The NCAA must defend claims that they are a joint employer from student-athletes seeking to be paid for the time they spend participating in collegiate athletic activities. Despite U.S. District Court Judge John Padova’s dismissal with prejudice of wage and hour claims filed by the student-athletes against more than 20 schools that the plaintiffs never attended, he rejected that same argument when raised by the NCAA. Instead, he allowed the Fair Labor Standards Act (FLSA) claim seeking financial remuneration for their participation in Division I athletic activity to continue against the NCAA. (Ralph “Trey” Johnson et al. v. NCAA).

Judge Padova concluded the student-athletes’ allegation that the NCAA is their joint employer, along with the defendant university schools that the student-athletes attended, is possible.

Recognizing that two different entities can be joint employers of the same person if they both have significant control over the employee, Judge Padova utilized a Third Circuit test involving four factors established In Re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation. The four factors to consider if a joint employer relationship exists as outlined in Enterprise include, if an alleged employer can hire and fire the relevant employees; if it has the authority to promulgate work rules and assignments and to set the employees’ conditions of employment; is involved in day-to-day employee supervision and discipline; and has actual control of employee records, including payroll.

Approximately one month ago, Judge Padova allowed the six student-athlete plaintiffs’ claims against their institutions (Villanova, Fordham, Sacred Heart, Cornell and Lafayette) to proceed because the schools had failed to provide sufficient proof to establish that the student-athletes were not employees. Similarly, Judge Padova rejected the NCAA’s defense and effort to dismiss the FLSA action concluding that a possible joint employer relationship exists because the “NCAA does more than just impose rules…it also investigates violations of those rules and imposes penalties, including the firing of student athletes, for those violations”.

Judge Padova concluded,

“the complaint plausibly alleges that the NCAA exercises significant control over the hiring and firing of student athletes, including plaintiffs, such that the complaint satisfies the first factor of the Enterprise test with respect to the NCAA.”

Jackson Lewis’ Sports Industry Group will continue to monitor the progress of this case and its potential impact on college sports. Please feel free to reach out to any member of the Group with questions.

On August 31, 2021, Governor Newsom signed Senate Bill 26 (SB 26) which makes the provisions of the Fair Pay to Play Act (The Act) operative September 1, 2021, and makes the provisions applicable to the California Community Colleges.

Click here to continue reading on the California Workplace Law Blog.

A case that may signal the continued erosion of the amateur status of college student-athletes will continue as the action in Ralph “Trey” Johnson et al. v. NCAA has survived the defendants’ motion to dismiss the complaint.

U.S. District Court Judge John Padova allowed the six student-athlete plaintiffs’ claims against Villanova, Fordham, Sacred Heart, Cornell and Lafayette to proceed as he concluded  the schools had failed to show at this stage of the litigation that the student-athletes were not employees. The student-athletes brought their claims as a proposed collective or class action. They seek to be classified as employees pursuant to the Fair Labor Standards Act (FLSA) and state labor laws and be entitled to paid minimum wage.

Judge Padova’s 30-page order discussed familiar arguments made by the plaintiffs’ attorney Paul McDonald in Berger v. NCAA, a 2016 case decided by the U.S. Court of Appeals for the Seventh Circuit. In Berger, the Seventh Circuit rejected the “employee” argument, concluding the amateur status of college athletes prevented their classification as employees of their individual schools. Judge Padova rejected the schools’ argument that the student-athletes are enrolled as students and do not perform functions of an employee.

Judge Padova distinguished Berger and referred to the recent U.S. Supreme Court decision in NCAA v. Alston,

which rejected the argument that student-athlete compensation for educational benefits should be limited. He further rejected the position of the NCAA and the individual schools “that Plaintiffs are not employees entitled to minimum wage pursuant to the FLSA because there is a long-standing tradition of amateurism in NCAA interscholastic athletics that defines the economic reality of the relationship between the Plaintiffs and schools.”

