Ralph Johnson v. The National Collegiate Athletic Association
U.S. Court of Appeals for the Third Circuit
Ralph Johnson v. The National Collegiate Athletic Association, 108 F.4th 163 (3d Cir. 2024)
Ralph Johnson v. The National Collegiate Athletic Association
Opinion
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 22-1223
_______________
RALPH TREY JOHNSON; CLAUDIA RUIZ;
JACOB WILLEBEEK-LEMAIR; NICHOLAS LABELLA;
ALEXA COOKE, STEPHANIE KERKELES; RHESA
FOSTER; ESTEBAN SUAREZ; ZACHARY HARRIS;
LAURA HAMILTON; MATTHEW SCHMIDT; LIAM
WALSH; GINA SNYDER; TAMARA SCHOEN,
Individually and on Behalf of All Persons Similarly Situated
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION,
also known as the NCAA, and the Following NCAA Division
I Member Schools as Representatives of a Defendant Class of
All Private and Semi-Public NCAA Division I Member
Schedules; DREXEL UNIVERSITY; LAFAYETTE
COLLEGE; VILLANOVA UNIVERSITY; UNIVERSITY
OF PENNSYLVANIA; CORNELL UNIVERSITY;
SACRED HEART UNIVERSITY; FORDHAM
UNIVERSITY; UNIVERSITY OF OREGON; TULANE
UNIVERSITY; UNIVERSITY OF ARIZONA; PURDUE
UNIVERSITY; DUKE UNIVERSITY; MARIST COLLEGE
National Collegiate Athletic Association; Cornell
University; Fordham University; Lafayette College; Sacred
Heart University; Villanova University,
Appellants
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-19-cv-05230)
District Judge: Honorable John R. Padova
_______________
Argued: February 15, 2023
Before: RESTREPO, PORTER, and McKEE, Circuit Judges
(Filed: July 11, 2024)
Steven B. Katz [ARGUED]
CONSTANGY BROOKS SMITH & PROPHETE
2029 Century Park East, Ste. 1100
Los Angeles, CA 90067
John E. MacDonald
CONSTANGY BROOKS SMITH & PROPHETE
3120 Princeton Pike, Ste. 301
Lawrenceville, NJ 08648
Donald S. Prophete
CONSTANGY BROOKS SMITH & PROPHETE
2600 Grand Boulevard, Ste. 750
Kansas City, MO 64108
Counsel for Appellants
Allan Bloom
2
Adam L. Deming
Mark D. Harris
Adam Lupion
Paul Salvatore
PROSKAUER ROSE
11 Times Square, 17th Floor
New York, NY 10019
John E. Roberts
PROSKAUER ROSE
One International Place
Boston, MA 02110
Counsel for Amicus Appellants Southeastern Conference;
American Council on Education; American Association of
Community Colleges; American Association of State
Colleges and Universities; Association of American
Universities; Association of Catholic Colleges and
Universities; Association of Governing Boards of
Universities and Colleges; Association of Jesuit Colleges
and Universities; Association of Public and Land-Grant
Universities; College and University Professional
Association for Human Resources; Council for Christian
Colleges and Universities; National Association of
College and University Business Officers; National
Association of Independent Colleges and Universities;
and Southern Association of Colleges and Schools
Commission on Colleges
Erik R. Zimmerman
ROBINSON BRADSHAW & HINSON
1450 Raleigh Road, Ste. 100
Chapel Hill, NC 27517
Counsel for Amicus Appellant Southeastern Conference
3
Benjamin F. Johns
SHUB & JOHNS
200 Barr Harbor Drive
Four Tower Bridge, Ste. 400
West Conshohocken, PA 19428
Counsel for Amicus Appellant Professor Michael H. Leroy
Renan Varghese
Michael J. Willemin [ARGUED]
WIGDOR
85 Fifth Avenue, 5th Floor
New York, NY 10003
Paul L. McDonald
1800 John F. Kennedy Boulevard, Ste. 300
Philadelphia, PA 19103
Counsel for Appellees
_______________
OPINION OF THE COURT
_______________
RESTREPO, Circuit Judge.
Do efforts that provide tangible benefits to identifiable
institutions deserve compensation? In most instances, they do.
And yet athletes at our most competitive colleges and
universities are told that their “amateur” status renders them
ineligible for payment. The issue raised by this interlocutory
4
appeal is not whether the athletes before us are actually owed
the protections of the Fair Labor Standards Act (FLSA), but
rather, whether college athletes, by nature of their so-called
amateur status, are precluded from ever bringing an FLSA
claim. Our answer to this question is no.
This case originated in 2019 when athletes at several
National Collegiate Athletic Association (NCAA) Division I
(D-I) member schools filed a complaint asserting violations of
the FLSA and various state wage laws. The plaintiffs argued
that they were entitled to federal minimum wage compensation
for the time they spent representing their schools. The NCAA
and member schools moved to dismiss pursuant to Federal
Rule of Civil Procedure Rule 12(b)(6), asserting that the
athletes—as “amateurs”—are not, and historically have never
been, considered employees of their respective schools or the
NCAA. The District Court determined that the athletes had
sufficiently pleaded facts that, under a multifactor balancing
test, might allow them to be classified as employees under the
FLSA and denied the motion to dismiss. The NCAA and
member schools appealed.
For the reasons stated below, we will affirm in part the
District Court’s decision denying Appellants’ motion to
dismiss. But because the District Court erred by applying the
test from Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528
(2d Cir. 2016), to determine whether college athletes can be
employees under the FLSA, we will vacate and remand for
application of an economic realities analysis grounded in
common-law agency principles.
5
I. BACKGROUND
Appellees contend that they are entitled to minimum wage
under the FLSA for time spent on their sport-related activities.1
Appellants are thirteen colleges and universities that are
members of the NCAA. The NCAA regulates intercollegiate
sports and has jurisdiction over approximately 1,100 schools
and some 500,000 athletes. The NCAA has multi-year, multi-
billion-dollar contracts with ESPN, CBS, and Turner Sports to
broadcast athletic competitions between D-I schools, and it
distributes shares of those broadcasting fees to its member
institutions. In addition to shares of broadcasting fees, D-I
schools receive fees from multi-year, multi-million-dollar
agreements with television and radio networks that they have
entered, either individually or as part of an NCAA conference,
to broadcast their athletic competitions. To understand how
collegiate sport generates these revenues, a brief historical
survey is instructive.2
A. College Athletics in Historical Context
American intercollegiate athletics began when a group of
Yale students formed a boat club in 1843; undergraduates at
1
Additionally, Appellees raise claims under Connecticut,
Pennsylvania, and New York state wage laws.
2
Given the significance of the question presented, we
provide an abridged history of intercollegiate athletics. We do
so purely for context, and our disposition does not rely upon
this historical background.
6
Harvard followed suit the next year.3 In 1852, the two clubs
staged our nation’s first intercollegiate athletic competition
(The Race) on a lake in New Hampshire.4 From that first
contest, the spectacle of college sports has grown steadily to
become a multi-billion-dollar industry.5
Put simply, athletic victories have provided many colleges
with the institutional visibility needed to facilitate tremendous
growth.6 Indeed, although tension continues to exist between
the demands of traditional education and athletics, even early
college presidents came to see athletes as effective avatars for
3
Guy Lewis, The Beginning of Organized Collegiate
Sport, 22 AM. Q. 222, 222, 224 (1970).
4
Id. at 224. For an in-depth history of The Race, see
generally THOMAS C. MENDENHALL, THE HARVARD–YALE
BOAT RACE, 1852–1924 (1993).
5
Doug J. Chung, The Dynamic Advertising Effect of
Collegiate Athletics, 32 MARKETING SCI. 679, 681 (Sept.–Oct.
2013).
6
RONALD A. SMITH, SPORTS AND FREEDOM, at vii (1988).
In 1800, there were twenty-five colleges in the United States.
Today there are around four thousand. See Josh Moody, A
Guide to the Changing Number of U.S. Universities, U.S.
NEWS & WORLD REPORT (Apr. 27, 2021, 9:30 AM),
https://www.usnews.com/education/best-
colleges/articles/how-many-universities-are-in-the-us-and-
why-that-number-is-changing.
7
their institutions.7 By 1875, intercollegiate regattas had
become feature items in nationally distributed magazines and
front-page material for leading newspapers.8 Both “students
and the public began to regard victory as a measure of an
institution’s prestige.”9 One student of the era explained that
the contests were “sacredly connected with the glory of Alma
Mater herself.”10
Such glory was especially valuable to lesser-known
institutions. Take the 1871 regatta between Harvard, Brown,
and the “Farmer Boys” of the Massachusetts Agricultural
College of Amherst for example. An unexpected victory over
widely-favored Harvard made the little-known, eight-year-old
land grant college now known as UMass Amherst a nationally
recognized institution overnight.11 More importantly, it
inspired hope among other lesser-known colleges that they too
might do the same.12
7
See, e.g., CLIFFORD PUTNEY, MUSCULAR CHRISTIANITY:
MANHOOD AND SPORTS IN PROTESTANT AMERICA, 1880–
1920, at 39 (2001) (describing Harvard President Charles W.
Eliot’s appreciation for “athletic and curricular reforms”).
8
Lewis, supra note 3, at 227–28 (citations omitted).
9
Id.
10
Id.
11
SMITH, supra note 6, at 43.
12
Id.
8
This phenomenon would later become known as the “Flutie
Effect” following a 1984 football game between Boston
College and the University of Miami. With six seconds on the
clock and Miami up by four, Boston College’s quarterback,
Doug Flutie, completed an astounding forty-eight-yard Hail
Mary touchdown pass to win the game. Over the next two
years, applications to Boston College jumped thirty percent.13
Successful football and basketball programs have more
recently driven notoriety and applications to, among other
institutions, Georgetown, Northwestern, Boise State, Texas
Christian University, Butler, Gonzaga, Virginia Commonwealth
University, Texas A&M, Florida Gulf Coast, Lehigh, and
Wichita State.14
13
Harvard Business School Working Knowledge, The
Flutie Effect: How Athletic Success Boosts College
Applications, FORBES (Apr. 29, 2013, 9:48 AM),
https://www.forbes.com/sites/hbsworkingknowledge/2013/04
/29/the-flutie-effect-how-athletic-success-boosts-college-
applications/?sh=2e892b8e6e96.
14
See, e.g., Nicholas Fram & T. Ward Frampton, A Union
of Amateurs: A Legal Blueprint to Reshape Big-Time College
Athletics, 60 Buff. L. Rev. 1003, 1019 (2012); Michael
McCann, The Flutie Effect: How UMBC Can Benefit From a
Historic NCAA Tournament Upset, SPORTS ILLUSTRATED
(Mar. 17, 2018), https://www.si.com/college/2018/03/17/umb
c-virginia-upset-doug-flutie-jairus-lyles; Hayley Glatter, The
March Madness Application Bump, THE ATLANTIC (Mar. 16,
2017), https://www.theatlantic.com/education/archive/2017/0
3/the-march-madness-application-bump/519846/; Polly Mos-
endz, Dashiell Bennett & Lance Lambert, March Madness
Cinderella Stories Send Applications Soaring, BLOOMBERG
9
Indeed, Professor Doug J. Chung describes athletic
programs as higher education’s primary form of mass media
advertising. In one study, Professor Chung found that raising a
football team from mediocrity to national status caused, on
average, a 17.7 percent increase in the number of applications
to the team’s institution.15 Increased applications then
contribute to a positive feedback loop producing more revenue,
greater selectivity in admissions, improved alumni
engagement, greater fundraising, and better faculty recruiting,
all of which can catapult regional universities into national
prominence in a way that would otherwise be impossible.16
Profit, after all, has always played a role in intercollegiate
college athletics. The Race—the very first intercollegiate
competition—was neither proposed nor organized by the
students of Yale or Harvard, but by James Elkins, the
superintendent of the Boston, Concord, and Montreal
Railroad.17 Mr. Elkins had hoped that staging a regatta on Lake
Winnipesaukee would increase ridership on his rail line, raise
the value of his nearby real estate holdings, and bring tourists
to the quiet, lakeside resort. Unsurprisingly, the teams were
treated to a lavish vacation, and the winners received “a
(Mar. 13, 2017, 11:00 AM), https://www.bloomberg.com/new
s/features/2017-03-13/march-madness-more-students-apply-
to-schools-that-break-brackets.
