Berger v. National Collegiate Athletic Ass'n
27 Wage & Hour Cas.2d (BNA) 136, 2016 U.S. App. LEXIS 21642, 843 F.3d 285 (2016)
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Rule of Law:
Student-athletes are not employees for the purposes of the Fair Labor Standards Act (FLSA) because the economic reality of the relationship between the student and the educational institution is defined by a tradition of amateurism, not employment.
Facts:
- Gillian Berger and Taylor Hennig were students at the University of Pennsylvania ('Penn').
- While enrolled, Berger and Hennig participated on Penn’s women’s track and field team.
- Penn’s athletic teams, including the track and field team, are regulated by the National Collegiate Athletic Association ('NCAA').
- The women’s track and field team at Penn competes in the NCAA's Division I.
- Berger and Hennig did not receive a wage from Penn for their participation in athletics.
Procedural Posture:
- Gillian Berger and Taylor Hennig sued the University of Pennsylvania, the NCAA, and over 120 other Division I schools in federal district court.
- The plaintiffs alleged violations of the Fair Labor Standards Act (FLSA), claiming they were employees entitled to a minimum wage.
- The defendants filed motions to dismiss for lack of standing and for failure to state a claim upon which relief can be granted.
- The district court granted the defendants' motions, dismissing the claims against the NCAA and all schools other than Penn for lack of standing.
- The district court then dismissed the claim against Penn for failure to state a claim, ruling that student-athletes are not employees under the FLSA.
- The plaintiffs appealed the district court's dismissals to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Does participation in interscholastic athletics as a student-athlete create an employment relationship with a university that would entitle the student-athlete to a minimum wage under the Fair Labor Standards Act (FLSA)?
Opinions:
Majority - Kanne, Circuit Judge
No. Participation in interscholastic athletics does not create an employment relationship entitling a student-athlete to a minimum wage under the FLSA. The court determined that the FLSA's applicability depends on the 'economic reality' of the relationship, not a rigid multifactor test. In the context of collegiate sports, this reality is defined by the 'revered tradition of amateurism,' which establishes that students participate for reasons wholly unrelated to compensation. The court found persuasive guidance in the Department of Labor's Field Operations Handbook, which characterizes 'interscholastic athletics' as an 'extracurricular' activity, not 'work' contemplated by the FLSA. Therefore, as a matter of law, student-athletes are not employees under the statute.
Concurring - Hamilton, Circuit Judge
No. The judge agreed with the outcome for these specific plaintiffs but expressed caution about the majority's broad holding. He noted that the plaintiffs participated in a non-revenue sport (track and field) at an Ivy League school without athletic scholarships, a context where amateurism aligns with economic reality. The judge suggested that the reasoning might not extend to athletes in high-revenue sports like Division I men's basketball and FBS football who receive scholarships, as the billions of dollars involved in those sports could create a different 'economic reality' pointing toward an employment relationship. This distinction, he argued, might require a more developed factual record in a future case.
Analysis:
This decision solidifies the legal status of student-athletes as non-employees under the FLSA within the Seventh Circuit, protecting the NCAA's amateurism model from minimum wage claims. By holding that student-athlete status can be decided as a matter of law at the pleading stage, the court makes it significantly more difficult for similar lawsuits to proceed to discovery. However, the concurrence by Judge Hamilton introduces a crucial distinction between revenue and non-revenue sports, signaling that future litigation involving athletes in high-profile, profitable programs like football and basketball might successfully challenge this precedent by arguing their 'economic reality' is fundamentally different.
