–by Ryan White
Source: Berger v. National Collegiate Athletic Association, No. 16-1558, 2016 WL 7051905 (7th Cir. Dec. 5, 2016).
Abstract: Two former members of the University of Pennsylvania Women’s Track and Field team sued the school and the NCAA claiming they were entitled to minimum wage for their athletic training. The Seventh Circuit disagreed, but the court left open the possibility for a class of future plaintiffs who may succeed with that argument.
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Facts and Procedure
Gillian Berger and Taylor Hennig both were part of the University of Pennsylvania’s Track and Field team, a Division I school governed by the National Collegiate Athletic Association. Berger and Hennig’s suit against Penn, the NCAA, and 120 other NCAA institutions was predicated on the argument that they, as student athletes, were “employees” and entitled to minimum wage under the Fair Labor Standards Act (29 U.S.C. § 201). The District Court held that the plaintiffs did not have standing to sue any defendants other than Penn, and that the former student athletes failed to state a claim because student-athletes are not employees under the FLSA.
7th Circuit Decision
The 7th Circuit affirmed both of the lower court’s holdings. The opinion quickly dispensed with the first issue of standing, explaining that under the FLSA, an alleged employee’s injuries are only redressable by the employer. Any connections between the former student-athletes and the NCAA or its other member institutions were “far too tenuous” for the plaintiff-appellants to have standing.
The Court spent a little more time analyzing the alleged employer-employee relationship between Berger and Hennig and Penn under the FLSA. Circular definitions in the statute itself led the Court to look other places to determine whether student-athletes were entitled to minimum wage.
The burden for establishing an employer-employee relationship fell on the plaintiffs, and the Court emphasized that in ultimately making a decision, it must look to the totality of the circumstances. This examination includes reviewing the “economic reality” between the student-athletes and the university. The Court had developed a seven-factor test for analyzing whether migrant laborers were protected by the FLSA, and the Second Circuit had a similar seven-factor analysis for evaluating interns under the FLSA. The District Court declined to utilize those tests because they did not accurately capture the facts at hand.
The Court was particularly concerned with the revered nature of amateurism in collegiate sports. The amateur status of student-athletes is at the core of the economic reality of the situation. The Court stressed the importance of the eligibility rules developed by the NCAA. In discussing the amateur status of student-athletes, the court cited to O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015), one of several recent cases where student-athletes have challenged the NCAA seeking better compensation.
The Seventh Circuit considered several other courts’ decisions that found there to be no employer-employee relationship. One particular scenario in which this has consistently been the case is in regards to workers’ compensation. Multiple courts have consistently refused to say that student-athletes are employees in the workers compensation context and thus athletes are not entitled to compensation if injured while playing sports for their university.
The Court also looked to the Department of Labor, whose Field Operations Handbook also states that student-athletes are not employees under the FLSA. One section of that handbook stressed that interscholastic and extracurricular activities, like athletics, are primarily for the benefit of the student. When the benefit is primarily for the student, then the activity cannot be labeled “work.” While not specifically controlling, the Court said the Handbook is persuasive and has been used as guidance repeatedly.
The plaintiff-appellants’ argued that an employer-employee relationship is a particularly fact intensive investigation. The Seventh Circuit disagreed as a matter of law. The voluntary nature of intercollegiate sports is crucial. The Court emphasized that there is a fundamental difference between “play[ing]” sports and “work.” The Seventh Circuit affirmed the District Court’s grant of defendant-appellants’ motion to dismiss.
Justice Hamilton’s Concurrence
While the majority opinion does not offer any hope for the growing movement seeking compensation for student-athletes, Justice Hamilton’s concurrence does. Justice Hamilton finds specific facts in the case at hand that may distinguish it from future legislation. First, Penn does not offer scholarships. Second, Track and Field is not a revenue sport for the University. Given those two factors, the amateur status of the student-athletes as the NCAA projects is in its purest form.
Justice Hamilton points out, though, that a different conclusion could be reached for a student-athlete on scholarship playing a sport like football or basketball that is a major revenue stream for the university. Justice Hamilton concurred because the broad theory pursued by the plaintiff-appellants was just that—too broad. The amateur status of a D1 basketball or football player in a billion dollar industry presents a much different scenario. The economic reality of someone in that scenario, Justice Hamilton suggests, may be of a fundamentally different nature. There may be a light at the end of the tunnel for those college athletes seeking compensation.