revenue-generating sports, leaving behind other athletes, particularly women. That could trigger legal challenges if not addressed.

“Title IX is definitely a very big factor in the equity piece of it,” said Dante, noting that recent litigation has largely focused on big revenue generating sports like men’s football and basketball programs. “And the Trump administration has made clear that as part of its priorities, it is looking at gender equity in athletic programs.”