In his analysis, Judge Padova applied the Second Circuit’s Glatt test. This test is used for assessing when an intern should be considered an employee based upon the benefits received and an analysis of seven factors.

The seven factors are:

  1. The interns expected payment for the internship program;
  2. The training in the internship was consistent with what they would have learned in an educational environment;
  3. The internship was for academic credit or was part of the intern’s formal education;
  4. The internship period was consistent with an academic calendar;
  5. The internship duration was for a valuable period;
  6. The interns displaced paid employees through the tasks they perform; and
  7. The interns expected an offer of paid employment following the internship.

Judge Padova stated that under some of the factors, such as whether there was an expectation of compensation or a job, student-athletes would not appear to be employees. He considered two other factors, whether an intern receives training similar to that in an educational environment and the extent to which the internship is limited to the period in which it provides beneficial learning, as neutral.

However, Judge Padova found other Glatt factors suggest the athletes are employees.

These factors included the extent to which: an internship is related to an intern’s education, an internship accommodates an intern’s academic commitments, and the intern complements instead of displaces the work of employees.

“Balancing all of these factors,” Judge Padova concluded, “that the complaint plausibly alleges that plaintiffs are employees of the [schools] under the Glatt test.”

While the denial of the motion to dismiss will allow the action to continue, an analysis of the merits has yet to begin. The standard to oppose a motion to dismiss is much lower than the burden of proof facing the plaintiffs in a potential trial.

Jackson Lewis’ Sports Industry Team will continue to monitor the progress of this litigation and its potential impact on college sports and student-athletes being considered as employees.. Please feel free to reach out to any member of the Team with questions.

 

Legislation recently reintroduced by Senators Maria Cantwell (D-Wash.) and Shelly Moore Capito (R-W.Va.) joins a growing number of federal bills on pay equity for female athletes.

The “Equal Pay for Team USA” Act of 2021, first introduced in 2019, would require equal pay for all athletes representing the United States in international sporting competitions, regardless of the athlete’s gender. This comes less than a month after the “Even Playing Field” Act, another bill addressing pay equity for female athletes, was reintroduced.

Currently, men and women representing Team USA in the same sport can receive different compensation, which can result in a gender-based pay disparity. The disparity in pay between men’s and women’s national teams was highlighted after the U.S. Women’s National Soccer Team (USWNT) victory in the 2019 FIFA World Cup finals. The USWNT sued the U.S. Soccer Federation for equal pay under the Equal Pay Act and Title VII of the Civil Rights Act, eventually settling some claims.

The USWNT has won four FIFA world cup titles (1991, 1999, 2015, and 2019) and four Olympic gold medals (1996, 2004, 2008, and 2012).

Introducing the bill, Senator Capito explained, “[I]t is only right that the women competing for the United States in global athletic competitions receive the same kind of pay and benefits as their male counterparts. This is an issue we can address together, not as Democrats and Republicans, but as Americans, and I’m proud to join Senator Cantwell in introducing this legislation.” The proposal goes beyond equal financial compensation.

It requires that all athletes are afforded the same benefits, medical care, travel budgets, and reimbursement of expenses.

The national governing bodies for over 50 sports and the U.S. Olympic and Paralympic committees, which would also be required to conduct oversight investigations and submit annual reports regarding compliance, would be covered. Senator Cantwell emphasized that Americans should be assured that U.S. athletes representing the country on the world stage are compensated equally and

“anything short of that sends exactly the wrong message across the world and here at home about the American commitment to equality and fairness.”

The proposal has already garnered support of several organizations, including the National Interscholastic Athletic Administrators Association, Sports Fans Coalition, Women’s Basketball Coaches’ Association, and UN Women.

If you have questions about this or other equal pay issues, contact a member of the Jackson Lewis Sports Industry Team or any Jackson Lewis attorney to discuss.

