Practical implications for student-athletes if they professionalize

What will change?

EDITOR’S NOTE: This article initially appeared in the Sports Business Journal. Constangy represents the National Collegiate Athletic Association in Johnson v. NCAA, a case in which student-athletes allege that they should be considered “employees” for purposes of the Fair Labor Standards Act and state analogs. The opinions expressed in this article are those of Chris, not of his firm or the NCAA.

Many believe that college athletics is in the process of transitioning to a structure in which at least some student-athletes are considered “employees.” The NCAA and its member institutions are facing a variety of antitrust, labor, and employment actions concerning their restrictions on student-athlete compensation. As of late, those cases are going against the NCAA and the schools. Should that trend continue, and legal and policy changes crystalize, it is important to consider the possible effects on student-athletes.

The following is a list of practical considerations for student-athletes should they become employees of their institutions:

Compensation. The most obvious and significant change for student-athletes is that they would receive compensation. The nature of that compensation is uncertain but would have to comply with federal and state minimum wage and overtime laws. Questions exist whether a scholarship would be considered compensation as well as housing, equipment, clothing, food, nutrition, and other academic and athletic support services typically provided to student-athletes. In the case concerning the men’s basketball players at Dartmouth College, the Regional Director of the National Labor Relations Board considered these items to be compensation. Some elite student-athletes are likely to be able to demand salaries in the hundreds of thousands (if not millions) of dollars, but the vast majority would be in line for the minimum wage or something just above it, amounts that might easily be satisfied by a scholarship and the benefits already provided.

Taxes. If we’re talking compensation, we also need to talk taxes. The IRS definition of taxable income is notoriously broad. Should student-athletes be considered employees, a student-athlete’s scholarship and the various other in-kind benefits referenced above might be considered taxable income. Student-athletes would thus be in the position of owing a considerable amount in taxes, even though they did not actually receive any cash income.

Collective bargaining. Student-athletes at private institutions will have the opportunity to unionize under the National Labor Relations Act and bargain collectively with their school-employers. Student-athletes at public institutions will generally have similar rights under state laws. If they do, they will have the opportunity to negotiate the wages, hours, and terms and conditions of their employment. More specifically, they could seek to negotiate the various forms of compensation discussed above. From a practical perspective, they would also need to find or form union staff and counsel to assist them, for a fee of course. Moreover, collective bargaining also brings the possibility of work stoppages, which would be particularly detrimental to student-athletes given their limited time at a school.

NIL Rights. The right of student-athletes to earn money from third parties for the use of their name, image, and likeness (known as “NIL”) has certainly been one of the contributing factors in this potential professionalization process. In response to that change, colleges enacted rules around student-athlete NIL usage, including prohibiting partnerships with certain product categories, such as alcohol or cannabis, or with certain brands that conflict with college sponsors. These restrictions are similar to the restrictions that professional sports leagues and teams impose on their players. This state of affairs is likely to remain. However, there is the possibility that colleges, as a condition of employment or as part of collective bargaining negotiations, would seek to obtain greater control over student-athlete NIL.

Health insurance. The Affordable Care Act requires employers with 50 or more employees to offer health insurance to employees who work an average of at least 30 hours per week or 130 hours per month. At least some student-athletes are likely to meet these minimums. Student-athletes, like most employees, would probably be responsible for some portion of the insurance premiums, a subject of potential negotiation. But nevertheless, for at least some population of student-athletes, they could now be sure to have health insurance coverage, whereas they might not have previously.

Workers’ compensation. Adjacent to health insurance benefits are workers’ compensation benefits. Student-athletes injured while practicing or playing would file for workers’ compensation benefits through their appropriate state agencies. Those benefits would cover any lost pay and obligate the school to cover treatment for any health care costs associated with the injury moving forward.

Employer rights. Most of what has been described above is good for student-athletes. But with employment status comes rights for employers. Most significantly, employers have the right to terminate employees so long as doing so doesn’t violate law, contract, or public policy. Student-athletes could theoretically be terminated from the team – and perhaps even the school – for poor athletic performance. Schools could also exert even greater control over student-athletes, including practice schedules and related obligations, further straining the students’ academic pursuits.

The employee-employment relationship is governed by extensive and generally well-established legal rights and obligations. The relationship between student-athletes and their institutions is also deep-rooted and highly regulated. The way in which those relationships interact is at the core of much of the ongoing litigation. The litigants, and the courts adjudicating these cases, should nevertheless be mindful of the potential practical implications of merging these two paradigms.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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