Law360 quoted McGuireWoods partner Sarah Wake in a July 12, 2024, story about a long-awaited federal appeals court decision that allows a group of former college athletes to proceed with a class action lawsuit against the National Collegiate Athletic Association and their former schools.
The plaintiffs in Johnson, et al. v. National Collegiate Athletic Association, et al. argue Division I student athletes are employees of the NCAA and certain of its member institutions under the Fair Labor Standards Act (FLSA) and various state wage and hour laws. On July 11, 2024, the U.S. Court of Appeals for the Third Circuit affirmed a lower court’s denial of the NCAA’s motion to dismiss the case. The appeals court remanded the case to the U.S. District Court for the Eastern District of Pennsylvania to decide whether student athletes are employees based on an “economic realities” test.
Wake, who advises universities on athletics compliance issues, told Law360 that the dispute is unlikely to be resolved soon.
“To me, the question of whether or not a student actually is an employee is very fundamental to the academic missions of the institutions and what I think the NCAA tries to foster,” said Wake, ho previously served as associate general counsel at Northwestern University and as a member of the NCAA Committee on Infractions. “So I would be a little bit surprised if there was an early settlement on this particular issue. My gut sense is that it will play out in litigation, at least for some time.”
Though the Third Circuit affirmed the district court’s denial of the NCAA’s motion to dismiss, it ruled that the district court erred in applying the test from the Second Circuit’s decision in Glatt v. Fox Searchlight Pictures, Inc., in which the Second Circuit considered whether unpaid interns must be deemed employees under the FLSA. The Third Circuit determined the Glatt test was inappropriate because, among other reasons, “interscholastic athletics are not part of any academic curriculum,” unlike unpaid collegiate internships.
Instead, Wake explained, applying the “economic realities” test will require the district court to determine whether student athletes are “performing services for that entity that are necessarily and primarily for that employer’s benefit.”
Wake and associate Paul Chappell analyzed the Third Circuit ruling in July 12, 2024, McGuireWoods legal alert.