15
Chung, supra note 5, at 681.
16
McCann, supra note 14.
17
SMITH, supra note 6, at 3–4, 27–29.
10
handsome pair of black, silver-tipped, walnut oars.”18 Such
commercialization was the norm in early athletic
competitions.19
The same is true today. First and foremost, the colleges
themselves stand to profit substantially from television
contracts, licensing fees, and ticket, concessions, and
merchandise sales that their athletic programs generate. Some
estimate that college athletes generate roughly $3 billion in
annual revenue for their schools, conferences, and the
NCAA.20 And at least 38 NCAA member colleges currently
gross more than $100 million annually in sports revenue.21 The
athletic department of the University of Texas, for example,
reported $271 million in revenue for 2023, more than the
highest-earning National Hockey League team.22 In 2020, 63
18
Id. at 27–29.
19
See, e.g., id. at 29–34, 42–51.
20
Liz Clarke, The NCAA Coined the Term ‘Student-
athlete’ in the 1950s. Its Time Might Be Up, WASH. POST (Oct.
28, 2021, 9:00 AM), https://www.washingtonpost.com/sports/
2021/10/27/ncaa-student-athlete-1950s/.
21
Marc Edelman, Why Congress Would Be Crazy to Grant
the NCAA an Antitrust Exemption, FORBES (May 6, 2020, 9:50
AM), https://www.forbes.com/sites/marcedelman/2020/05/06
/why-congress-would-be-crazy-to-grant-the-ncaa-an-antitrust-
exemption/?sh=6cdddce070a9.
22
Steve Berkowitz & Kirk Bohls, Texas Reported Athletic
Department Revenue of $271 Million in 2023, a Record for
NCAA Schools, USA TODAY (Jan. 17, 2024, 5:19 PM),
11
other NCAA member colleges earned more than $25 million
from their football programs.23
The colleges are not alone in profiting. One study reported
that 45 million Americans planned to wager a combined $3.1
billion on the 2022 NCAA March Madness basketball
tournament.24 And the NCAA itself, first founded to help
regulate dangerous playing conditions, has grown into a
financial behemoth with revenues often exceeding $1 billion
annually.25 ESPN, for example, recently announced that it will
https://www.usatoday.com/story/sports/ncaaf/big12/2024/01/
17/texas-athletic-department-271-million-
revenue/72255138007/; Mike Ozanian & Justin Teitelbaum,
NHL Team Values 2022: New York Rangers on Top at $2.2
Billion, FORBES (Dec. 14, 2022, 6:23 AM),
https://www.forbes.com/sites/mikeozanian/2022/12/14/nhl-
team-values-2022-new-york-rangers-on-top-at-22-
billion/?sh=7fe345287deb.
23
Brad Crawford, Ranking College Football’s Richest,
Poorest Programs, 247 SPORTS (Dec. 29, 2020, 7:45 AM),
https://247sports.com/longformarticle/college-football-
richest-poorest-programs-alabama-crimson-tide-texas-
longhorns-ohio-state-buckeyes-157982941/.
24
45 Million Americans to Wager $3.1B on March
Madness, AM. GAMING ASS’N (Mar. 13, 2022),
https://www.americangaming.org/resources/march-madness-
2022/.
25
Associated Press, NCAA Earns $1.15 Billion in 2021 as
Revenue Returns to Normal, ESPN (Feb. 2, 2022, 3:53 PM),
https://www.espn.com/college-
12
pay the NCAA $115 million each year for exclusive broadcast
rights to 40 leagues’ championship games.26 March Madness
and the College Football Playoff each have their own television
deals valued at $8.8 billion and $5.64 billion, respectively.27
By far the most obvious beneficiaries of college sports are
a select few administrators, athletic directors, and coaches.28
The recently retired Alabama football coach, Nick Saban,
earned over $11.4 million in his last year leading the Crimson
Tide, making him the highest-paid coach in college sports29
sports/story/_/id/33201991/ncaa-earns-115-billion-2021-
revenue-returns-normal.
26
Ben Straus, ESPN, NCAA Strike $920 Million Deal to
Keep 40 Championships on Network, WASH. POST (Jan. 4,
2024, 11:45 AM), https://www.washingtonpost.com/sports/20
24/01/04/ncaa-tv-deal-espn/.
27
Id.
28
Marc Edelman, Note, Reevaluating Amateurism
Standards in Men’s College Basketball, 35 U. MICH. J.L.
REFORM 861, 874 (2002) (noting that former NCAA Executive
Director Cedric Dempsey earned $647,000 [$1.096 million
adjusted] each year during the described period and that many
coaches made more that $1 million [$1.694 million adjusted]
each year in total compensation).
29
College Football Head Coach Salaries, USA TODAY
(Oct. 2, 2023, 7:18 PM), https://sports.usatoday.com/ncaa/sal
aries/football/coach.
13
and the eighth-highest-paid football coach in America.30 In
fact, seventeen of the 37 highest-paid coaches in any sport in
the United States make their living in college football or
basketball.31 By contrast, university professors and
administrators make far less. The University of Virginia, for
example, pays $900,000 each year to its president32 and
$600,000 to its law school dean33 while its basketball coach
receives $5.2 million.34 This is not abnormal; in forty states,
30
Reem Abdalazem & Jeffrey May, Who Are the Highest
and Lowest Paid Coaches in the NFL?, AS (Jan. 19, 2024,
10:10 AM), https://en.as.com/nfl/who-are-the-highest-and-
lowest-paid-nfl-coaches-n-2/.
31
Kurt Badenhausen, Highest-Paid Coaches 2023:
Belichick, Payton, Popovich Pocket $16m+, SPORTICO (Nov.
28, 2023, 12:02 AM), https://www.sportico.com/personalities
/people/2023/highest-paid-coaches-2023-belichick-payton-
popovich-1234747782/; Highest Paid Coaches in U.S. Sports,
SPORTICO (Nov. 28, 2023), https://www.sportico.com/feature/
highest-paid-coaches-american-sports-1234747983/.
32
Sarah Larimer, U-Va.’s New President Will Earn
$750,000 a Year, WASH. POST (Sept. 17, 2021, 4:16 PM),
https://www.washingtonpost.com/local/education/u-vas-new-
president-will-earn-750000-a-year/2017/09/20/2a5cfdce-
9e2f-11e7-9083-fbfddf6804c2_story.html.
33
U.Va. Faculty & Staff Salaries 2022, CAVALIER DAILY
(Aug. 2022), https://www.cavalierdaily.com/page/faculty-
salary-2022.
34
Abigail Johnson Hess, UVA Basketball Coach Turned
Down a Raise After National Championship Win: ‘I Have
14
the highest-paid public employee is a D-I coach.35 Ohio State
president E. Gordon Gee summarized this upside-down world
when, asked whether he would consider firing his embattled
football coach, he quipped, “I’m just hoping the coach doesn’t
dismiss me.”36
B. Amateurism and the “Student-Athlete” in College
Athletics
We have opted against using a term both parties employ
liberally in briefing: “student-athlete.” Like “band-aid” or
More Than I Need’, CNBC (Sept. 17, 2019, 10:21 AM),
https://www.cnbc.com/2019/09/17/why-uva-basketball-
coach-tony-bennett-turned-down-a-raise.html. Public
university presidents in 1986 slightly out-earned head football
coaches; now coaches earn almost four times as much as
university presidents. Fram & Frampton, supra note 14, at
1020.
35
David Evans, Complete List Of The Highest-Paid State
Employees: College Coaches Dominate Top Earning Public
Sector Workers, SPORTS DAILY (July 20, 2023),
https://thesportsdaily.com/news/complete-list-of-the-highest-
paid-state-employees-college-coaches-dominate-top-earning-
public-sector-workers/. In our circuit, two out of three states’
highest-paid employees are college football coaches: James
Franklin at Penn State, who earns $8.7 million per year, and
Greg Schiano at Rutgers, who earns $4 million each year. Id.
36
Fram & Frampton, supra note 14, at 1020 (citing Albert
R. Hunt, Athletics Overrun the Ivory Tower, INT’L HERALD
TRIBUNE 2 (Dec. 12, 2011)).
15
“laundromat,” “student-athlete” is essentially a brand name
that has become synonymous with its product.37 As scholars
have noted, the term is an NCAA marketing invention designed
to “conjure the nobility of amateurism,” assert “the precedence
of scholarship over athletic[s],” and “obfuscate the nature of
the legal relationship at the heart of a growing commercial
enterprise.”38 Context makes this vividly apparent.39
The NCAA arose from the public outcry over the dangers
of early college football. In 1904 alone, at least twenty players
died, not on battlefields, but on football fields.40 The next year,
urged on by President Theodore Roosevelt, a group of colleges
chartered the non-profit organization that would become the
NCAA to establish common safety guidelines in college
athletics. In doing so, the NCAA also promoted an ethos of
strict amateurism that forbade all forms of payment, including
athletic scholarships. Yet for the first fifty years of its existence,
this ethos was openly defied: most member schools admitted
37
Mark Abadi, Taser, Xerox, Popsicle, and 31 More
Brands-Turned-Household Names, BUSINESS INSIDER (June 3,
2018, 10:41 AM), https://www.businessinsider.com/google-
taser-xerox-brand-names-generic-words-2018-5.
38
Fram & Frampton, supra note 14, at 1015.
39
See generally RONALD A. SMITH, THE MYTH OF THE
AMATEUR: A HISTORY OF COLLEGE ATHLETIC SCHOLARSHIPS
(2021).
40
Fram & Frampton, supra note 14, at 1013.
16
to offering under-the-table compensation to star players.41 By
the 1950s, even the ban on athletic scholarships—a central
tenant of the original, British-inspired amateur ideal—lacked
so much as a pretense of enforcement. In reality, such payments
were already quite commonplace.42 Conceding defeat to this
fact, the NCAA elected in 1956 to bring some forms of
compensation (including athletic scholarships) aboveground in
the hope that it could better regulate the market.43 But the
NCAA also foresaw the explosion of college athletics and
hoped to both facilitate and capitalize on that growth. Athletics
scholarships proved to be an ideal mechanism for promoting
order and retaining economic control.44
In response, courts began to question the economic realities
of college athletics. Two state appellate court cases in
particular took direct aim at the professed amateur status of
athletes at D-I schools.45 Those courts saw that college sports
41
Id.
42
Id. at 1013–14.
43
See SMITH, supra note 39, at 127.
44
Fram & Frampton, supra note 14, at 1014.
45
See Van Horn v. Indus. Accident Comm’n, 33 Cal. Rptr.
