7th Circuit rules student-athletes aren’t considered ‘employees’

Collegiate athletes cannot be considered university employees and, thus, are not eligible for minimum wage pay, the 7th Circuit Court of Appeals ruled Monday, affirming a district court decision that dismissed a lawsuit brought against the NCAA.

In Gillian Berger, et al. v National Collegiate Athletic Association, et al., 16-1558, Judge Michael Kanne wrote that there was a tradition of amateurism in the realm of collegiate sports and that such amateurism was dependent, in part, on the fact that student-athletes participate in their sports for reasons unrelated to compensation.

The case began when former University of Pennsylvania track-and-field athletes Gillian Berger and Taylor Henning sued the school, the NCAA and more than 120 other NCAA Division I schools, arguing that student-athletes should be considered “employees” under the Fair Labor Standards Act and, thus, are entitled to minimum wage of $7.25 an hour.

Penn and the NCAA moved to dismiss the suit under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), a motion District Court Judge William T. Lawrence granted when he decided that the student-athletes failed to state a claim against Penn because they are not employees under the FLSA. Lawrence also ruled that the students lacked standing to bring action against any entity except Penn.

Berger and Henning appealed to the 7th Circuit Court, and the panel of Kanne and Judges David Hamilton and Diane Sykes agreed with Lawrence’s ruling that the student-athletes had no standing to sue the NCAA or the other 120 schools because none of the other appellees could be considered their “employers.”

Further, Kanne wrote that although the Supreme Court of the United States has instructed lower courts to expansively construe the terms “employer” and “employee,” the court has also held that the definition of “employee” does have limits. Specifically, Kanne wrote that courts must examine the “economic reality” of a working relationship to determine if the relationship is one of an employer and employee.

Regarding the economic reality of Berger and Henning’s situation, Kanne wrote that most courts had found that student-athletes were not considered employees of their schools. Similarly, the circuit judge said the Department of Labor wrote in its Field Operations Handbook that “University or college students who participate in activities generally recognized as extracurricular are generally not considered to be employees within the meaning of the (FLSA).” Interscholastic sports, Kanne wrote, are considered “extracurricular.”

“Appellants in this case have not, and quite frankly cannot, allege that the activities they pursued as student athletes qualify as ‘work’ sufficient to trigger the minimum wage requirement of the FLSA,” Kanne wrote. “Although we do not doubt that student athletes spend a tremendous amount of time playing for their respective schools, they do so – and have done so for over a hundred years under the NCAA – without any real expectation of earning an income.”

Hamilton concurred with the majority opinion, but wrote in a separate opinion that he was not confident that the panel’s reasoning should extend to students who receive athletic scholarships to participate in “revenue sports,” such as Division I men’s basketball and FBS football.

“In those sports, economic reality and the tradition of amateurism may not point in the same direction,” Hamilton wrote. “With economic reality as our guide … there may be room for further debate, perhaps with a developed factual record rather than bare pleadings, for cases addressing employment status for a variety of purposes.”