In Johnson v. Nat’l Collegiate Athletic Ass’n, No. 22-1223, 2024 WL 3367646 (3d Cir. July 11, 2024), the Third Circuit has affirmed in part a decision by the Eastern District of Pennsylvania (D.C. No. 2-19-cv-05230) holding that college athletes are not precluded from bringing a claim under the Fair Labor Standards Act (“FLSA”). The case was, however, remanded to the district court for a corrected analysis of whether the specific plaintiff-athletes could be considered employees under the FLSA.

Question on Appeal
The specific question on appeal before the Third Circuit was, “Whether NCAA Division I athletes can be employees of the colleges and universities they attend for purposes of the Fair Labor Standards Act solely by virtue of their participation in interscholastic athletics” Johnson, 2024 WL 3367646, at *7.

Background and Preliminary Legal Analysis
Before answering the specific legal question before the Court, the Third Circuit engaged in an extensive examination of the history behind college athletics, the term “student-athlete,” the origins of “amateurism,” the evolution of compensation given to college athletes, and the growth of name, image, and likeness agreements resulting from the U.S. Supreme Court’s decision in Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021).

As discussed in the Johnson opinion, the FLSA is a broadly interpreted statute that contains expansive definitional language. The Third Circuit’s found that under the FLSA an ‘employee’ is “any individual employed by an employer, a definition that has been described as ‘the broadest that has ever been included in any one act.’” Johnson, 2024 WL 3367646, at *8 (citations omitted) (quoting United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945)). In turn, an ‘employer’ is “‘any person acting directly or indirectly in the interest of an employer in relation to an employee,’ and to ‘employ’ is ‘to suffer or permit to work.’ Johnson, 2024 WL 3367646, at *8 (citations omitted) (quoting Martin v. Selker Bros., 949 F.2d 1286, 1293 (3d Cir. 1991)).

Provided the similarities between the FLSA’s treatment of employees and employer and common-law agency principles, and the U.S. Supreme Court’s precedent, the Third Circuit stated it must look to the “economic realities of the relationship between the college athletes and their schools or the NCAA” to determine their employee-status under the FLSA.  Johnson, 2024 WL 3367646, at *9 (citing Martin, 949 F.2d at 1293).

After outlining the case law and statutory definitions, the Third Circuit then addressed the multifactor Glatt-test used by the district court to determine if college athletes were, in fact, employees. In the Second Circuit’s case of Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016), the Second Circuit created a multifactor test to determine whether unpaid interns were considered employees under the FLSA. The Third Circuit in Johnson ultimately rejected the Glatt-test as “not sufficiently analogous to the case at bar,” partly because unpaid interns received “educational or vocational benefits that are not necessarily expected with all forms of employment”, whereas the “educational and vocational benefits” that the NCAA argued college athletes received were “the kinds of skills one would typically acquire in a work environment.” Johnson, 2024 WL 3367646, at *11. The Court admitted that there was a need for a more tailored test to address the specific circumstances of college athletes.

Johnson’s New Multifactor Test for College Athletes
Although the FLSA is an expansive statute with broad definitions, the Third Circuit did note that, “the FLSA does not cover a person who, without promise or expectation of compensation, but solely for his personal purpose or pleasure performs activities carried on by other persons either for their pleasure or profit.” Johnson, 2024 WL 3367646, at *9 (emphasis added) (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947)). “Any test to determine college athlete employee status under the FLSA must therefore be able to identify athletes whose play is also work.” Johnson, 2024 WL 3367646, at *9. “[F]or an activity to constitute ‘work’ it need only be controlled by an employer and pursued necessarily and primarily for that employer’s benefit.” Id. (emphasis added).

An earlier decision by the Seventh Circuit in Berger v. Nat’l Collegiate Athletic Ass’n, 843 F.3d 285 (7th Cir. 2016) held that college athletes were not employees under the FLSA because “student-athletic ‘play’ is not ‘work’, at least as the term is used in the FLSA.” Berger, 843 F.3d 285, 293 (7th Cir. 2016). The Third Circuit explicitly disagreed with the Seventh Circuit and dismissed its rationale as irrelevant to college athletes. See Johnson, 2024 WL 3367646, at *13 (“We disagree with our sister circuit court’s comparison of college athletes to prisoners and refuse to equate a prisoner’s involuntary servitude, as authorized by the Thirteenth Amendment, to ‘the long-standing tradition’ of amateurism in college athletics.”).

The Third Circuit in Johnson ultimately held that, “college athletes may be employees under the FLSA when they (a) perform services for another party, (b) necessarily and primarily for the other party’s benefit, (c) under that party’s control or right of control, and (d) in return for express or implied compensation or in-kind benefits.” Johnson, 2024 WL 3367646, at *11 (citations omitted). “Ultimately, 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.’ Id.

Conclusion:
The Third Circuit’s decision in Johnson is the first court of appeals decisions to affirm that college athletes may be employees under the FLSA. Under the Johnson-test, the finder of fact must engage in a fact-intensive analysis to determine whether the economic realities of the case support a finding that the college athlete is performing work controlled by their employer necessarily and primarily for the benefit of the employer in return for compensation or in-kind benefits. This fact-intensive test will likely result in a wide array of rulings across the county. If other jurisdictions agree with the Johnson-test, the outcome of an individual case could depend on whether the college athlete received a scholarship, if they had NIL deals supported by the school, or even if they were injured for part, or all, of the year. Additionally, the Johnson decision leaves open the possibility that future courts may find that a school is not an employer of college athletes under the FLSA. See Dawson v. Nat’l Collegiate Athletic Ass’n, 932 F.3d 905 (9th Cir. 2019). Regardless of the outcome of future cases, Johnson is a watershed moment for the status of college athletes under the FLSA.

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About the Author:

Christopher T. Porter is a Minnesota employment law attorney located in Minneapolis, Minnesota who handles disputes under the Fair Labor Standards Act. He can be reached at cporter@trepanierlaw.com or at 612.455.6218. Trepanier MacGillis Battina P.A. is a Minnesota business and employment law firm located in Minneapolis, Minnesota.