169, 172(Ct. App. 1963) (holding decedent scholarship-athlete eligible for benefits, as he “participated in the college football program under a contract of employment with the college”); Univ. of Denver v. Nemeth,257 P.2d 423, 426
(Colo. 1953)
(holding that an athlete employed by the university to
“discharge certain duties, not a part of his education program,”
i.e., to compete, “is no different than the employee who is
17
had become a big business, and that athletes thus operated in
the dual capacity of both student and employee.46 These cases
stoked fears in NCAA leaders that college athletes might
someday receive statutory employment protections.47 The
NCAA’s answer was the term “student-athlete,” which it
imposed as the exclusive label for its players.48 As the historian
Taylor Branch notes:
The term student-athlete was deliberately
ambiguous. College players were not students at
play (which might understate their athletic
obligations), nor were they just athletes in
college (which might imply they were
professionals). That they were high-performance
athletes meant they could be forgiven for not
meeting the academic standards of their peers;
that they were students meant they did not have
to be compensated, ever, for anything more than
the cost of their studies. Student-athlete became
the NCAA’s signature term, repeated constantly
in and out of courtrooms.49
taking no course of instruction” so far as state workers’
compensation laws are concerned).
46
Fram & Frampton, supra note 14, at 1014.
47
Id. at 1015.
48
Id.
49
Taylor Branch, How the Myth of the NCAA “Student-
Athlete” Was Born, DEADSPIN (Feb. 20, 2014),
18
The NCAA’s strategy has worked for some time, supported
in part through dicta from the Supreme Court’s decision in
NCAA v. Board of Regents of the University of Oklahoma,
stating that “[t]he NCAA plays a critical role in the
maintenance of a revered tradition of amateurism in college
sports.” 468 U.S. 85, 120 (1984). With Board of Regents in
hand, the NCAA and its member colleges have largely
succeeded in persuading courts to grant the concept of
amateurism the force of law.50 As one federal district judge
https://deadspin.com/how-the-myth-of-the-ncaa-student-
athlete-was-born-1524282374.
50
See, e.g., Berger v. NCAA, 843 F.3d 285, 291(7th Cir. 2016) (“[The] long-standing tradition [of amateurism] defines the economic reality of the relationship between student athletes and their schools.” (citing Board of Regents,468 U.S. at 120
)); Agnew v. NCAA,683 F.3d 328, 344
(7th Cir. 2012) (“For the purposes of college sports, and in the name of amateurism, we consider players who receive nothing more than educational costs in return for their services to be ‘unpaid athletes.’”); Bassett v. NCAA,528 F.3d 426, 433
(6th Cir. 2008) (“It also violates the spirit of amateur athletics by providing remuneration to athletes in exchange for their commitments to play for the violator’s football program.”); Smith v. NCAA,139 F.3d 180, 187
(3d Cir. 1998) (“We agree with these courts that, in general, the NCAA’s eligibility rules allow for the survival of the product, amateur sports, and allow for an even playing field.”), vacated,525 U.S. 459
(1999); McCormack v. NCAA,845 F.2d 1338, 1345
(5th Cir. 1988)
(“That the NCAA has not distilled amateurism to its purest
form does not mean its attempts to maintain a mixture
containing some amateur elements are unreasonable.”).
19
wrote, “[e]ven in the increasingly commercial modern world,
there is still validity to the Athenian concept of a complete
education derived from fostering full growth of both mind and
body.” Gaines v. NCAA, 746 F. Supp. 740, 744(M.D. Tenn. 1990). The Court of Appeals for the Seventh Circuit similarly found the idea that college athletes are “selling their services” and that universities are “purchasers of labor” to be a “surprisingly cynical view of college athletics.” Banks v. NCAA,977 F.2d 1081
, 1091–92 (7th Cir. 1992). College football players, the Court reasoned, are not market participants because they are “student-athletes.” Seeid. at 1090
(“We consider college football players as student-athletes simultaneously pursuing academic degrees that will prepare them to enter the employment market in non-athletic occupations.” (citing Justice v. NCAA,577 F. Supp. 356, 382
(D. Ariz. 1983)).
Until recently, NCAA rules barred athlete compensation
beyond “tuition and fees, room and board, books and other
expenses related to attendance.”51 But the Supreme Court’s
unanimous decision in NCAA v. Alston disrupted the status quo
by holding that that Board of Regents did not create a binding
precedent “reflexively” supporting the organization’s
compensation rules. 141 S. Ct. 2141, 2158 (2021). The NCAA
responded by changing its rules to allow athletes to profit from
their name, image, and likeness (NIL) with direct endorsement
51
NCAA, DIVISION I MANUAL 209 (2021),
https://web3.ncaa.org/lsdbi/reports/getReport/90008.
20
deals.52 Historically, the NCAA and the colleges had been the
only entities permitted to do so.53
Justice Kavanaugh, in an oft-cited concurrence, noted that
the NCAA’s remaining rules restricting non-education-related
compensation raised serious antitrust questions as well. See
Alston, 141 S. Ct. at 2166–67 (Kavanaugh, J., concurring).
Rebuking the NCAA’s argument that maintaining
compensation restrictions is necessary to distinguish college
athletics from professional athletics, Justice Kavanaugh wrote
that “[b]usinesses like the NCAA cannot avoid the
consequences of price-fixing labor by incorporating price-
fixed labor into the definition of [its] product.” Id. at 2168. Although Justice Kavanaugh did suggest that the NCAA could protect itself from future judicial scrutiny by permitting collective bargaining,id. at 2168
, he also flatly concluded that “[n]owhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. . . . The NCAA is not above the law,”54id. at 2169
.
52
Alan Blinder, College Athletes May Earn Money From
Their Fame, N.C.A.A. Rules, N.Y. TIMES (Sept. 29, 2021),
https://www.nytimes.com/2021/06/30/sports/ncaabasketball/n
caa-nil-rules.html.
53
Id.; Fram & Frampton, supra note 14, at 1019.
54
Incidentally, the NCAA’s former president Myles Brand
highlighted the weakness of the organization’s defense over a
decade ago—though perhaps inadvertently—in an interview
for Sports Illustrated:
21
Appellants raise similarly circular arguments. But as the
Supreme Court recently suggested, such rationales no longer
hold the weight they once did. See Alston, 141 S. Ct. at 2158.
The National Labor Relations Board (NLRB), likely in
response to Alston, is for the first time taking the position that
college athletes are employees for purposes of the National
Labor Relations Act (NLRA).55 In the midst of these changes,
our Court is the first to consider whether college athletes may
also be employees under the ambit of the related FLSA.
[Brand] They can’t be paid.
[Q] Why?
[Brand] Because they’re amateurs.
[Q] What makes them amateurs?
[Brand] Well, they can’t be paid.
[Q] Why not?
[Brand] Because they’re amateurs.
[Q] Who decided they are amateurs?
[Brand] We did.
[Q] Why?
[Brand] Because we don’t pay them.
Michael Rosenberg, Change Is Long Overdue: College
Football Players Should Be Paid, SPORTS ILLUSTRATED (Aug.
26, 2010), https://www.si.com/more-sports/2010/08/26/pay-
college.
55
Office of Public Affairs, NLRB General Counsel
Jennifer Abruzzo Issues Memo on Employee Status of Players
at Academic Institutions, NLRB (Sept. 29. 2021),
https://www.nlrb.gov/news-outreach/news-story/nlrb-general-
counsel-jennifer-abruzzo-issues-memo-on-employee-status-
of.
22
C. The Athletes at Bar
The plaintiffs allege that although the NCAA and its
member schools profit from their efforts, the NCAA’s bylaws
prohibit member schools from offering wages and forbid
students from accepting them. To enforce these rules, the
bylaws prescribe sanctions for violating schools and students,
including suspension or termination of athletes, suspension of
coaching staff, and disqualification of teams from
competitions. The NCAA and defendant schools argue that,
although athletes do not earn wages, the benefits of
participation include payment in other forms, such as increased
discipline, a stronger work ethic, improved strategic thinking,
time management, leadership, and goal setting skills, and a
greater ability to work collaboratively.
The athletes allege that the soft skills the Appellants point
to are inadequate compensation for their services and that they
were subject to extensive training and performance
requirements that regularly interfered with their learning. As
just one example, the plaintiffs allege that they were forced to
schedule classes around their athletic commitments, limiting
their range of learning options. During the football season at
Villanova University, for example, Mr. Johnson was allegedly
required to spend weekdays from 5:45 AM to 11:30 AM
practicing or engaging in other activities related to athletics.
This commitment locked him out of hundreds of available
classes, including prerequisites for certain academic degrees.
In addition to Mr. Johnson’s personal experiences, the athletes
cite to studies showing that NCAA requirements frequently
prevent athletes from pursuing their preferred majors.
23
In their First Amended Complaint,56 the athletes asserted
claims under the FLSA for the NCAA’s and member colleges’
failure to pay them a minimum wage and sought relief in the
form of unpaid wages, an equal amount in liquidated damages,
and attorneys’ fees. Some athletes also asserted state-specific
failure-to-pay claims. Finally, the athletes asserted unjust
enrichment claims. The defendant schools moved to dismiss
the First Amended Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), arguing that athletes cannot be employees
as a matter of law and therefore had failed to state a claim.
On August 25, 2021, the District Court rejected this
argument. In the absence of controlling authority providing a
specific multifactor test to evaluate whether athletes can be
considered “employees” under the FLSA, the District Court
applied the Court of Appeals for the Second Circuit’s
multifactor test from Glatt, 811 F.3d 528, where the Court
considered whether unpaid interns must be deemed employees
under the FLSA and therefore compensated for their work. The
District Court determined that Glatt required it to assess the
“economic reality” of the relationship by identifying whether
the athletes or the NCAA and schools were the primary
beneficiary of the relationship. After balancing and
considering the seven Glatt factors, the District Court
concluded that the athletes had plausibly pleaded that they may
56
Appellees filed their initial complaint on November 6,
2019, and subsequently filed two amended complaints on
December 12, 2019, and September 23, 2021, respectively. See
App. at 43 n.1 (stating Second Amended Complaint, filed after
the District Court issued the order and memorandum on the
motion to dismiss, did not alter any of the claims).
24
be employees and denied the motion to dismiss. Subsequently,
the District Court granted the Appellants’ motion under 28
U.S.C. § 1292(b) to certify an interlocutory appeal from the
denial of their motion to dismiss. The question certified for
appeal 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.” App. at 35.
II. DISCUSSION57
57
We have jurisdiction to review interlocutory appeals
certified under 28 U.S.C. § 1292(b). When reviewing an interlocutory appeal, we exercise de novo review over the certified question. In re Enter. Rent-A-Car Wage & Hour Emp. Pracs. Litig.,683 F.3d 462, 467
(3d Cir. 2012). Our review is not limited to the certified question and may include consideration of “any issue fairly included within the certified order.” Barbato v. Greystone All., LLC,916 F.3d 260, 264
(3d Cir. 2019) (citing Yamaha Motor Corp., U.S.A. v. Calhoun,516 U.S. 199, 205
(1996)). We have even gone so far as to declare that, because it is the order that is appealable in an interlocutory appeal, “we may address any issue necessary to decide the appeal before us.” Ivy Club v. Edwards,943 F.2d 270, 275
(3d Cir. 1991). This “plainly includes the threshold question” of whether the athletes before us have established a prima facie case. Egervary v. Young,366 F.3d 238, 245
(3d Cir. 2004).
In reviewing a motion to dismiss, we “review any legal
determinations anew and presume that a complaint’s factual
allegations are true.” Pennsylvania v. Navient Corp., 967 F.3d
273, 283 n.7 (3d Cir. 2020) (reviewing de novo, following
§ 1292(b) certification, a district court’s denial of a motion to
25
The FLSA protects “the rights of those who toil, of those
who sacrifice a full measure of their freedom and talents to the
use and profit of others.” Tenn. Coal, Iron & R.R. Co. v.
