Indiana District Court Judge Rules Student Athletes Are Not Employees Under the FLSA

By: Shelbie J. Byers, Drewry Simmons Vornehm, LLP

On February 16, 2016, the Hon. Judge William T. Lawrence of the United States District Court for the Southern District of Indiana ruled that student athletes at collegiate institutions are not employees for purposes of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et.seq. (“FLSA”).  In Berger et. al. v. NCAA, Cause No. 1:14-cv-1710 current and former student athletes at the University of Pennsylvania sought to certify a nation-wide class action of current and former college athletes from 123 NCAA member schools with Division 1 athletic teams.  Plaintiffs alleged they were employees under the wage and hour provisions of the FLSA and thus entitled to be paid at least minimum wage for all hours worked.  The FLSA defines “employee” as “any individual employed by an employer,” 29 U.S.C. 203(e)(1), and “employer” as including “any person acting directly or indirectly in the interest of an employer in relation to an employee,” 29 U.S.C. 203(d).  The FLSA’s definition of “‘employ’ includes to suffer or permit to work.” 29 U.S.C. 203(g).  The court applied the “economic realities” test in looking at whether student athletes were employees under the FLSA.  The court, relying on a Supreme Court case, noted that there is a “revered tradition of amateurism in college sports.”  Citing, National Collegiate Athletic Ass’n v. Board of Regents of Univ. of Okla., 468 U.S. 85, 120 (1984).  The court stated that is was just that tradition which was central to the economic reality of the relationship between the student athletes and Penn.  In support of its ruling that student athletes were not employees under the FLSA, the court noted, “the existence of thousands of unpaid college athletes on colleges campuses each year is not a secret, and yet the Department of Labor has not taken any action to apply the FLSA to them.”  The court ruled that the “economic reality of the situation and the DOL’s position on the issue both point to one conclusion:  the fact that the Plaintiffs participate in an NCAA athletic team at Penn does not make them employees of Penn for FLSA purposes.”

FLSA litigation is poised to remain one of the leading employment-based claims in 2016 with more than 9,000 FLSA lawsuits expected this year.  In data obtained from the Federal Judicial Center, 8,781 FLSA cases were filed in 2015, up nearly 8 percent from 2014 which saw 8,160 cases filed.  Employers should take steps to review their wage and hour policies and procedures, job descriptions and exemption statuses of all employees as a method of wage and hour litigation prevention.