The federal Fair Labor Standards Act (“FLSA”) provides “employees” with important rights, including the right to be paid a minimum wage of $7.25/hour and the right to “time and one-half” overtime pay for hours worked over 40 per week. But these wage rights only apply to “employees,” and the FLSA defines an “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). This circular definition is not too helpful.
Regardless, it’s well-understood that the FLSA’s conception of “employment” is especially broad. Before being appointed to the Supreme Court, the great Hugo Black was a Senator from Alabama and was the moving force behind the FLSA. He characterized the FLSA’s definition of employment as “the broadest . . . that has ever been included in any one act.” 81 Cong. Rec. 7657 (1937). Many courts have repeated this quotation in opinions addressing the scope of FLSA employment. See, e.g., United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945). Moreover, in 1992, the Supreme Court acknowledged the “striking breadth” of the FLSA’s definition of employment and observed that the FLSA “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 326 (1992).
This brings us to Johnson v. NCAA, 108 F.4th 163 (3d Cir 2024), a case in which Division I college athletes from various universities sought to be paid as “employees” under the FLSA. The Third Circuit did not resolve this thorny issue. However, it did set forth the various factors that trial courts must weigh in determining whether college athletes are “employees” under the FLSA. Specifically, in a split-opinion authored by Judge L. Filipe Restrepo, the Court held “that college athletes may be employees under the FLSA when they (a) perform services for [the university], (b) ‘necessarily and primarily for the [university’s] benefit,’ (c) under [the university’s] control or right of control, and (d) in return for ‘express’ or ‘implied’ compensation or ‘in-kind benefits.’” Id. at 180 (internal citations omitted). The Court emphasized that, in applying this multi-factor test, “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.” Id. at 180.
Notably, in adopting the above test, the Circuit Court rejected the use of an alternative test (known as the “Glatt test”) that places a particular emphasis on the purported “benefits” that student athletes accrue through their participation in sports. See id. at 179-80. In this regard, the Court observed that “the educational and vocational benefits of college athletics cited by [the NCAA] 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.” Id. at 180.
Finally, the Circuit Court flatly rejected the NCAA’s argument that “the history and tradition of amateurism” requires a finding that student athletes be deemed non-employees. See id. at 181. The Court explained: “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 181 (quoting NCAA v. Alston, 594 U.S. 69, 109 (2021) (Kavanaugh, J. concurring)). – PW