Muscoda Local No. 123, 321 U.S. 590, 597(1944). Accordingly, it gives specific, non-waivable minimum protections to individuals to ensure that each covered employee receives “[a] fair day’s pay for a fair day’s work,” Overnight Motor Transp. Co. v. Missel,316 U.S. 572, 578
(1942) (quoting 81 Cong. Rec. 4983 (1937) (statement of President Franklin Roosevelt)), and is protected from “the evil of ‘overwork’ as well as ‘underpay,’”id.
Consistent with the FLSA’s “remedial and humanitarian”
purpose, Tenn. Coal, 321 U.S. at 597, Congress adopted definitions of “employee” and “employer” that brought a broad swath of workers under the statute’s coverage, including even “those who would decline its protections.” Tony & Susan Alamo Found. v. Sec’y of Labor,471 U.S. 290, 302
(1985). Accordingly, “the term ‘employee’ means any individual employed by an employer,”29 U.S.C. § 203
(e)(1), a definition that has been described as “the broadest . . . that has ever been included in any one act.” United States v. Rosenwasser,323 U.S. 360
, 363 n.3 (1945) (quoting 81 Cong. Rec. 7657 (1937) (statement of Sen. Hugo Black)). Similarly open-ended, an “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee,”29 U.S.C. § 203
(d), and to “employ” is “to suffer or permit to work,”id.
§ 203(g). These “statutory definitions regarding employment status are necessarily broad to effectuate the remedial purposes dismiss for failure to state a claim). The presumption of truth does not extend to legal conclusions. Ashcroft v. Iqbal,556 U.S. 662, 678
(2009).
26
of the Act.” Martin v. Selker Bros., 949 F.2d 1286, 1293 (3d
Cir. 1991).
The “striking breadth” of these definitions brings within the
FLSA’s ambit workers “who might not qualify as [employees]
under a strict application of traditional agency law principles”
or under other federal statutes, Nationwide Mut. Ins. Co. v.
Darden, 503 U.S. 318, 326(1992), and these definitions have long been held to apply notwithstanding any “prior custom or contract . . . not to compensate employees for certain portions of their work.” Tenn. Coal,321 U.S. at 602
. Accordingly, to determine employment under the Act, the Supreme Court has instructed that we “look to the economic realities of the relationship.” Martin,949 F.2d at 1293
(citing Rutherford Food Corp. v. McComb,331 U.S. 722, 730
(1947)).
Under this framework, the employer-employee
“relationship does not depend on . . . isolated factors but rather
upon the circumstances of the whole activity.” McComb, 331
U.S. at 730; see also Haybarger v. Lawrence Cnty. Adult Prob. & Parole,667 F.3d 408, 418
(3d Cir. 2012) (holding that “whether a person functions as an employer depends on the totality of the circumstances rather than on ‘technical concepts of the employment relationship’”) (citation omitted). Limitations articulated by the Supreme Court include that independent contractors are not employees under the FLSA, see McComb,331 U.S. at 729
, and “[a]n individual who, ‘without promise or expectation of compensation, but solely for his personal purpose or pleasure, worked in activities carried on by other persons either for their pleasure or profit,’ is outside the sweep of the Act,” Tony & Susan Alamo Found.,471 U.S. at 295
(quoting Walling v. Portland Terminal Co.,330 U.S. 148, 152
(1947)).
27
Importantly, in determining that the Alamo “volunteers”
were actually employees because they expected “in-kind”
compensation for services performed, Tony & Susan Alamo
Found., 471 U.S. at 301, the Court distinguished their situation from that of a group of trainees in Walling.Id.
at 299–301. In Walling, the trainees participated in a week-long course, during which they performed some work under close supervision without receiving or expecting remuneration beyond the possibility of future employment. 330 U.S. at 149–150. But the Court held that the trainees did not qualify as “employees” under the FLSA, as their work did not confer an “immediate advantage” to the purported employer. Id. at 153. Instead, as the Court in Alamo explained, the trainees in Walling were akin to “students in a school,” whose activities are driven by the educational benefits. Tony & Susan Alamo Found.,471 U.S. at 300
. By contrast, the Alamo “volunteers” engaged in work over extended periods, sometimes years, and received “in-kind benefits” like food, clothing, shelter, and other benefits as compensation.Id. at 292
. These benefits were “wages in another form.”Id. at 301
. Even though the Alamo “volunteers” claimed they expected no compensation, the Court explained that a compensation agreement can be either “express” or “implied,” and “[i]f an exception to the Act were carved out for employees willing to testify that they performed work “voluntarily,” employers might be able to use superior bargaining power to coerce employees to make such assertions, or to waive their protections under the Act.”Id.
at 301–02.
Since McComb, we and other courts of appeal have adopted
multifactor tests to analyze, based on the circumstances of the
whole relationship between the parties, whether individuals are
employees or independent contractors, whether entities are
28
joint employers, and whether individuals are employees or
interns. See, e.g., Donovan v. DialAmerica Mktg., Inc., 757
F.2d 1376, 1382(3d Cir. 1985) (adopting a six-factor test developed to determine whether an individual is an employee or an independent contractor); In re Enterprise Rent-A-Car,683 F.3d at 469
(adopting a four-factor test to determine
whether entities are joint employers); Glatt, 811 F.3d at 536–
37 (adopting a non-exhaustive set of seven factors to determine
whether an individual is a student intern or an employee). Here,
we confront circumstances unlike those previously addressed,
but core principles that traditionally define an employee-
employer relationship are no less applicable.
A. Determining the Employment Status of College
Athletes
In looking to “the economic realities of the relationship”
between college athletes and their schools or the NCAA,
Martin, 949 F.2d at 1293, we begin by noting that athletes in the collegiate context are sui generis. After all, merely playing sports, even at the college level, cannot always be considered commercial work integral to the employer’s business in the same way that the activities performed by independent contractors or interns are assumed to be in previously mentioned multifactor tests. See, e.g., Donovan, 757 F.2d at 1379–83 (undisputed that home-based researchers who distributed their and other researchers’ confirmed phone numbers to a telemarketing firm performed work); Glatt,811 F.3d at 531
(undisputed that “[p]laintiffs worked as unpaid
interns” on a Fox Searchlight-distributed film or at the Fox
corporate offices (emphasis added)). The Supreme Court has
acknowledged this possibility, explaining that the FLSA does
not cover a person who, “without promise or expectation of
29
compensation, but solely for his personal purpose or pleasure”
performs “activities carried on by other persons either for their
pleasure or profit.” Walling, 330 U.S. at 152. The Department
of Labor (DOL) makes the same distinction.58 But just as
intuitively, with professional athletes as the clearest indicators,
playing sports can certainly constitute compensable work. Any
test to determine college athlete employee status under the
FLSA must therefore be able to identify athletes whose play is
also work.
For its part, the FLSA does not define “work.” The
Supreme Court “broadly” interprets it in the FLSA context and
initially defined it as “physical or mental exertion (whether
burdensome or not) controlled or required by the employer and
pursued necessarily and primarily for the [employer’s]
benefit.” Tenn. Coal, 321 U.S. at 598. The Court has since
58
See U.S. DEP’T OF LABOR, FIELD OPERATIONS
HANDBOOK § 10b03(e) (2016) (activity of college students
participating in interscholastic athletics primarily for their own
benefit as part of the educational opportunities provided to the
students by the school is not “work”). Appellants argue that
Department of Labor guidance entitles them to a complete
statutory defense against Appellees’ claims. We will not
address this argument as “an affirmative defense may not be
used to dismiss a plaintiff’s complaint under Rule 12(b)(6).” In
re Adams Golf, Inc. Sec. Litig., 381 F.3d 267, 277 (3d Cir. 2004). Although there is an exception to this rule when the affirmative defense appears on the face of the complaint, see Jones v. Bock,549 U.S. 199, 215
(2007), that exception is not
applicable here, as the Appellees’ reliance on DOL guidance is
not established on the face of the Complaint.
30
clarified that “exertion” is “not in fact necessary for an activity
to constitute ‘work’” because “an employer . . . may hire
[someone] to do nothing.” IBP, Inc. v. Alvarez, 546 U.S. 21, 25(2005) (quotation omitted). Accordingly, for an activity to constitute “work” it need only be controlled by an employer and pursued necessarily and primarily for that employer’s benefit. See De Asencio v. Tyson Foods, Inc.,500 F.3d 361, 371
(3d Cir. 2007) (explaining that courts should “preclude[] the consideration of cumbersomeness or difficulty on the question of whether activities are ‘work’”). A putative employee, meanwhile, is expected to receive either express or implied “in-kind” compensation for services rendered. Tony & Susan Alamo Found.,471 U.S. at 301
.
Read together, these cases largely mirror common-law
agency principles others have used to help decide cases
involving similar purported employer-employee relationships.
Chief among them is the NLRB’s decision in Trustees of
Columbia University in the City of New York, 364 NLRB 1080, 1081 (2016), where the Board applied a common-law agency test (also known as the “right-of-control” test) to answer the threshold question of whether graduate students who perform services at a university in connection with their studies are statutory employees within the meaning of Section 2(3) of the NLRA.Id. at 1081
. That test asks whether the individual, in return for payment, performs services under the control of another person, or under a person with the right to control such services.Id.
at 1081–82, 1094. By reverting to common-law agency principles, the Board notably rejected a Glatt-like primary beneficiary analysis.Id.
at 1101 n.49. Instead, the
Board held that student teaching and research assistants are
employees under the NLRA if they meet the Act’s broad
definition of “employee,” which encompasses individuals who
31
meet the common law test for employment. Trs. of Columbia
Univ., 364 NLRB at 1083 (“Where student assistants have an
employment relationship with their university under the
common law test—which they do here—this relationship is
sufficient to establish that the student assistant is a Section 2(3)
employee for all statutory purposes.”).
We recognize that the NLRA and FLSA have distinct policy
goals, but their shared history often inspires courts to draw
interchangeably from each statute’s caselaw to answer
fundamental questions related to the equitable regulation of the
American workplace.59 See, e.g., Kasten v. Saint-Gobain
Performance Plastics Corp., 563 U.S. 1, 13(2011) (“The similar enforcement needs of [the NLRA] argue for an interpretation of the word ‘complaint’ [in the FLSA] that would provide ‘broad rather than narrow protection to the employee.’” (quoting NLRB v. Scrivener,405 U.S. 117, 122
(1972))); Maryland v. Wirtz,392 U.S. 183, 192
(1968) (relying on NLRB v. Jones & Laughlin Steel Corp.,301 U.S. 1
(1937), to explain that Congress had commerce power to expand the FLSA); In re Enterprise Rent-A-Car,683 F.3d at 468
(adopting
the FLSA definition of “joint employer” from an earlier NLRA
59
Moreover, although graduate-student employees are
often exempt from FLSA coverage (and notably, college
athletes are not), see 29 U.S.C. § 213(a)(1), the graduate
student may be the closest equivalent we have. Like the athlete,
the graduate student is enrolled in college or university. Like
the college athlete, the graduate student’s tuition is often
covered by the institution as a recruitment incentive. Also
similar to the college athlete, the graduate student sometimes
performs work for the institution that involves little
educational value or direct connection to a course of study.
32
case); Brock v. Richardson, 812 F.2d 121, 124 (3d Cir. 1987)
(“NLRA cases are often considered of assistance in
interpreting the Fair Labor Standards Act.”) (citation omitted).
