Game Over for NCAA Student Athletes Seeking Employee Status? 7th Circuit Affirms Dismissal of U. Penn Athletes’ FLSA Complaint

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On December 5, 2016, the Seventh Circuit affirmed dismissal of a complaint filed by two University of Pennsylvania track and field athletes against the National Collegiate Athletic Association, the university, and more than 120 other NCAA Division I universities and colleges alleging that student athletes are entitled to minimum wage under the Fair Labor Standards Act (“FLSA”). In Berger v. NCAA, the court held that student athletes are not “employees” within the meaning of the FLSA and thus, are not entitled to a minimum wage for their athletic activities.

In considering whether appellants were “employees” of Penn, the court first turned to the statutory language of the FLSA. The court noted that the FLSA defines “employee” in an unhelpful and circular fashion as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The court then noted that although the FLSA defines “employ” as “to suffer or permit to work,” 29 U.S.C. § 203(g), the statute does not define the term “work.”

Finding the statutory language of the FLSA ambiguous, the Court then examined the variety of multi-factor tests courts have used to evaluate the “economic realities” of an alleged employment relationship, including the test advocated by the student athletes and established in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2015). However, the Court ultimately decided not to apply a multi-factor test and instead followed its reasoning in Vanskike v. Peters, 974 F.2d 806, 807 (7th Cir. 1992), in which it stated that multi-factor tests do not apply where they “fail to capture the true nature of the relationship” between putative employees and employers. Id. at 809. In particular, the Seventh Circuit found that the multi-factor test proposed by the athletes “does not take into account this [NCAA] tradition of amateurism or the reality of the student-athlete experience.”

The court further noted that the majority of courts to consider the issue had not deemed student athletes employees in various contexts (such as under workers’ compensation laws), and was also persuaded by the Department of Labor’s Field Operations Handbook, which indicates that student athletes are not employees. The court concluded that the student athletes had participated in collegiate athletics on a purely voluntary basis, without any real expectation of compensation. Thus, they had not performed “work” for Penn and were not employees under the FLSA.

The court’s decision in Berger makes clear that courts are not married to strict court-created multi-factor tests when examining whether an individual qualifies as an employee under the FLSA and, depending on the circumstances, may be willing to instead rely on analogous case law, historical precedent, and administrative guidance in determining the “economic realities” of the alleged employment relationship.