For the past several years, there has been an increased focus on student-athletes and whether colleges and universities should be paying athletes for their participation in intercollegiate sports. So far, courts have been reluctant to require pay for student-athletes. For example, in the O’Bannon lawsuit, student athletes’ claims that the NCAA’s ban on student-athlete compensation above the cost of attendance was an unreasonable restraint on trade in violation of the Sherman Antitrust Act were largely rejected. Similarly, an attempt by student-athletes to unionize pursuant to the National Labor Relations Act was also rejected because the student-athletes were not employees within the jurisdiction of the NLRA.

Most recently, student-athletes from the University of Pennsylvania asserted a claim that they should be considered employees pursuant to the Fair Labor Standards Act (FLSA). The students argued that under the FLSA, they were entitled to minimum wage and overtime for the “work” they performed as student-athletes.

The FLSA has one of the broadest definitions of employee in the law. The FLSA generally covers any individual an employer “suffer[s] or permit[s] to work.” The question raised was whether this definition is broad enough to include student-athletes. The court held that it is not. According to the court, student-athletes are not employees covered by the FLSA.

In making its holding, the court evaluated the economic reality of the relationship between the student-athlete and the University. The court reasoned that there is a recognized “revered tradition of amateurism in college sports and students who choose to participate in sports as part of their educational experience do so because they view it as beneficial to them.” The court found it relevant that generations of Penn students have vied for the opportunity to be a part of the athletic tradition with no thought of any compensation. The court also found it important that despite the fact that it is no secret that thousands of unpaid college athletes exist on campuses across the country; the Department of Labor has taken no action to apply the FLSA to them. In fact, the DOL has taken the opposite position with regard to student-athletes.

What this means to you

The issue of “pay for play” is still a hot-button issue. So far, all attempts to fit student-athletes into traditional categories of employment have been unsuccessful. However, there will be continued pressure to evaluate the financial relationship between colleges/ universities and student-athletes. It is important to be aware of these developments and to consider how your student-athletes may approach these issues.