Effective July 1, 2021, college athletes in South Carolina can earn compensation for the use of their name, image, or likeness (NIL) and obtain agents. South Carolina Attorney General, Alan Wilson, certified the effective date of the bill as July 1st after the NCAA Board of Directors agreed to allow student athletes to earn compensation for the use of their NIL.

Senate Bill 685, signed by Governor Henry McMaster, applies to eligible intercollegiate athletes and post-secondary educational institutions in South Carolina. It prohibits such institutions from adopting or maintaining contracts, rules, regulations, or standards that prevent or unduly restrict an athlete from (1) earning NIL compensation, or (2) obtaining an agent for the purpose of securing NIL compensation. Institutions and athletic conferences are also prohibited from directly or indirectly creating or facilitating NIL compensation opportunities for athletes.

Although the law opens the door to NIL compensation, it also provides limits. College athletes in South Carolina will be able to receive NIL compensation only from third parties for endorsements, non-athletic work product, and activities related to a business that the athlete owns. College athletes in South Carolina may not earn NIL compensation for any of the following:

  • The athlete’s athletic participation or performance, or recruiting inducements by a higher education institution or its boosters;
  • Endorsement of tobacco, alcohol, illegal substances or activities, banned athletic substances, gambling, or sports betting;
  • Activities that use the institution’s facilities, uniforms, or intellectual property in connection with the use of the athlete’s NIL;
  • Activities that occur during participation in academic, athletic, or team-mandated activities; and
  • Activities that conflict with existing institutional sponsorship agreements or other contracts or that conflict with defined institutional values, if the institution elects to prohibit NIL compensation on these grounds.

Further, to earn NIL compensation under the law, an athlete is required to (1) abide by their institution’s and athletic department’s policies with respect to missed class time and good academic standing, (2) meet all academic requirements of the athletic association and conference to which the institution is a member, (3) disclose existing NIL contracts to the institution and its athletic department prior to enrollment or signing a financial aid agreement or team contract, and (4) disclose the terms of proposed NIL contracts to the institution prior to signing the contracts, in a manner designated by the institution. Higher education institutions must disclose prohibitions for the use of NIL to college athletes at the time the athlete is admitted or signs a financial aid agreement or team contract.

A grant in aid, including the cost of attendance, awarded to an athlete is not considered NIL compensation under this law and may not be reduced or revoked because the athlete receives NIL compensation or agent representation. Although NIL compensation cannot be used to limit athletic grant in aid, it may be used in the calculation for need-based financial aid available to the general student population at an institution.

Anticipating the need for additional oversight, the South Carolina law allows higher education institutions to fund an independent, third-party administrator under their athletic departments who supports education, monitoring, disclosures, and reporting of permitted NIL activities.

At least 20 other states have enacted similar NIL legislation, though the details vary from state to state. In several of those states, including Alabama, Florida, Kentucky, Georgia, Texas, Ohio and Mississippi, college athletes will also be able to earn NIL compensation beginning on July 1, 2021. (For more on trends in NIL legislation across the country, see the following Jackson Lewis articles: State Name, Image, and Likeness Laws With July 1st Effective Dates Continue to Grow and Maryland Adds Athlete Safety Provision As It Joins Growing List Of States To Enact Name, Image, And Likeness Law.)

Jackson Lewis’ Sports Industry Group continues to monitor the ongoing NIL issues on the federal and state levels. Please feel free to reach out to any member of the Group with questions.

In its ongoing reaction to the recent unanimous Supreme Court decision in NCAA v. Alston finding the NCAA in violation of federal antitrust laws, the NCAA Division I Council has voted to support the interim name, image and likeness (NIL) policy provided below. The NCAA Board of Directors will now consider the policy and vote on the potential adoption of the policy on Wednesday, June 30.

If adopted by the Board of Directors, the interim policy will become effective on July 1, 2021, the same date as numerous NIL laws and executive actions will also become effective (including Alabama, Florida, Georgia, Kentucky, Mississippi, New Mexico, Ohio and Texas).