Significantly, the NLRA and FLSA both use broad
definitions of “employee” and “employer” to delineate
statutory coverage. See 29 U.S.C. §§ 152(2)–(3), 203(d)–(e). The “striking breadth” of the FLSA’s definitions, after all, brings within the Act’s purview workers “who might not qualify as [employees] under a strict application of traditional agency law principles.” Darden,503 U.S. at 326
. It necessarily follows that determining an employer-employee relationship under the FLSA includes, but is not limited to, a strict application of traditional agency law principles. The NLRA, meanwhile, does not explicitly define the terms. But it is well established that “when Congress uses the term ‘employee’ in a statute that does not define the term, courts interpreting the statute ‘must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning”’ of the term, with reference to “common-law agency doctrine.” NLRB v. Town & Country Elec.,516 U.S. 85, 94
(1995) (quoting Darden, 503 U.S. at 322–323); see also Cmty. for Creative Non-Violence v. Reid,490 U.S. 730
, 739–40 (1989)
(“when Congress has used the term ‘employee’ without
defining it, we have concluded that Congress intended to
describe the conventional master-servant relationship as
understood by common-law agency doctrine”) (citations
omitted). Put otherwise, common-law agency doctrine, a
doctrine largely symmetrical to governing FLSA caselaw, is
also a helpful analytical tool in evaluating college athletes’
33
purported employer-employee relationships in either the
NLRA or the FLSA context.60
We do not reproach the District Court for being drawn to
Glatt. But while we agree with our sister circuit that “an
employment relationship is not created when the tangible and
intangible benefits provided to [a] [worker] are greater than [a]
[worker]’s contribution to the employer’s operation,” Glatt,
811 F.3d at 535; see Tenn. Coal,321 U.S. at 598
, Glatt’s overall
utility with respect to college athletes is undercut by its
accurate presumption that unpaid interns all perform work for
their employers.
Indeed, the facts that animate Glatt are not sufficiently
analogous to the case at bar because the work performed during
properly designed unpaid internships “can greatly benefit
interns,” as “the intern enters into the relationship with the
expectation of receiving educational or vocational benefits that
are not necessarily expected with all forms of employment.”
811 F.3d at 535–36. Meanwhile, the educational and vocational
benefits of college athletics cited by Appellants as alternative
forms of remuneration (increased discipline, a stronger work
ethic, improved strategic thinking, time management,
leadership, and goal setting skills, and a greater ability to work
collaboratively) are all exactly the kinds of skills one would
typically acquire in a work environment. Additionally, the
Glatt test has limited relevance to athletes because it compares
60
Indeed, decision-makers in the NLRA context are
already using it. See, e.g., Trs. of Dartmouth Coll. & Serv.
Emps. Int’l Union, Local 560, N.L.R.B. No. 01-RC-325633, at
18 (Feb. 5, 2024).
34
the benefits that an intern might receive at an internship with
the training received at the intern’s formal education program.
Id.at 537–38. In comparison, interscholastic athletics are not part of any academic curriculum. Here, the plaintiffs go as far as alleging that the sports played are actually detrimental to their academic performance because athletic performance provides no academic benefits, they are frequently precluded from enrolling in hundreds of courses that conflict with their athletic obligations, and they are unable to declare their preferred majors. We therefore hold 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,” Tenn. Coal,321 U.S. at 598
, (c) under that party’s control or right of control,id.,
and (d) in return for “express” or “implied” compensation or “in-kind benefits,” Tony & Susan Alamo Found.,471 U.S. at 301
(quotation omitted).61 If
61
Although FLSA cases involving patients at rehabilitation
centers present entirely different factual circumstances, courts
of appeal already weigh these same factors to determine
whether a patient is performing work. See, eg., Klick v. Cenikor
Found., 79 F.4th 433, 441–42 (5th Cir. 2023) (rejecting the Ninth Circuit Court of Appeal’s decision in Williams v. Strickland,87 F.3d 1064
(9th Cir. 1996), and holding that the district court did not abuse its discretion in concluding that patients in a rehab program that worked at outside businesses were employees because they were promised in-kind benefits in the form of housing, food, medical care, and clothing); Fochtman v. Hendren Plastics, Inc.,47 F.4th 638, 646
(8th Cir.
2022) (holding that the patient-worker was not an employee
because his circumstances were more akin to those described
35
so, the athlete in question may plainly fall within the meaning
of “employee” as defined in 29 U.S.C. § 203(e)(1). 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.
B. The “Frayed Tradition” of Amateurism is No Shield
to FLSA Claims
Appellants argue that the history and tradition of
amateurism is sufficient not only to remove college athletes
from the general population of people whose FLSA
employment status is routinely determined through the
application of multifactor tests, but also compels dismissal of
in Portland Terminal than those in Susan Alamo); Vaughn v.
Phoenix House N.Y., Inc., 957 F.3d 141, 144–45 (2d Cir. 2020) (holding that residential drug treatment patient was not an employee of the facility, even though he received “food, a place to live, therapy, vocational training, and jobs that kept him busy and off drugs” because he was the “primary beneficiary” of the relationship and not the facility); Acosta v. Cathedral Buffet, Inc.,887 F.3d 761, 767
(6th Cir. 2018) (holding that church volunteers “were not economically dependent upon” the alleged employer given that “[t]he volunteers neither expected nor received any wages or in-kind benefits in exchange for their service.”); Williams,87 F.3d at 1064
(holding that a participant in six-month rehabilitation
program that included work was not an employee of the
Salvation Army because the relationship did not contemplate
“in-kind benefits” in exchange for work).
36
this suit. We disagree. Although the Supreme Court remarked
in Board of Regents dicta that “[t]he NCAA plays a critical role
in the maintenance of a revered tradition of amateurism in
college sports,” 468 U.S. at 120, it has since unanimously clarified that Board of Regents did not expressly approve of every NCAA limit on athlete compensation or foreclose “any meaningful review of those limits today.” Alston,141 S. Ct. at 2157
; see alsoid. at 2167
(Kavanaugh, J., concurring) (“The
Court makes clear that the decades-old ‘stray comments’ about
college sports and amateurism made in [Board of Regents]
were dicta and have no bearing on whether the NCAA’s current
compensation rules are lawful.”) (citation omitted). The
NCAA’s athlete compensation rules, after all, were not even at
issue in Board of Regents. That case instead concerned the
NCAA’s attempt to exercise monopoly control over television
broadcast agreements.
Responding to an argument like the one that the Appellants
make here, the Supreme Court in Alston noted that the NCAA
had “not adopted any consistent definition” of amateurism and
acknowledged that the organization’s “rules and restrictions on
compensation have shifted markedly over time,” which further
undermined the NCAA’s reliance on the concept. Id. at 2163(citations omitted). The Court’s disapproval of amateurism as a legal defense was only strengthened by a point made by Justice Kavanaugh in concurrence that we now adopt: the argument “that colleges may decline to pay student athletes because the defining feature of college sports . . . is that the student athletes are not paid,” is circular, unpersuasive, and increasingly untrue.Id. at 2167
.
Nevertheless, this is the argument Appellants most heavily
rely upon to characterize the economic realities of the college
37
athlete’s alleged employment relationship. They argue that the
District Court should have adopted the Court of Appeals for the
Seventh Circuit’s reasoning in Berger, 843 F.3d at 291, where the Court declined to apply the Glatt test to determine whether a group of track and field athletes from the University of Pennsylvania were employees under the FLSA. In the eyes of both the Berger Court and the Appellants, no multifactor test is appropriate.Id.
Rather, a general economic realities analysis that centers on amateurism and college athletes’ historical lack of bargaining power should be used.Id.
In other words,
Appellants ask us to elevate amateurism to a quasi-legal status
in a way the Supreme Court has already rebuffed.
The Seventh Circuit Court of Appeals did indeed decline to
apply a multifactor test because doing so “‘fail[ed] to capture
the true nature of the relationship’ between [the] athletes and
their schools and [was] not a ‘helpful guide.’” Id.(quoting Vanskike v. Peters,974 F.2d 806, 807
(7th Cir. 1992)). Instead, it concluded that the “longstanding tradition [of amateurism] defines the economic reality of the relationship between [] athletes and their schools,” and held that existing multifactor tests could not adequately account for this tradition.Id.
A “more flexible standard” was needed.Id.
Ultimately, the Court
held that college athletes were not employees entitled to
minimum wage under the FLSA because their “amateur” status
made it such that their “‘play’ is not ‘work.’” Id. at 293.
To reach its conclusion, the Berger Court relied on its own
precedent in Vanskike, which considered whether incarcerated
people had any rights under the FLSA. Id. at 291. In Vanskike,
the Court similarly declined to use a multifactor test because
any test would fail to account for what it called a “free labor
situation” in the prison context. 974 F.2d at 809. This
38
“situation” exists in prisons because the Thirteenth
Amendment permits involuntary servitude, meaning that the
work incarcerated people perform is not based on voluntary
employment relationships. Id.at 809–10. The Vanskike Court also pointed out that some factors typically found in FLSA multifactor tests could not logically be applied in the prison context.974 F.2d at 809
. For example, one common factor among FLSA tests is a consideration of the amount of control the employer has over the worker.Id.
Given that prisons have almost complete control over prisoners’ lives, the Vanskike Court reasoned that such control was incidental to the workers’ custodial status.Id.
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. Berger, 843 F.3d at 291. Nor are we the only ones. See, e.g., Dawson v. NCAA,932 F.3d 905
, 908 n.2 (9th
Cir. 2019) (“We do not adopt Berger’s analytical premises nor
its rationales.”). But, in a limited sense, we agree that existing
multifactor tests are inadequate when applied to the college
athlete. As noted above, we believe that such tests either
improperly assume that the alleged employee engages in
compensable work or account for factors not relevant to
college athletics.
In sum, for the purposes of the FLSA, we will not use a
“frayed tradition” of amateurism with such dubious history to
define the economic reality of athletes’ relationships to their
schools. Berger, 843 F.3d at 294 (Hamilton, J., concurring).
Instead, we believe that the amateurism that Judge Hamilton
calls into question in his “note of caution” highlights the need
39
for an economic realities framework that distinguishes college
athletes who “play” their sports for predominantly recreational
or noncommercial reasons from those whose play crosses the
legal line into work protected by the FLSA. Id.(“I am less confident, however, that our reasoning should extend to students who receive athletic scholarships to participate in so- called revenue sports like Division I men’s basketball and FBS football.”). Accordingly, we also hold that college athletes cannot be barred as a matter of law from asserting FLSA claims simply by virtue of a “revered tradition of amateurism” in D-I athletics. Board of Regents,468 U.S. at 120
.
III. CONCLUSION
In light of the foregoing, we will vacate the District Court’s
order, remand for further proceedings in compliance with this
opinion, and direct the District Court to grant leave to amend.62
62
Our colleague’s concurring opinion points out perceived
problems with our analysis, but those are inherent to the unique
nature of the legal question presented. And while he is correct
that factual issues remain unresolved, the District Court must
know what law to apply to the facts it ultimately determines
upon remand. Accordingly, nothing would be accomplished
but delay if we were to await resolution of every underlying
factual dispute before deciding what law the trial court must
apply.
40
PORTER, Circuit Judge, concurring in the judgment.
I write separately to explain why I concur only in the
judgment.
I. We should decline to assert interlocutory
jurisdiction.
A. The question presented is too fact-
intensive.
Respectfully, we should not have accepted this
interlocutory appeal. 28 U.S.C. § 1292(b) allows us to assert appellate jurisdiction over a non-final “order involv[ing] a controlling question of law” if doing so would “materially advance the ultimate termination of the litigation.” Section 1292(b) is thus reserved for dispositive legal questions. It is not suitable for reviewing mixed questions of law and fact. See Resol. Tr. Corp. v. Cityfed Fin. Corp.,57 F.3d 1231
, 1236 n.6 (3d Cir. 1995) (declining to decide an issue certified as part of an interlocutory appeal under § 1292(b) because “the fact- intensive nature of the law in this area” required “greater factual development” by the district court), vacated on other grounds by Atherton v. F.D.I.C.,519 U.S. 213
(1997); Link v. Mercedes-Benz of N. Am., Inc.,550 F.2d 860
, 863 (3d Cir.
