NCAA Settlement Bolsters Bids to Treat Athletes as Employees

The NCAA’s sign off on a nearly $2.8 billion antitrust settlement with college athletes opens the door to more legal challenges over players’ employment status and the association’s amateur model, legal observers say.

The NCAA and its Power Five conferences agreed to pay $2.75 billion in damages to college athletes over a 10-year period in a deal that seeks to resolve three pending antitrust lawsuits. The agreement also eliminates NCAA and conference rules that prohibit direct payments from schools to athletes, and allows direct revenue sharing through new payments and benefits, according to a statement from Hagens Berman and Winston & Strawn LLP, the firms representing athlete plaintiffs.

The proposed agreement is meant to stave off future antitrust litigation, but player advocates and attorneys say its terms could open the association, conferences, and schools up to more claims that they’re unlawfully misclassifying the athletes as students instead of employees under federal labor and wage and hour law. The settlement will still need to be approved by the judge presiding over the three cases.

“It’s a seismic shift but is this the end of the road? Absolutely not,” said Michael Elkins, an employment attorney and founder of MLE Law. “The NCAA’s troubles are far from over unless they’re willing to sit down and sort out those other problems too.”

Beyond the antitrust litigation, legal disputes in federal court and before the National Labor Relations Board are tackling whether college athletes are employees entitled to unionization, minimum wages, and other employment rights.

The issue came to a head after the Dartmouth College men’s basketball team became the first-ever student-players to unionize in March and an NLRB official ruled that the students were employees under federal labor law. An agency judge is also considering claims that the University of Southern California, the NCAA, and the Pac-12 Conference are joint employers of USC’s football and basketball players.

Meanwhile, a Fair Labor Standards Act case currently before the US Court of Appeals for the Third Circuit that accuses the NCAA of illegally denying athletes minimum wage could provide the flash point in the debate.

Both the Third Circuit and the NLRB appear poised to grant employment status for student athletes in multiple areas of US labor law, which would have significant consequences for colleges.

Revenue-Sharing

Dartmouth and USC have both argued before NLRB officials that their athletes aren’t employees under the National Labor Relations Act, claiming that the schools don’t give them wages or exert the level of control that employers do. The NCAA has also historically leaned on its amateurism model to fend off antitrust and employment claims.

According to Anne Marie Lofaso, a labor law professor at West Virginia University and former NLRB attorney, making the payments more explicit weakens schools’ legal arguments.

“The NCAA and schools have built this wall between employment status and student status for the players,” she said. “I won’t say the wall is down, but it’s extremely weakened.”

Jason Stahl, executive director of the College Football Players Association, said Friday that the cases surrounding athletes’ employee status will take years to resolve.

“The NCAA and the powers that be, they’re sick of taking losses and I think this is going to be the hill they’re willing to die on,” Stahl said.

The association declined to comment Friday, but NCAA President Charlie Baker in a joint statement with conference commissioners said the agreement is an “important step in the continuing reform of college sports that will provide benefits to student-athletes and provide clarity in college athletics across all divisions for years to come.”

Collective Bargaining

Players see the new deal as an opening for collective bargaining efforts.

Justin Falcinelli, CFBPA vice president and a former football player at Clemson University, said the settlement agreement, which outlines the NCAA’s commitment to share 22% of its media contract revenue with the athletes, provides a starting place for negotiations.

This would equal out to a figure “projected to be significantly more than $20 million per school, per year,” according to Hagens Berman and Winston & Strawn LLP. The law firms said schools can “choose” to make the new payments and benefits to athletes playing any Division I sport.

“The colleges are at the table with their big checkbooks out now and we want to see athletes start to collectively organize and bargain for everything else, including better medical care, healthier options, and a schedule that has a real off season,” Falcinelli said. “Now that they’re getting part of the revenue they generate, we want to see them being treated more like partners in this venture.”

Legislative Intervention

Employment classification for college athletes has become a political football in Congress in recent months, as well. Republicans have warned of an “existential threat” to college athletics and have introduced several bills to prohibit worker protections for the players. Democrats are trying to balance their pro-union views with the potential consequences of classifying student-athletes as employees.

Michael Hsu, a former regent for the University of Minnesota who advocates for college athlete pay and collective bargaining rights, said he expects the NCAA to fight on the employee question in court and on Capitol Hill. The NCAA and the Power Five Conferences have spent a combined $3 million lobbying Congress in 2023, according to an Open Secrets report based on data from the Senate Office of Public Records.

“They’re consciously going to take their argument to Congress and say, ‘Hey, we fixed all these things, all these other defects to our business model, but we still want to be allowed to not call them employees,’” said Hsu, who recently filed an unfair labor practice charge with the NLRB against the University of Notre Dame over student-athlete classification.

Elkins said he doesn’t think Congress is likely to move on the issue any time soon, though.

“The representatives are probably reading the same tea leaves we all are from the courts,” he said. “Why would they want to back a business model that the courts have basically said violates the Sherman Act? I just don’t think Congress has the appetite to do that.”