The NCAA has confirmed that the interim NIL policy will remain in effect until either federal legislation is passed or revised NCAA rules are adopted. The policy will authorize student-athletes in all fifty states to have the opportunity to participate and benefit from the marketing of their name, image, and likeness rights.

The policy, which still states that NCAA Bylaws remain in effect, including restrictions on pay-for-play and improper recruiting inducements, provides very limited guidance and defers decisions on compensation for college athletes to states with their own laws or, in the event no such state law is in effect, the policy requires individual conferences and their schools to draft and implement their own NIL policies. These policies must be consistent with NCAA Bylaws as well as applicable federal and state laws.

Despite more than eighteen months of NCAA discussion and its presentation of various proposals, the NCAA has now shifted the burden, requiring conferences and schools to react on an extremely expedited basis to the July 1st effective date for the NCAA policy.

The text of the NCAA’s proposed Interim Policy is as follows:

Interim NIL Policy

The NCAA is committed to ensuring that its rules, and its enforcement of those rules, protect and enhance student-athlete well-being and maintain national standards for recruiting. Those goals are consistent with the NCAA’s foundational prohibitions on pay-for-play and impermissible recruiting inducements, which remain essential to collegiate athletics.

As the NCAA continues to work with Congress to adopt federal legislation to support student-athlete use of NIL, it is necessary to take specific, short-term action with respect to applicable NCAA rules. Accordingly, effective July 1, 2021, and until such time that either federal legislation or new NCAA rules are adopted, member institutions and their student-athletes should adhere to the guidance below.

  1. NCAA Bylaws, including prohibitions on pay-for-play and improper recruiting inducements, remain in effect, subject to the following:
  • For institutions in states without NIL laws or executive actions or with NIL laws or executive actions that have not yet taken effect, if an individual elects to engage in an NIL activity, the individual’s eligibility for intercollegiate athletics will not be impacted by application of Bylaw 12 (Amateurism and Athletics Eligibility).
  • For institutions in states with NIL laws or executive actions with the force of law in effect, if an individual or member institution elects to engage in an NIL activity that is protected by law or executive order, the individual’s eligibility for and/or the membership institution’s full participation in NCAA athletics will not be impacted by application of NCAA Bylaws unless the state law is invalidated or rendered unenforceable by operation of law.
  • Use of a professional services provider is also permissible for NIL activities, except as otherwise provided by a state law or executive action with the force of law that has not been invalidated or rendered unenforceable by operation of law.

2. The NCAA will continue its normal regulatory operations but will not monitor for compliance with state law.

3.  Individuals should report NIL activities consistent with state law and/or institutional requirements.

Jackson Lewis’ Sports Industry Group will continue to monitor the progress of this proposed policy and related legislation and its potential impact on college sports. Please feel free to reach out to any member of the Group with questions.

 

The NCAA has lost an additional federal court battle on name, image, and likeness (NIL) compensation for student-athletes just days after the U.S. Supreme Court’s unanimous decision confirming the Ninth Circuit’s ruling that the NCAA’s limitation on education-related benefits for student-athletes violates federal antitrust laws.

In its latest legal loss, U.S District Court Judge Claudia Wilken, the federal district judge who presided over both the Alston case and Ed O’Bannon antitrust cases, denied the NCAA’s request to dismiss any of the claims in the lawsuit seeking to eliminate any NCAA rules blocking a student-athletes ability to profit from their NIL and allowing student-athletes ability to challenge NCAA rules preventing them from securing a portion of the rights fees received by the NCAA from group licensing revenues from the broadcasting of college sports.

Judge Wilken rejected the NCAA’s motion that the claims asserted in this action have already been ruled upon in prior antitrust litigation

The class action lawsuit, filed in June 2020 on behalf of Arizona State University swimmer Grant House and Oregon women’s basketball player Sedona Prince, will continue. The lawsuit seeks to prevent the NCAA from using any bylaws or rules to allow their college and university members to “restrict the amount of name, image, and likeness compensation available” to athletes. It challenges rules prohibiting athletes from being paid for sponsorships or endorsements, being paid for social media influencer sponsorships and using their NIL to promote their own businesses, along with rules that prohibit them from sharing in television revenue made by schools and conferences through group licensing.