1977) (“[Section] 1292(b) is not designed for review of factual
matters but addresses itself to a ‘controlling question of
law.’”).1 That is particularly true where, as here, the facts are
1
At least eight of our sister circuits have acknowledged
the limitation of 28 U.S.C. § 1292(b) to pure questions of law.
1
See Nice v. L-3 Commc'ns Vertex Aerospace LLC, 885 F.3d
1308, 1313(11th Cir. 2018) (dismissing appeal and vacating order under § 1292(b) where a question was “far from being one of pure law”); Steering Comm. v. United States,6 F.3d 572, 575
(9th Cir. 1993) (recognizing a general rule forbidding “mixed questions of law and fact” on § 1292(b) review but finding a narrow exception for liability in multidistrict litigation); Ahrenholz v. Bd. of Tr. of Univ. of Ill.,219 F.3d 674, 676
(7th Cir. 2000) (defining “question of law” to be “the meaning of a statutory or constitutional provision, regulation, or common law doctrine”); Clark-Dietz & Assocs.-Eng’s, Inc. v. Basic Const. Co.,702 F.2d 67
, 69 (5th Cir. 1983) (denying § 1292(b) review where “most [of the questions] appear to be merely fact-review questions” and “[e]ven those . . . that are legal may be foreclosed by the fact findings of the district court”); United States ex rel. Michaels v. Agape Senior Cmty., Inc.,848 F.3d 330, 341
(4th Cir. 2017) (rejecting an appeal as not presenting a “pure question of law”); Foster Wheeler Energy Corp. v. Metro. Knox Solid Waste Auth., Inc.,970 F.2d 199, 202
(6th Cir. 1992) (“pure questions of law”); Harriscom Svenska AB v. Harris Corp.,947 F.2d 627, 631
(2d Cir. 1991) (“Section 1292(b) . . . allows certification only of questions of law. Where, as here, the controlling issues are questions of fact[.]” (cleaned up)); Pittway Corp. v. Fyrnetics, Inc.,1993 WL 452621
,9 F.3d 977, at *1
(Fed. Cir. 1993)
(Section 1292(b) “contemplates review of pure questions of
law” where “‘the order involve[s] a clear-cut question of law
against a background of determined and immutable facts.’”
(quoting 9 James W. Moore et al., Moore’s Federal Practice
¶ 110.22[2] (2d ed. 1993)) (unpublished).
2
rapidly changing and highly disparate among putative class
members. See In re Tutu Wells Contamination Litig., 120 F.3d
368, 407 (3d Cir. 1997) (discouraging § 1292(b) certification
where the issues involved “may change as matters proceed
before the district court”).
Even if this appeal were limited to just the six named
plaintiffs, it would be fact-intensive. Determining whether
nearly 200,000 Division I student-athletes playing on nearly
6,700 teams can be employees under the Fair Labor Standards
Act (FLSA) requires us to assess countless facts. Maj. Op. at
23–24. On an interlocutory appeal from the denial of a Rule
12(b)(6) motion, that fact-bound exercise exceeds the scope
and purpose of § 1292(b).
Indeed, almost no question is as fact-intensive as
determining employee status under the FLSA. See Burrell v.
Staff, 60 F.4th 25, 43(3d Cir. 2023) (“FLSA coverage is a highly factual inquiry[.]”). We have said that it is “a mixed question of fact and law.” Verma v. 3001 Castor, Inc.,937 F.3d 221, 229
(3d Cir. 2019). But that is an understatement because, as the Supreme Court has cautioned, “[m]ixed questions are not all alike.” U.S. Bank Nat. Ass’n v. Vill. at Lakeridge, LLC,138 S. Ct. 960, 967
(2018). Some mixed questions involve the articulation of a “pristine legal standard” or the development of “auxiliary legal principles” from a “broad legal standard.”Id.
Others “immerse courts in case-specific factual issues— compelling them to marshal and weigh evidence[.]”Id.
When considering mixed questions, we must ask whether “it entails primarily legal or factual work.”Id.
If the mixed question involves primarily factual work, appellate courts should defer to the court that is most adept at clarifying and resolving factual disputes.Id. at 968
.
3
Here, it is not even close: the mixed question is
overwhelmingly factual. The majority’s test posits four factual
questions while emphasizing that the “[u]ltimate[] touchstone”
is the “economic reality” of “the cumulative circumstances . . .
between the athlete and college or NCAA[.]” Maj. Op. at 36.
And where, as here, the inquiry is essentially factual or presents
conflicting inferences that can be drawn from undisputed facts,
the ultimate question must be resolved by the fact-finder. See
Razak v. Uber Techs., Inc., 951 F.3d 137, 145(3d Cir. 2020) (reversing summary judgment because question of employee status under FLSA must go to a fact-finder); Verma,937 F.3d at 229
(same).
The majority does not return this interlocutory appeal to
the District Court with a case-dispositive legal rule. This lack
of a clear rule is unsurprising. The question presented2
necessarily invites finding, weighing, and balancing a
multitude of as-yet undeveloped facts that will vary widely
across many thousands of student-athletes, teams, sports,
colleges, and universities. In that sense, it is like the question
presented in Link, 550 F.2d at 861 (whether an antitrust action
with potentially 300,000 claimants is manageable as a class
action), which we declined to answer because it was fact-
dependent, id. at 863. Similarly, a yes-or-no answer is
impossible under the majority’s test, inevitably leading to over-
or under-inclusion. Fashioning a pure legal rule is impossible
2
“Whether NCAA Division I student-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.” App. 35.
4
here, and I do not fault the majority for failing to provide one.
But we should have refused to certify the order and even now
we should decline to answer this intensely fact-bound question.
B. The Plaintiffs’ pleading and the
parties’ briefing makes this case even
less suitable for interlocutory review.
Plaintiffs’ manner of pleading and the parties’ briefing
compounds these problems by failing to discuss Plaintiffs’ own
experiences and the heterogeneity that exists between different
types of college athletes. The economic relationship between
the quarterback of a Power Four conference football team and
his university is presumably different than the relationship
between, say, a Conference USA school and a member of its
bowling team. But the First Amended Complaint (FAC) treats
all student-athletes the same.
Collective-action plaintiffs must plead plausible claims
at a sufficient level of specificity. For example, in Davis v.
Abington Mem’l Hosp., we held that the plaintiffs’ failure to
allege a specific week in which they worked more than 40
hours made their claims “insufficient.” 765 F.3d 236, 242–43 (3d Cir. 2014). Merely alleging that they “typically” or “frequently” did so, without more, was not enough.Id.
(internal quotation marks omitted). Though exact dates and times for every week aren’t necessary, pleadings lacking any specific instances do not establish a plausible claim under Rule 8.Id. at 243
.
And in Karlo v. Pittsburgh Glass Works, LLC, we
discussed the “two-step certification process” employed in
FLSA collective actions. 849 F.3d 61, 85 (3d Cir. 2017). First,
5
under conditional certification, named plaintiffs must make a
“modest factual showing to demonstrate a factual nexus
between the manner in which the employer’s alleged policy
affected him or her and the manner in which it affected the
proposed collective action members.” Id.(internal quotation marks and quoted source omitted) (emphasis added). Second, under final certification, “[t]he named plaintiffs bear the burden of showing that the opt-in plaintiffs are similarly situated to them for FLSA purposes.”Id.
(internal quotation
marks and quoted source omitted).
Here, the named plaintiffs played football at Villanova
University (Johnson), swimming and diving at Fordham
University (Kerkeles), baseball at Fordham University
(Labella), tennis at Sacred Heart University (Ruiz), soccer at
Cornell University (Willebeek-Lemair), and tennis at Lafayette
College (Cooke). Rather than describing their own, individual
circumstances, Plaintiffs’ FAC describes the alleged
experiences of student-athletes generally. The FAC is
interspersed with anecdotes about non-party student-athletes
and their schools, but it says little about the individual
Plaintiffs and their universities. See App. 107–12. It
sweepingly refers to “NCAA D1 member schools, like
Villanova,” but fails to describe lead-Plaintiff Ralph Johnson’s
experiences at Villanova except to allege that his football-
related responsibilities could have limited his ability to sign up
for certain classes. App. 86 (FAC ¶ 93).
The other named Plaintiffs’ alleged experiences are
even less particularized: their names appear almost solely in
paragraphs reciting jurisdictional requisites, class definition,
and FLSA collective allegations. App. 65–66 (FAC ¶¶ 19–24).
Plaintiffs’ generic pleading masks an underlying heterogeneity
6
among them and the thousands of student-athletes playing
different sports at different universities across the country. At
this interlocutory stage, the prudent course is for us to abstain.
II. The majority’s historical and sociological
survey is inappropriate.
This appeal is taken from the District Court’s denial of
a motion to dismiss under Fed. R. Civ. P. 12(b)(6). In this
posture, we, like the District Court, may consider “only the
allegations contained in the complaint, exhibits attached to the
complaint, and matters of public record.” Doe v. Univ. of
Sciences, 961 F.3d 203, 208 (3d Cir. 2020) (internal quotation
marks and quoted source omitted).
The majority opinion, however, opens with a seventeen-
page discussion of the history, sociology, and economics of
intercollegiate sports. Maj. Op. at 6–23. It includes fifty-five
references to news articles, books, journal articles, and online
sources—none of which is in the appellate record. The factual
assertions in these sources and the inferences drawn therefrom
have not been litigated and lack the benefit of party
presentation. Although the entire section is dicta, I find it
objectionable.
III. Traditional multifactor tests and the
amateurism principle are unhelpful guides.
I agree with the majority’s rejection of the tests in Glatt
v. Fox Searchlight Pictures, Inc., 811 F.3d 528(2d Cir. 2016), Donovan v. DialAmerica Mktg., Inc.,757 F.2d 1376
(3d Cir.
1985), and other cases distinguishing employee workers from
independent-contractor workers or interns. In those cases, the
7
analysis began with the undisputed premise that individuals
performed “work” that was necessary and integral to their
employer’s business. See Donovan, 757 F.2d at 1385. Here, the
critical antecedent question is whether student-athletes are
“workers” providing “services” to an employer. The Glatt and
Donovan multi-factor tests do not even attempt to answer that
question, so they are inapposite.
I do not question the existence or virtue of amateurism
in college athletics.3 But a combination of market forces,
decades-spanning behavior of the NCAA and some Division I
teams and athletes, and the Supreme Court’s relevant antitrust
decisions4 have enervated that concept, at least for some
student-athletes. Whatever legal force amateurism once had in
the Division I context, it is now insufficient to decide cases like
this one. Instead, we must look to the language and rules
provided by statute and Supreme Court decisions.
IV. Play is not work.
The FLSA applies only to “employees” who perform
“work” for an “employer.” Walling v. Portland Terminal Co.,
330 U.S. 148, 150–51 (1947). So an obvious starting point is
to ask whether a student-athlete may play her chosen sport
because she wants to play, not to work primarily for her
university’s benefit. Play is arguably a basic human good that
3
See, e.g., Lincoln Allison, Amateurism in Sport
(2001).
4
See NCAA v. Alston, 141 S. Ct. 2141, 2157–58 (2021).
