College athletes often receive scholarships to attend universities often valued at tens of thousands of dollars. But is it enough? Presently, the National Collegiate Athletic Association (NCAA) prohibits universities from paying student athletes despite colleges and universities raking in millions of dollars for lucrative sports like football and basketball.
Recent & Pending Litigation
Last month, Lamar Dawson, a former University of Southern California student-athlete, filed a proposed class action lawsuit in federal court against the NCAA and Pac-12 Conference claiming that college football players are employees who deserve to be paid wages.
Dawson’s suit is the latest attempt for college athletes to obtain the same legal protections as employees. According to Dawson’s suit, the NCAA and the PAC-12 failed to pay student athletes minimum wage and overtime as required by the Fair Labor Standards Act (FLSA) and California law. To support his argument, Dawson alleges that the NCAA and the PAC-12 are joint employers of football players at the University of Southern California, University of California Los Angeles, Stanford University and nine other schools in the PAC-12 Conference. Dawson claims that, like employers, the organizations exercise a high degree of control over the players’ on- and off-campus activities and restrict the players’ ability to earn compensation from other sources.
Other student-athletes have filed wage-and-hour class actions against the NCAA claiming they were employees. On October 3, 2016, the U.S. Supreme Court declined to hear an appeal in O’Bannon v. NCAA. You can read the petition for a writ of certiorari here: http://www.scotusblog.com/case-files/cases/obannon-v-ncaa/. The issue in O’Bannon involved federal anti-trust laws. The student athletes in O’Bannon were basketball players. They argued that the NCAA was violating anti-trust laws by restricting what college athletes can earn. The athletes further argued that they should receive compensation for the commercial use of their names and images in video games and on T.V. On the other hand, the NCAA responded that college athletes were amateurs and that the distinctive nature of college sports would be destroyed by turning a scholastic model into a professional one. In O’Bannon, the lower federal appeals court in California, in a seeming attempt to split the baby, issued a decision that left both sides unhappy. The court ruled against the NCAA, saying its amateurism rule violated anti-trust rules, but went on uphold the NCAA’s restrictions prohibiting colleges from paying athletes beyond offering scholarships and providing student athletes a few thousand dollars for “the cost of attendance.” Since the SCOTUS did not grant certiorari, the ruling of the Ninth Circuit stands.
In February 2016, the U.S. District Court for the Southern District of Indiana dismissed a complaint against the NCAA and 123 member schools filed by three University of Pennsylvania track athletes who alleged that they were employees of the school for purposes of the FLSA. Like Dawson, the student athletes argued that the schools reaped large financial benefits from their efforts. The court concluded that school activities such as interscholastic athletics “do not result in an employee-employer relationship between the student and the school or institution,” even if a student receives a minimal payment for participation (Berger v. NCAA, No. 1:14-cv-1710 (S.D. Ind. 2016)). The case was argued on appeal to the 7th Circuit Court of Appeals on Sept. 28, 2016. You can hear the oral argument here: http://media.ca7.uscourts.gov/sound/external/rt.16-1558.16-1558_09_28_2016.mp3 .
Some proponents of paying student athletes, like ESPN college basketball analyst Jay Bilas, advocate for a free market approach saying that athletes should reap whatever the market will bear. Others argue that colleges and universities should employ the so-called Olympic model, in which players would generate income from endorsements, autographs, jobs, and control of their image and likeness.
On the other side of the divide are those who believe that a college scholarship is pay enough. For example, a full athletic scholarship (a “grant-in-aid”) at an NCAA Division I university is about $65,000 if you enroll at a college with high tuition. Most of those taking this position are athletic directors and coaches. Additionally, if college athletes receive a salary as opposed to scholarship, they will have to pay income taxes. So, while a salary of $100,000 a year might seem like a good deal for a college kid, he may not have enough left over after he pays Uncle Sam to pay his tuition since under the present tax code tuition scholarships are tax deductible. A second concern is that universities cannot afford to pay the players. In fact, by most estimates even the most well-established college sports programs operate in the red.