The action also seeks unspecified damages, which could be result in treble damages in the hundreds of millions, based on the share of television-rights money and the social media earnings the plaintiffs claim athletes would have received if the NCAA’s current restriction on NIL compensation had not existed. The suit seeks to cover athletes who played in the last four years through those who play through the date of a final judgment.

When the lawsuit was filed, House alleged the NCAA puts college athletes who are shooting for the Olympics at a huge disadvantage. He stated, “[W]hile Olympic athletes rely heavily on endorsements to afford the cost of competing and training, the NCAA shuts us out of the opportunity entirely.”

Judge Wilken rejected the NCAA’s argument that prior judicial decisions fail to support the claim that student-athletes should be able to make a claim to be compensated for the use of their name, image and likeness in live broadcasts.

She held that the athletes had raised “sufficient” allegations against the rules denying them television revenue in that they “raise the reasonable inference that competition among schools and conferences would increase in the absence of the challenged rules, and that this increased competition would incentivize schools and conferences to share their broadcasting and other commercial revenue with student-athletes even if the student-athletes lacked publicity rights in broadcasts.”

Judge Wilken further supported her dismissal of the NCAA’s motion to dismiss by stating that to establish injury “a plaintiff need not establish that it has a legal entitlement to the compensation in question.” Rather, a “plaintiff can show that it was injured in fact by alleging that it was deprived of the opportunity to receive compensation it otherwise would have received but for the challenged conduct.” 

We will continue to monitor the progress of this case and its potential impact on college sports. Please feel free to reach out to any member of the Sports Industry Group with questions.

 

From the last line of Justice Kavanaugh’s concurring opinion, one thing is clear from the U.S. Supreme Court’s unanimous ruling against the NCAA in NCAA v. Alston,

“The NCAA is not above the law.”

The Supreme Court, in a unanimous opinion authored by Justice Neil Gorsuch and supported by all nine justices, and Justice Kavanaugh’s concurring opinion which advocated further rejection of many of the NCAA’s current interpretations of amateurism, decided that the NCAA’s restraints were subject to the ordinary antitrust rule of reason fact-specific assessment and the restraints effect on competition. Justice Gorsuch’s opinion affirmed a 2020 ruling by the U.S. Court of Appeals for the Ninth Circuit that the NCAA and its more than 1,200 member schools and conferences restraints are in violation of Section I of the Sherman Antitrust Act.

The antitrust law violation arises from NCAA members agreeing to limit how much each school can compensate athletes for academic-related costs. At issue are limitations on how schools and conferences reimburse or pay athletes for computer costs, study abroad programs, internship opportunities, scholarships to attend vocational schools and other academic-related expenses. The Supreme Court’s decision was technically limited to the question raised and considered by U.S. District Court Judge Claudia Wilken and the Ninth Circuit Court of Appeals of whether the NCAA can restrict these education-related benefits for student-athletes.

In its unanimous decision, the Supreme Court affirmed the Ninth Circuit decision, invalidating “amateurism” rules limiting education-related benefits.

The Ninth Circuit had affirmed a ruling by U.S. District Judge Claudia Wilken, who following a 10-day bench trial in 2018, held in favor of the class of student-athletes, led by former West Virginia running back Shawne Alston. The Alston case had initially attempted to secure far more dramatic compensation changes for student-athletes.

The case initially challenged NCAA existing limitations on athlete financial compensation, alleging that schools act as a cartel in limiting how much each school could pay to a student athlete. The case attempted to analogize rising college student-athletes to professional free agents, which would have allowed colleges to compete for student-athletes in an emerging “professional” free agent type system. While ruling in favor of Alston, Judge Wilken rejected that extreme position asserted by the Plaintiffs when she ruled and the Ninth Circuit affirmed that while the NCAA can lawfully restrict athletics-related expenses, the NCAA violates the law by restricting expenses that are “tethered” to academics.

