On July 11, the United States Third Circuit Court of Appeals affirmed a district court’s decision to reject a request from the National Collegiate Athletics Association to dismiss a landmark case for student athletes. The case, Johnson v. NCAA, asks whether universities should consider student athletes employees — a crucial question in Dartmouth’s dispute over the basketball team unionizing in March.
Johnson — initially filed by athletes at several NCAA Division I schools in 2019 — argues that the plaintiffs are employees of their schools and the NCAA “within the meaning of the Fair Labor Standards Act,” University of New Hampshire School of Law professor Michael McCann wrote in an email statement to The Dartmouth. The plaintiffs are arguing for back wages if the NCAA is found to be in violation of the FLSA, Southeastern Louisiana University sports law professor Joseph Sabin said.
The Dartmouth men’s basketball team became the first successful college athlete union following the National Labor Relations Board regional director’s ruling that the players are university employees, according to past reporting by The Dartmouth. The College has refused to bargain with the union and requested a review of the NLRB regional director’s ruling by the national NLRB, The Dartmouth reported in March.
According to Sabin, the July 11 ruling opens up the door for further argument on whether players are university employees because the Third Circuit did not directly rule on the issue.
“This just means that there’s a plausible enough case that the [district] court can listen to arguments … as opposed to just getting it thrown out the door,” Sabin said.
While dealing with similar issues, the Johnson case will not directly influence the Dartmouth men’s basketball team union’s ongoing case before the National Labor Relations Board because the two cases concern different employment laws, according to McCann.
“Johnson concerns the FLSA, which is about guaranteeing minimum wage, while [the] Dartmouth [case] concerns the [National Labor Relations Act], which guarantees the right to organize and bargain through unionization,” McCann wrote.
However, the July 11 decision and final outcome of Johnson may indirectly influence the Dartmouth men’s basketball team’s NLRB case. McCann said the ruling is a “positive sign” for the Dartmouth men’s basketball team because a federal appeals court and federal district judge have now “voiced support for the recognition of college athletes as employees.”
“There appears to be momentum, from both conservative and progressive voices, for the recognition of college athletes as employees,” McCann wrote.
According to McCann, the Johnson plaintiffs have a “number of steps left to play out” but are “winning” so far. The case will return to a district court judge who has already “signaled support for finding the players are FLSA employees” by previously applying a different FLSA employment test to the case, according to McCann.
Service Employees International Union, Local 560 president Chris Peck concurred — adding that the ruling opens the door for student athletes to receive wages from universities. Local 560 has represented the men’s basketball team union since March, according to past reporting by The Dartmouth.
“A positive decision in Johnson v. NCAA will result in varsity athletes filing back wage claims, including penalties, that could potentially total in the millions of dollars,” Peck wrote. “Dartmouth could avoid those penalties by bargaining in good faith with the student employees working as athletes for the College.”
Peck added that Dartmouth is “in violation of federal labor law” by refusing to bargain with the men’s basketball team union.
According to Peck, Dartmouth men’s basketball players go through a special admissions process, with recruited athletes who “meet certain academic and financial standards” receiving “full scholarships” through need-based aid. Peck added that Dartmouth men’s basketball players receive other forms of compensation, such as athletic gear, meals and a stipend.
In a July 19 letter filed to the NLRB, attorneys for the Board of Trustees claimed that the basketball team should not be considered employees because they do not make the College money. When asked for comment, a representative for the College directed The Dartmouth to the filing.
“Johnson only underscores that Dartmouth’s men’s varsity basketball players are not employees under any applicable test,” the Board of Trustees filing wrote.
The July 11 ruling instructed the district court to apply the “economic realities test” — which states that an individual is an employee if they perform services “primarily for [another] party’s benefit,” work “under that party’s control” and receive “express or implied compensation” — to determine if the athletes are employees, Sabin said.
In its filing, the Board of Trustees wrote that Dartmouth student athletes are not employees because they do not receive athletic scholarships to participate in athletics programs which generate “hundreds of millions of [dollars of] revenue.”
Instead, student athletes receive need-based financial aid that is “not conditioned on athletic participation.” The men’s basketball program is offered to “advance [Dartmouth’s] commitment to all students’ academic and personal growth” despite “knowingly [losing] hundreds of thousands of dollars each year,” the filing wrote.
Peck argued that Dartmouth “mislead[s]” community members about the “true value” of the basketball program and varsity sports. The basketball program generates “significant profit” when revenue from March Madness, the basketball team’s share of the Ivy League ESPN+ contract and alumni donations are counted as revenue, he wrote.
Revenue is “irrelevant” to whether athletes are paid or not, according to Southern Utah University economics professor David Berri.
“The minute you sold the ticket, the minute you got a media deal, the minute somebody gave you revenue for this business, it’s now a business, and you have to pay your workers,” Berri said. “You don’t get to decide, ‘I wasted all the revenue — I can’t pay you.’”
Berri added that athletes generate publicity for Dartmouth through the College’s logo on uniforms and the use of the athletics program to advertise the university.
“[Athletics] also just raises the profile of the institution,” Berri said. “It allows people to see it, and that’s important. … This is why those athletes — even if you’re not selling tickets — are still employees. They’re still generating money.”
