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Seventh Circuit Holds That Student Athletic Play Is Not Work

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Employment & Labor Law News - Special Alert

December 7, 2016

This week, in Berger v. National Collegiate Athletic Association, the Seventh Circuit held that student athletes are not employees under the Fair Labor Standards Act (FLSA) and thus are not entitled to be paid minimum wage. The plaintiffs, two former University of Pennsylvania track and field athletes, filed a proposed class action against the University of Pennsylvania and 120 other NCAA Division I universities and colleges, alleging that student athletes are employees who are entitled to minimum wage under the FLSA. The District Court for the Southern District of Indiana dismissed the complaint on a motion to dismiss, holding that, as a matter of law, no employment relationship exists between student athletes and their university. The plaintiffs appealed the dismissal to the Seventh Circuit.

On appeal, the plaintiffs argued that whether student athletes should be considered employees is a fact sensitive inquiry and should not have been decided at the motion to dismiss stage. Specifically, the plaintiffs argued that student athletes are akin to work study participants or interns and that the appropriate test to be used to determine if an employment relationship exists is the multifactor test adopted by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. 811 F.3d 528 (2nd Cir. 2015) in the context of determining whether an intern is an employee under the FLSA. The Seventh Circuit rejected the plaintiffs’ argument and held that the multifactor test would fail to capture the true nature of the relationship between student athletes and institutions of higher education because it would not take into account the “tradition of amateurism” in college sports or the “reality of the student athlete experience.” Relying on the Department of Labor Field Operations Handbook, the Seventh Circuit found that college athletics were voluntary, “extracurricular activities,” and that “students participate in their sports for reasons wholly unrelated to immediate compensation.” The Seventh Circuit then concluded that “student-athletic ‘play’ is not ‘work’ … as the term is used in the FLSA,” and held as a matter of law student athletes are not employees and not entitled to minimum wage under the FLSA.

The Berger decision is a victory for colleges and universities. However, higher education institutions should take note of Judge Hamilton’s concurring opinion, in which he specifically noted that the Berger plaintiffs were students at an Ivy League school that does not offer athletic scholarships and that they participated in a non-revenue generating sport. He then stated that the reasoning of the majority may not extend if the plaintiffs were students who receive scholarships and participate in Division I men’s basketball and FBS football. Thus, it is likely only a matter of time before the next student athlete lawsuit is filed.