The majority opinion highlights that the NCAA relies on “amateur” student athletes who compete under restraints, issued and enforced by the NCAA, that limit how schools may compensate student athletes and that the rules limit compensation for athletes at an artificial level below what a competitive market would allow. The Alston plaintiffs argued that the NCAA’s rules violated the Sherman Act, which prohibits contracts, combinations, or conspiracies in restraint of trade or commerce. Judge Wilken, in her district court decision, agreed with the Alston plaintiffs but she limited the discussion and her opinion to education-related benefits and the athletes did not, in front of the Supreme Court, renew their broad based efforts to eliminate other restrictions on compensation that had initially been asserted in their federal district court action. The ultimate holding was that the district court’s injunction on the NCAA’s cap of education-related benefits was proper and consistent with established antitrust principles. The NCAA must permit colleges and universities to recruit athletes by offering additional benefits, as long as the additional benefits  are related to education.

However, it is important to understand that the Alston decision is not a mandate or obligation that schools spend more on student-athletes in the context of academic-related expenses.

Rather, the ruling provides schools with the discretion and ability to do so. To that end, schools will be able to use academically related offerings to compete for athletes to attend their institutions. If a college doesn’t wish to reimburse a student-athlete for a higher dollar amount for academic-related expenses, it will not be required to participate.

The ruling further eliminates a long-standing NCAA argument that it should be granted favorable treatment under federal antitrust law as the decision clarified the impact of the Supreme Court’s prior decision in the case of National Collegiate Athletic Assn. v. Board of Regents of Univ. of Okla., 468 U. S. 85, 104, n. 27 (1984). The Alston decision eliminates the precedential value which the NCAA has long held as a basis to support its amateur policies, indicating that a comment made by Justice John Paul Stevens nearly forty years ago in his majority opinion that the NCAA enjoys “ample latitude” under antitrust law when setting amateurism rules that pertain to college athletes was dicta and a passing comment, neither binding nor dispositive in the Alston case.

On the heels of this landmark Supreme Court decision, the NCAA will be meeting over the next two weeks to discuss potential rule and bylaw changes that would formally allow student-athletes to monetize their name, image and likeness rights (NIL). While Alston and student athlete NIL rights have frequently been discussed in tandem, each presents separate and distinct areas of law. The ultimate decision in Alston does not impact the state law driven publicity rights associated with NIL and the NCAA’s potential reforms to their rules and bylaws to address these student athlete rights.

However, as the NCAA meets over the next two weeks to consider these NIL rules changes, the words of Justice Kavanaugh’s concurring opinion will certainly be on the minds of the NCAA leadership. In addition to his acknowledgment of the Supreme Court’s “important and overdue course correction” in its opinion, Justice Kavanaugh confirms the decision’s “narrow focus” and cautions that the NCAA’s remaining compensation rules also “raise serious questions under antirust laws.” He continued, ‘the remaining compensation rules should be subject to ordinary rule of reason scrutiny” and questioned whether those rules could pass muster under such scrutiny.

Justice Kavanaugh continued that the

“bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year.”

He questioned the ability of the NCAA and its member schools to continue to justify not paying student athletes on the “circular theory” that colleges do not pay student athletes.

Despite no basis or mention for the modification and amendment to the National Labor Relations Act regarding the establishment of student-athlete employee status and their resulting right to unionize or collectively bargain in either Justice Gorsuch’s majority opinion or Justice Kavanaugh’s concurring opinion, Justice Kavanaugh’s opinion interestingly went a step further. He alluded that the solution to the NCAA’s potential antitrust issues may be found in legislation or as an alternative, colleges and student athletes engaging in collective bargaining to provide a “fairer share of the revenues they generate…akin to how professional football and basketball players have negotiated for a share of league revenues.”

