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  • Writer's pictureEmma Spisak

Student-Athletes as Employees? The Compensation Hurdles Colleges and Universities May Face in the Future



By: Emma Spisak, 2025



In recent years, the realm of college athletics has seen significant transformations. These transformations began with NCAA v. Alston, which gave way to the emergence of name, image, and likeness (NIL) rights for student-athletes. This evolution has prompted a pivotal query: should student-athletes be deemed employees?

 

The Alston decision, allowing athletes to receive education-related compensation, was accompanied by Justice Kavanaugh's strong solo concurrence.[1] He advocated for collective bargaining among student-athletes, criticizing the NCAA's model and inviting further antitrust scrutiny, potentially leading to future legal actions against the NCAA.[2]

 

Prior to Alston, NCAA rules limited athlete compensation to the cost of attendance. The policies restricted both benefits unrelated and related to education, such as postgraduate scholarships,  study abroad expenses, and post eligibility internships.[3] Post-Alston, the NCAA still restricts non-education related compensation that schools can provide their athletes.[4] However, the Alston decision, combined with background principles of antitrust law that the Court did not consider, set the stage for future challenges to the NCAA’s remaining restrictions on compensation unrelated to education.[5]

 

The discussion further intensified in 2021, when student athletes were finally permitted to profit from their name, image, and likeness (NIL), prompting arguments for their classification as employees under the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA).[6]

 

If student athletes are acknowledged as employees, colleges and universities face the complex task of developing compensation models compliant with antitrust laws, the FLSA and the NLRA.

 

Antitrust Implications

Classifying student athletes as employees would necessitate institutions to construct compensation models, but this uncharted territory may lead to potential antitrust issues. Under the Sherman Antitrust Act, agreements among competing institutions regarding student-athlete wages may be deemed illegal collusion, and therefore subject to antitrust enforcement.[7]

 

Institutions will be prohibited from discussing athlete wages with one another in an attempt to establish uniformity within the college athletics market.[8] Although it may be tempting for schools to collaborate over this new development in college sports, institutions will need to remain cognizant of potential antitrust issues.

 

FLSA Considerations

The FLSA categorizes employees as "exempt" or "non-exempt."[9] Exempt employees are salaried individuals working in professional, administrative, or executive roles and are not eligible for overtime pay.  On the other hand, non-exempt employees are compensated on an hourly basis and qualify for overtime pay.[10] Unless Congress creates a special exemption, student athletes are likely to be considered non-exempt employees because their scope of employment does not involve professional, administrative, or executive responsibilities and they would not be on a salaried payment structure.

 

The first of many questions that institutions will need to answer regarding FLSA considerations: what activities count as “compensable time” under the FLSA?[11] The Supreme Court has stated that employees subject to the FLSA must be paid for all the time spent in "physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer of his business."[12]

 

Determining compensable time under the FLSA for student athletes could involve evaluating various activities, such as in-season and out-of-season commitments, optional practices, and non-sport-related events.[13] Although an event may be deemed ”non-sport-related”, if it’s controlled or required by the institution or coach of a sports team and is for the benefit of the institution then the event would be classified as ”compensable time” under the FLSA.

 

Additionally, institutions will need to determine where to draw the line between normal hourly wages and overtime pay. The NCAA already restricts the number of hours student athletes can contribute to their sport each week.[14] These hours vary depending on division and whether the sport is currently in season or out of season.[15] Institutions could leverage these existing NCAA restrictions in determining hourly wages vs. overtime pay.

 

The NLRA

The NLRA guarantees the right of employees to organize and bargain collectively with their employer.[16] In Alston, Justice Kavanaugh encouraged student athletes to utilize their employee rights under the NLRA and unionize in order to collectively bargain over their compensation.[17] Kavanaugh argued that “the NCAA’s business model would be flatly illegal in almost any other industry in America,” due to the NCAA’s remaining rules restricting athlete compensation (emphasis added).[18] 

 

If student athletes choose to unionize for collective bargaining, institutions must be mindful of the narrative they present to the media.[19] In the private sector, aggressive anti-union campaigns are common. If institutions are perceived to adopt a similar approach, it could result in a media-driven narrative of athlete exploitation.[20] Inevitably, public scrutiny and media pressures will arise as institutions and student-athletes negotiate compensation.[21] Institutions should consider how their negotiation tactics will be perceived because they could face public relations challenges in addition to legal challenges.

 

Challenges of an Open Economy

A non-exempt employee compensation model could lead to competitive wage structures among institutions, creating disparities between those with higher and lower athletic budgets.[22] Consequently, larger-budget institutions may have a competitive advantage in attracting top talent, perpetuating a cycle of success and revenue dominance.

 

This model might also raise concerns about Title IX and the survival of non-revenue producing sports, particularly in the distribution of wages among different sports within an institution.[23] With an open economy, institutions will be incentivized and capable of allocating their wage budget to the athletes of the top revenue sports; i.e. men’s programs, leaving female athletes and non-revenue producing sports at a disadvantage.[24] Female sports and programs that do not produce significant, or any,  revenue for their institution may face the threat of becoming a club sport or eradicated altogether.

 

Preparing for the potential reclassification of college athletes as employees requires a holistic approach for colleges and universities to address these multifaceted and complex considerations. The landscape of college sports is rapidly evolving, even though the formal classification of student athletes as employees is yet to be determined.


References:

[1] Gregory Marino. NCAA v. Alston: The Beginning of the End or the End of the Beginning? (5 Aug 2021) https://www.jdsupra.com/legalnews/ncaa-v-alston-the-beginning-of-the-end-9351737/

[2] Id.

[4] Id.

[5] Id.

[6] Lead1 Assoc. Preparing for a Potential Future With College Athletes as Employees. (2023) https://lead1association.com/preparing-for-a-potential-future-with-college-athletes-as-employees/

[8] Lead1 Assoc., supra.

[9] Handy Reference Guide to the Fair Labor Standards Act. (Sept 2016) https://www.dol.gov/agencies/whd/compliance-assistance/handy-reference-guide-flsa#content

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Bylaws, Article 17: Playing and Practice Seasons. (01 Jan 2000) https://web3.ncaa.org/lsdbi/search/bylawView?id=8823

[15] Id.

[17] Marino, supra.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

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