8
many pursue for its own sake.5 It is not work, even though it
may involve sustained, regulated, physical, or intellectual
exertion and combine with other goals such as competition,
teamwork, fitness, or personal glory.6
If a student-athlete participating in an NCAA-
sponsored sport—fencing, water polo, rifle, track and field,
golf, beach volleyball, or skiing, for example—is engaged in
play rather than work, then none of the commonly used tests
will be useful because the FLSA simply does not apply.
The FLSA does not define “work.” The Supreme Court
interprets it as denoting “physical or mental exertion (whether
burdensome or not) controlled or required by the employer and
performed necessarily and primarily for the benefit of the
employer and his business.” IBP, Inc. v. Alvarez, 546 U.S. 21,
25(2005) (quoting Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 US. 590, 598 (1944)). But the dictionary from which the Supreme Court derived that definition specifically distinguishes work “from something undertaken primarily for pleasure, sport, or immediate gratification, or as merely incidental to other activities[.]” Tennessee Coal,321 U.S. at 598
n.11 (quoting Websters Int’l Dictionary (2d ed.
unabridged)) (emphasis added). So even the Court’s broad
definition of work does not encompass play or sport.
5
See, e.g., John Finnis, Natural Law and Natural Rights
87, 140–42 (1980).
6
See, e.g., Anthony J. Celano, Play and the Theory of
Basic Human Goods, 28 Am. Phil. Q. 137, 139–40 (1991).
9
Division I student-athletes perform at the top of their
highly competitive sports, and some are world-class. They
certainly exert themselves physically and mentally. In
colloquial terms, they “work out,” just as lesser athletes and
fitness buffs do. But not all exertion is “work” for purposes of
the FLSA.
In Walling, the Court explained that the FLSA does not
cover a person who, “without promise or expectation of
compensation, but solely for his personal purpose or pleasure,
work[s] in activities carried on by other persons either for their
pleasure or profit.” 330 U.S. at 152. The Department of Labor
makes the same distinction. See United States Dep’t of Labor
Wage and Hour Division, Field Operations Handbook
§ 10b03(e) (activity of college students participating in
interscholastic athletics primarily for their own benefit as part
of the educational opportunities provided to the students by the
school is not “work”).7
Plaintiffs alleged that their college athletic experiences
constitute work. App. 61, 63 (FAC ¶¶ 1, 9). But that allegation
has not been proven, and unlike in the independent-contractor
and intern cases, it is not a given here. Even at the Rule
12(b)(6) stage, we “are not bound to accept as true a legal
conclusion couched as a factual allegation.” Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation
marks and quoted source omitted).
7
Available at https://www.dol.gov/sites/dolgov/
files/WHD/legacy/files/FOH_Ch10.pdf (last visited June 18,
2024).
10
The majority opinion helpfully acknowledges this
nettlesome issue. Maj. Op. at 30. But in my view, its
definitional test8 does not adequately probe the distinction
between play and work, nor explain how district courts should
do so. In the following sections, I will explain my other
scruples about the majority’s proposed test and offer some
affirmative thoughts.
V. The economic-reality test continues to apply
in FLSA cases.
Congress and the Supreme Court have created a
patchwork of tests for determining employee status under
federal labor and employment laws. Initially, the Court used an
“economic realities” test in cases applying the National Labor
Relations Act (NLRA), FLSA, and Social Security Act (SSA).
See NLRB v. Hearst Publications, 322 U.S. 111(1944) (NLRA); Walling,330 U.S. 148
(1947) (FLSA); United States v. Silk,331 U.S. 704
(1947) (SSA). Almost immediately, Congress passed a joint resolution (the “Gearhart Resolution”) rejecting the economic-realities test for the NLRA and SSA, and reiterating its intention that employee status under those statutes should be determined by traditional agency law principles.62 Stat. 438
(1948). But Congress did not similarly
amend the FLSA.
Since then, the Supreme Court has applied the common-
law definition of “employee” to federal statutes that do not
define “employee” or define it circularly. See Cmty. For Create
Non-Violence v. Reid, 490 U.S. 730 (1989) (interpreting the
8
See Maj. Op. at 34, 40.
11
Copyright Act of 1976); Nationwide Mut. Ins. Co. v. Darden,
503 U.S. 318(1992) (interpreting the Employee Retirement Income Security Act of 1974); Clackamas Gastroenterology Assocs., P.C. v. Wells,538 U.S. 440
(2003) (interpreting the
Americans with Disabilities Act of 1990).
But the Court has continued to apply the economic-
reality test in FLSA cases. See Walling, 330 U.S. at 150–51
(rejecting “common law employee categories” and considering
economic reality of the parties’ relationship); Rutherford Food
Corp. v. McComb, 331 U.S. 722, 729(1947); Goldberg v. Whitaker House Co-op, Inc.,366 U.S. 28, 33
(1961); Tony & Susan Alamo Found. v. Sec’y of Labor,471 U.S. 290, 301
(1985). So have we. See Burrell,60 F.4th at 43
; Razak,951 F.3d at 144
; Verma,937 F.3d at 230
; Thompson v. Real Estate Mortg. Network,748 F.3d 142, 148
(3d Cir. 2014); In re Enterprise Rent-A-Car Wage & Hour Emp’t Prac. Litig.,683 F.3d 462
, 467–68 (3d Cir. 2012); Haybarger v. Lawrence Cnty. Adult Prob. & Parole,667 F.3d 408
, 417 n.8 (3d Cir. 2012) (“Since [1961], we and other circuits have applied the economic reality test to decide whether entities qualify as employers under the FLSA.”); Reich v. Gateway Press, Inc.,13 F.3d 685
, 695 n.12 (3d Cir. 1994) (“This court and others have often applied an ‘economic reality’ test when interpreting the FLSA.”); E.E.O.C. v. Zippo Mfg. Co.713 F.2d 32
, 36 (3d
Cir. 1983) (“The ‘economic realities’ standard is generally
used in cases involving the Fair Labor Standards Act
(‘FLSA’).”); Donovan, 757 F.2d at 1383–84.
So do other courts of appeals. See, e.g., Adams v. Palm
Beach Cnty., 94 F.4th 1334, 1337 (11th Cir. 2024) (“The
touchstone of the employee inquiry is one of ‘economic
reality.’”) (quoted source omitted); Klick v. Cenikor Found.,
12
94 F.4th 362, 369(5th Cir. 2024) (“The ultimate determination turns on the ‘economic reality’ of the relationship between the parties involved.”); Vallone v. CIS Solutions Group, LLC,9 F.4th 861, 866
(8th Cir. 2021) (“The test of employment is one of economic reality.”); Mendel v. City of Gibraltar,727 F.3d 565, 569
(6th Cir. 2013) (“The Supreme Court has adopted an
‘economic reality’ test to determine whether an individual is an
employee under the FLSA.”).
Other courts wrestling with the FLSA-employee
question in the specific context of student-athletes have also
applied an economic-reality test. See Dawson v. Nat’l
Collegiate Athletic Ass’n, 932 F.3d 905, 909(9th Cir. 2019); Berger v. Nat’l Collegiate Athletic Ass’n,843 F.3d 285, 290
(7th Cir. 2016).
The FLSA shares the Employee Retirement Income
Security Act’s (“ERISA’s”) “completely circular” definition
of “employee.” In Darden, the Supreme Court held that
ERISA’s use of the term “employee” “incorporate[s]
traditional agency law criteria.” 503 U.S. at 319. So Darden arguably supports abandoning the economic-reality test in favor of “common-law agency doctrine” in FLSA cases too. Darden,503 U.S. at 323
.
However, doing so would abrogate Walling’s clear
rejection of “common law employee categories” and decades
of precedent using the economic-reality standard in FLSA
cases. Only the Supreme Court can abrogate its precedents.
State Oil Co. v. Khan, 522 U.S. 3, 20 (1997) (“[I]t is this
Court’s prerogative alone to overrule one of its precedents.”).
So while I appreciate the majority’s attempt to fashion a test
using common-law agency principles from NLRA cases, Maj.
13
Op. at 31–34, I respectfully decline to join that analysis without
clearer direction from the Supreme Court. Instead, I think that
the proper test for this case is to determine the economic reality
of the parties’ relationships considering the circumstances of
the whole activity.9
VI. The majority’s test raises but does not answer
some important questions.
In addition to my doubts about relying on common-law
agency principles in the FLSA context, I find the majority’s
four-part test wanting in some respects.
a
The test begins by asking whether the student-athlete
performs “services” for his college or university. The majority
does not define “services,” but its test largely tracks the
9
Particularly in the independent-contractor context,
courts have sometimes attempted to discern economic reality
by applying a multifactor test such as the one we used in
Donovan. As noted above and in the majority opinion, such
tests are inapposite and unhelpful here. There is no “single
‘economic realities’ test consisting of uniform factors” that
apply to every case. Brown v. New York City Dept. of Educ.,
755 F.3d 154, 167(2d Cir. 2014). Because the plaintiffs in this case are “sui generis,” Maj. Op. at 29, the economic-reality question does not turn on “isolated factors” but can only be answered by considering “the circumstances of the whole activity.” Rutherford Food Corp.,331 U.S. at 730
.
14
Restatement (Third) of Agency’s definition of servant. That
definition has not materially changed since the first
Restatement of Agency (1933):
A servant is a person employed to perform
services for another in his affairs and who with
respect to the physical conduct in the
performance of the services is subject to the
other’s control or right to control.
Restatement (Third) of Agency § 220 (2006).
Webster’s New International Dictionary 2288 (2d ed.
1950) defines “service” as the “[p]erformance of labor for the
benefit of another or at another’s command.” See also Black’s
Law Dictionary (11th ed. 2019) (“labor performed in the
interest or under the direction of others”); Webster’s New
International Dictionary (3d ed. 1993) (“the performance of
work commanded or paid for by another”).
So the first part of the majority’s test immediately
raises—but does not clarify—the critical distinction between
“service,” “labor,” or “work,” as distinguished from play or
sport. In a general sense, student-athletes serve the teams for
which they play. But that is true of anyone who has ever played
on a team: each player contributes her measure of skill and
effort—her services, as it were—for the good of the entire
team. That’s the whole point of team sports. But one’s
contribution in the service of teamwork does not necessarily
create an employment relationship.
15
b
The second part of the majority’s test asks whether the
student-athlete’s team participation is necessarily and
primarily for the university’s benefit. Again, there is a sense in
which student-athletes obviously play for the benefit of their
university’s team. The NCAA Transfer Portal offers student-
athletes the flexibility each year to choose where they wish to
play. Once the student-athlete chooses, he enrolls in his chosen
college or university and becomes a member of its team. But
that has little or nothing to do with employment status; it’s a
basic correlate of matriculation and team membership.
Naturally, the student’s athletic prowess benefits his chosen
team and university because that is how team sports operate.
Division I student-athletes play or provide athletic “services”
for the benefit of their team just as Division II, Division III,
and high school athletes play or provide athletic “services” for
the benefit of their respective teams. But something more is
required to convert the majority’s university-as-beneficiary
factor into a useful indicia of employment.
For example, in Alamo Foundation, the religious
foundation doubled as a commercial enterprise through its
operation of profit-seeking “businesses serv[ing] the general
public in competition with ordinary commercial enterprises.”
