Johnson v. NCAA Puts College Athletic Compensation in the Spotlight

By Quinn Callaghan

Since 2020, we have seen major developments in NIL and college athlete compensation. Despite some players receiving compensation from NIL collectives, boosters, or revenue sharing, the status of players as employees remains foggy. 

This status has been prevalent in recent legal battles, such as Duke’s signing of QB Darian Mensah, which involved the enforcement of a semblance of a noncompete clause. This is an example of the contractual NIL and revenue-sharing deals given to athletes as an incentive in recruiting. However, these legal practices could all be changed by the ongoing case Johnson vs. NCAA. The case, which began in 2019, could cause an overhaul of the entire economic and legal relationship between athletes and their institutions. 

The case arose from former Villanova football player Ralph Johnson and other Division I athletes who argued that, under the Fair Labor Standards Act (FLSA), student athletes are considered employees of the university and are therefore entitled to state minimum wage. The plaintiffs are seeking backpay of minimum wage dating back to 2016. 

The NCAA and Division I institutions are depicted as sharing control over and responsibility for the athletes. This includes their scheduling, workplace condition monitoring, and general supervision. This would lead to further legal monitoring of hours worked, recruitment practices, disciplinary actions, and other aspects of employment. 

However, the plaintiff athlete’s attorneys, Paul L. McDonald and Michael J. Willemin, stress that they want to treat these athletes as student employees, comparable to anyone working in a library, dorm hall, or dining hall. This would legally distinguish athletes from professional employers, allowing for certain tax exemptions. 

The plaintiff athletes point to other students working for the university athletic events who receive minimum wage, such as seating attendants and concession workers. The federal minimum wage is $7.25/hour; however, most states set a higher minimum wage, and some universities further raise the on-campus minimum wage. The attorneys and plaintiffs also don’t see this employee status and payment as a replacement for scholarships, but rather something to go hand in hand with them. 

The athletes have seen some progress in their case. In 2021, U.S. District Judge John Padova denied the NCAA's motion to dismiss the case. Due to the NCAA's authority, exercised through recruitment and eligibility rulings, it holds employer-like powers. The NCAA’s Countable Athletically Related Activities, or CARA, are similar to employer time sheets and schedules. This element of domain over these athletes further exemplifies the seemingly already existing employer-employee relationship. They do not receive the benefits of employment but must assume the restrictions and responsibilities of employees.

Further motions for appeal by the NCAA have been denied on the grounds that the athletes under the FLSA may be considered employees. The decision falls on whether “the touchstone remains whether the cumulative circumstances of the relationship between the athlete and college or NCAA reveal an economic reality that is that of an employee-employer.” Simultaneously the court suggested that Padova uses a four step “economic reality” test to see if college athletes (a) perform services for another party, (b) necessarily and primarily for the college’s benefit, (c) under the college’s control or right of control and (d) in return for “express” or “implied” compensation or “in-kind benefits.” 

The plaintiffs believe they pass these tests. They argue that their role is outside of what any other normal student does. The plaintiffs argue that athletes benefit their universities in non-academic settings, generating millions, if not billions, of dollars for their respective institutions and the NCAA. 

The athletes believe that demand for training, recovery, and practice is similar between collegiate and professional athletes, highlighting “in-kind compensation provided by pro sports teams to pro athletes,” which is consistent with employment. 

The lawyers representing the defendants – Todd A. Noteboom, Tracey Holmes Donesky, and Steven B. Katz – argue that the athlete's argument is too generalized. They argue that not all athletes share the same experience, especially when it comes to stardom and motivation for playing. They also bring up that not all sports are profitable and that athletes would have to prove they contribute to revenue generation. 

Since another denial from Padova is expected, the NCAA could seek an interlocutory appeal. This rarely granted appeal means that the case would be appealed before it gets decided. Following another denial from Pavoda, the next step for this case would likely be determining the class-action status of the case. The case may become a class action lawsuit on behalf of NCAA athletes dating back to the 2016-17 season. 

A major implication of this case stems from its FLSA status. Under the FLSA, the time put in by these student-athletes would have to be accurately recorded. The case is not related to antitrust cases seeking billions from NCAA TV deals, but is just seeking minimum wage for these athletes. 

If this case doesn’t reach a settlement and becomes class action, the college administration would be legally required to notify every college athlete, current and former (going back to the class action date), that they are potential members of the lawsuit. 

Some institutions aren't afraid of this change and see the possible change as nothing new. Tennessee athletic director Danny White told ESPN in December, “I don’t understand why everyone’s so afraid of employment status.” He stated, “We have kids all over our campus that have jobs. … We have kids in our athletic department that are also students here that work in our equipment room, and they have employee status. How that became a dirty word, I don’t get it.” 

This ongoing case has the opportunity to change how college athletes are seen and treated regarding their employment status. Although some aren’t worried about the change, the NCAA as a whole is adamantly trying to avoid the accompanying payout.