471 U.S. at 299. The enterprise included “service stations, retail clothing and grocery outlets, hog farms, roofing and electrical construction companies, a recordkeeping company, a motel, and companies engaged in the production and distribution of candy.”Id. at 292
. The putative volunteers’ work for those “ordinary commercial businesses” produced economic benefits for the foundation, so it was appropriate to characterize them as employees.Id. at 298
. Here, the factfinder
16
should consider whether a university’s sports team is (a)
economically comparable to one of the Alamo Foundation’s
profit-seeking businesses, or (b) essentially an extra-curricular
activity creating at best indirect and attenuated economic
benefit for the university.
c
The third factor of the majority’s test asks whether the
student-athlete plays under the university’s control or right of
control. This principle of agency law is not particularly helpful
in the context of intercollegiate sports. High school students do
not set their own rules for recruitment and college students do
not set their own rules for eligibility and participation. Such
autonomy would invite chaos, undermine teamwork, and
destroy competition. Because team sports are collective
actions, all teams have coaches and administrators that
evaluate players, assemble rosters, allocate playing time, make
personnel changes, determine strategy, call plays, set practice
and game schedules, arrange transportation, and so forth. The
players do not act independently of each other and the coaches
because, again, team sports are collective actions requiring
significant direction and coordination. The control or right-of-
control factor does not go very far to distinguish Division I
athletes from Division II athletes, Division III athletes, or other
organized team-sport participants.
d
The fourth factor of the majority’s test asks whether the
student-athlete provides services “in return for ‘express’ or
‘implied’ compensation of ‘in-kind benefits.’” I agree that this
factor is relevant to the work/play and employee/non-employee
17
distinctions. The Supreme Court declared so in Walling, 330
U.S. at 152, and Alamo Found., 471 U.S. at 301–02.
In Alamo Foundation, the Court held that self-
proclaimed volunteers who were “entirely dependent upon the
Foundation for long periods” were actually employees because
they accepted “in-kind benefits . . . in exchange for their
services.” Id. at 293, 301(internal quotation marks and quoted source omitted). The benefits, according to the Court, amounted to “wages in another form.” Id. at 301. So even atypical modes of compensation can create employment relationships under the FLSA. What matters is the existence of some express or implied compensation arrangement and economic dependence. Theoretically, this approach might allow the would-be employer to avoid FLSA coverage simply by refusing to pay would-be employees as a matter of policy. See Alston,141 S. Ct. at 2167
(Kavanaugh, J., concurring). But
if the Supreme Court’s compensation rule is enforced, such
avoidance tactics will be futile. If universities offer in-kind
benefits—such as, perhaps, scholarships10 that can be
10
The significant grant-in-aid and in-kind benefits that
Division I schools have long given through athletic
scholarships are excluded from income under IRS rules. Rev.
Rul. 77-263, 1977-2 C.B. 47. That raises a legislative question
rather than an adjudicative question: what effect federal tax
policy has, or should have, on the economic-reality analysis.
18
cancelled mid-year if an athlete quits her team11—they must
navigate the rule of Alamo Foundation.12
What if an alleged employment relationship is voluntary
and truly implicates no compensation arrangement or wage-
like benefits for work in a commercial setting? In that case, the
purported employee might be a “person who, without promise
or expectation of compensation, but solely for his personal
purpose or pleasure, work[s] in activities carried on by other
persons either for their pleasure or profit.” Walling, 330 U.S.
at 152. The FLSA was “obviously not intended” to classify all such persons as employees, “[o]therwise, all students would be employees of the school or college they attended.”Id.
11
The NCAA Division I bylaws allow member
institutions to reduce or cancel athletic grants-in-aid during the
period of the award if the student “withdraw[s] from their
sport.” Suppl. Br. for Appellants Cornell University, Villanova
University, Fordham University, Lafayette College, NCAA,
and Sacred Heart University at 3 (citing NCAA Div. I Bylaws
§ 15.3.4.2(d)). Plaintiffs do not argue that they received aid
that amounted to compensation under Alamo Foundation. To
do so, they would have to offer pleadings as to their own
personal experiences and circumstances, not a sociological
survey of the life of a representative student-athlete at a typical
Division I university.
12
Ivy League universities do not award athletic
scholarships, further highlighting the heterogeneity among
Division I conferences, schools, sports, teams, and student-
athletes.
19
In Alamo Foundation, the disguised wages were paid
for work performed in the foundation’s various commercial
businesses. How those businesses compare to any given sports
team at any given college is another knotty factual question.
And although we may not consider facts that are not alleged in
the FAC, the economic reality surrounding the compensation-
bargain factor is in flux and will dramatically change even as
the ink on this opinion is drying.13
According to the majority, “profit” has always
influenced “college athletics.” Maj. Op. at 10. The majority
emphasizes the enormous revenue that “college athletes”
generate annually. Id. at 11. But revenue is not profit. And the
majority’s historical discussion diminishes the role of so-called
nonrevenue generating sports at colleges and universities. In
this pre-discovery posture, however, my general understanding
is that for most student-athletes, the economic reality is that
their athletic service, and their team’s existence, is revenue-
negative. Football Bowl Subdivision (“FBS”) football and
March Madness-level men’s basketball are spectacular
exceptions because they attract lucrative television deals.
Compared to FBS schools, the revenue vs. nonrevenue
issue is presumably even more pronounced in the smaller
Division I Football Championship Subdivision (“FCS”)
athletic programs. But the majority offers no guidance about
13
See, e.g., NCAA Agrees to Share Revenue With
Athletes in Landmark $2.8 Billion Settlement, The Wall Street
Journal (May 23, 2024), available at
https://www.wsj.com/sports/basketball/ncaa-revenue-athletes-
settlement-0b53306d (last visited June 20, 2024).
20
how courts or factfinders applying an economic-reality test
should consider student-athlete participation in nonrevenue
sports.14 Are they part of the “business” of a college or
university? For that matter, are athletics—though obviously
important for various reasons—incidental to the university’s
business or essential to it? Does a college benefit from revenue-
negative athletic programs? If so, how does that benefit differ
from the cash produced by football, men’s basketball, or the
profit-seeking businesses in Alamo Foundation? And how is
the “economic reality” of a nonrevenue student-athlete’s
relationship with his university different from that of a
musician whose performing arts scholarship is conditioned on
her time-consuming participation in a band or orchestra? Or
from a member of the school’s competitive esports team who
may also receive a scholarship? We cannot begin to answer
14
Obviously, I do not suggest that only workers in
profitable companies can be employees under the FLSA. But
in this “sui generis” context, Maj. Op. at 29, the distinction
between revenue sports and nonrevenue sports may help to
separate—as a matter of economic reality—those student-
athletes who “work” for the tangible benefit of their university
from those whose “play” confers no comparable benefit.
21
such questions in this interlocutory appeal.15 Nor can they be
answered in gross. The answers will likely differ among
individuals, teams, sports, and schools.
I tend to agree with Judge Hamilton’s intuition that the
economic-reality question probably shakes out differently for
FBS football players and March Madness-level men’s
basketball players than it does for other student-athletes.16 See
15
We cannot declare as a matter of law which activities
are essential or incidental to a particular university’s business,
let alone all universities’ businesses. That question is both fact-
intensive and value-laden. A few college sports would be
considered big business by any standard—so much so that
Power Four conferences are now considering private equity
investments. On the other hand, as the Supreme Court has said
in a different labor-law context, “[t]he ‘business’ of a
university is education[.]” N.L.R.B. v. Yeshiva Univ., 444 U.S.
672, 688 (1980). If one’s favorite college team were to
evaporate overnight, the institution would presumably
continue to teach, research, publish, confer degrees, and
perform the work that all universities have carried on for nearly
a millennium. Economists, sociologists, accountants,
historians, philosophers, professors, students, student-athletes,
and sports fans might all offer different perspectives on the
essential-or-incidental-question. This and other questions
generated by this interlocutory appeal are more legislative than
adjudicative. That is another reason for this Court to proceed
slowly and cautiously, lest the courts be used to precipitate
sweeping and essentially legislative changes.
16
Exceptions surely exist from time to time, such as the
2024 Women’s Final Four.
22
Berger v. NCAA, 843 F.3d 285, 294(7th Cir. 2016) (Hamilton, J., concurring). See also NCAA v. Alston,141 S. Ct. 2141
, 2166–69 (2021) (Kavanaugh, J., concurring) (focusing on the “enormous sums of money” generated in college athletics and noting distinction between revenue and “nonrevenue-raising sports”); Agnew v. NCAA,683 F.3d 328
, 340–41 (7th Cir.
2012) (positing a relevant labor market, for purposes of the
Sherman Act, consisting of “big-time college football
programs”). That is a factual matter that the parties can develop
in discovery. But any test that purports to gauge “economic
reality” must be sensitive to the glaring difference between
revenue generating and nonrevenue intercollegiate sports.
VII. The FLSA-employee test should account for
longstanding precedent and existing law.
For over 65 years, courts across the country have
determined that student-athletes do not qualify as employees
of their universities. See Dawson, 932 F.3d at 911; Berger,843 F.3d at 293
; Kavanagh v. Trs. of Bos. Univ.,440 Mass. 195
(Mass. 2003); Korellas v. Ohio State Univ.,121 Ohio Misc.2d 16
(Ohio Ct. Cl. 2002); Shephard v. Loyola Marymount Univ.,102 Cal.App.4th 837
(Cal. Ct. App. 2002); Waldrep v. Texas Emps. Ins. Ass’n,21 S.W.3d 692
(Tex. Ct. App. 2000); Townsend v. State of Cal.,191 Cal.App.3d 1530
(Cal. Ct. App. 1987); Rensing v. Ind. State Univ. Board of Trs.,444 N.E.2d 1170
(Ind. 1983); Coleman v. Western Mich. Univ.,125 Mich. App. 35
(Mich. Ct. App. 1983); State Comp. Ins. Fund v. Indus. Comm’n,135 Colo. 570
(Colo. 1957).
As the Supreme Court emphasized in the antitrust
context, changing market realities can throw such precedent
into doubt. See Alston, 141 S. Ct. at 2158. But in that event, our
23
test for employee status under the FLSA should isolate the
changed facts and market realities that distinguish the
venerable line of precedent. Again, that exercise may highlight
the growth of a unique and robust labor market for FBS
football and Division I basketball players. See, e.g., O’Bannon
v. NCAA, 802 F.3d 1049, 1056 (9th Cir. 2018) (discussing
antitrust market for FBS football and Division I men’s
basketball).
This case also presents difficult collateral legal issues
that should give us pause. For example, the related-statutes
canon requires harmonious interpretation of statutes. See
Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 252–55 (2012). Employee-
employer relationships are governed by Title VII, among other
things, but Title VII’s prohibition against employment
discrimination because of sex sits uneasily with Title IX
regulations and policy interpretations mandating equal
“participation opportunities” (read, “participants”) between the
two sexes. See, e.g., Michael E. Rosman, Gender Identity,
Sports, and Affirmative Action, 53 St. Mary’s L. J. 1093, 1119–
39 (2022). FLSA employee status for student-athletes would
also roil the percolating debate under Title IX over transgender
athletes’ participation on opposite-sex teams because Title VII,
which would apply to collegiate athletics if student-athletes
have employee status under FLSA, prohibits employment
discrimination on the basis of gender identity. See Bostock v.
Clayton Cnty., 140 S. Ct. 1731 (2020). The notion that sports
are integral to a university’s educational purpose, rather than
employment programs themselves, is the basis for several tax-
advantageous rules benefitting universities and student-
athletes, such as unrelated business income tax, and the
taxation of athletic scholarships. And our disposition of this
24
interlocutory appeal could impact student-athletes’ eligibility
for federal student aid, state worker’s compensation regimes,
student-athletes’ immigration status, and the employment
status of students participating in other college-supervised
extracurricular activities. These potentially disruptive
collateral effects implicate many other statutory schemes,
revealing the legislative rather than adjudicative nature of
plaintiffs’ claims and providing another reason to slow down
and proceed warily.
VIII. Conclusion
To the extent that the majority holds simply that it is
factually possible for a Division I student-athlete to be an
employee under the FLSA, I concur in that judgment.
25
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