Justice Kavanaugh did not explain how this collective bargaining process would be legally possible without a significant amendment to the National Labor Relations Act and student-athletes being recognized and considered as employees of their institution.

In response to the Court’s decision, NCAA President Mark Emmert confirmed the NCAA’s commitment to supporting NIL benefits for student-athletes and his organizations commitment to working with Congress to chart a path forward.

 

 

 

 

 

 

 

 

 

A group of Democratic U.S. Senators, led by Senator Chris Murphy (D-Conn.) and Senator Bernie Sanders (D-Vt.) have introduced the College Athlete Right to Organize Act. The proposed legislation would amend the National Labor Relations Act (NLRA) and provide student-athletes collective bargaining rights, regardless of any existing state law restrictions.

Regarding his proposed legislation, Senator Murphy stated, “Big time college sports haven’t been ‘amateur’ for a long time, and the NCAA has long denied its players economic and bargaining rights while treating them like commodities.” He added,

“That’s why I’m introducing the College Athlete Right to Organize Act, which finally recognizes college athletes as employees and allows athletes to collectively bargain with their colleges and across conferences.

Having the right to do so will help athletes get the pay and protections they deserve and forces the NCAA to treat them as equals rather than second-class citizens.”

This proposal far exceeds the student-athlete rights previously sought and currently covered by the College Athlete Economic Freedom Act (“Freedom Act”), which was introduced by Senator Murphy and U.S. Representative Lori Trahan (D-Mass.). The Freedom Act would protect the name, image and likeness rights of current collegiate student-athletes. Senator Murphy’s proposed legislation provides jurisdiction to the National Labor Relations Board (NLRB) to exercise authority over all institutions of higher education that sponsor intercollegiate sports in relation to collective bargaining and labor disputes.

The latest bill proposes that the definitions of “employee” and “employer” under Section 2 of the NLRA be rewritten and amended to consider any college-athlete who receives a grant-in-aid or other compensation from a college or university to participate in intercollegiate athletics to be an “employee” of the respective college or university, whether a public or private institution.

Student-athletes would be recognized as “employees” of the institution and thereby entitled to exercise the rights of employees guaranteed by the NLRA, including the right to seek redress for alleged violations of those rights by their university “employer” through the NLRB. Those protected rights include, for example, efforts to form a union among members of a sports team, challenging alleged discriminatory or retaliatory conduct by coaches, administrators or others in response to a student-athlete’s protected actions.

According to the bill’s language, this provision only recognizes the employee-employer relationship that its proponents assert already exists between college athletes and their respective colleges or universities, and it helps athletes to successfully organize and collectively bargain over their compensation, hours, working conditions, and other related mandatory subjects of bargaining.

Possible topics of bargaining could include practice time, dates and content, travel accommodations, overtime compensation and team rules. Unionized student-athletes would, of course, also have the right to engage in a strike or other job action.

While far exceeding the anticipated granting of name, image and likeness marketing rights for student-athletes, the proposed bill seeks to introduce of a specific “pay for play” process, authorizing student-athletes to negotiate for specific compensation and benefits for playing their sport.

Senator Sanders commented on his proposal,

“College athletes are workers. They deserve pay, a union, and to own their own name, image, and likeness. We cannot wait for the NCAA to share its billions with the workers who create it.”

While treating athletes as employees, the bill would seek to exempt them from paying income and payroll taxes for the scholarship, grant-in-aid or other money they receive from the institution. The bill provides that “nothing in this Act shall change the current tax status and treatment of any compensation college athletes receive, otherwise create additional tax burdens that do not currently exist due to an athlete being considered an employee, or affect college athletes’ federal financial aid status as well as any current reporting requirements within the Internal Revenue Code.” It is unclear if the institution would have to make social security, Medicare or other payments on behalf of its new employees to exempt them from paying income and payroll taxes for the scholarship, grant-in-aid or other money they receive from the institution.

The proposed College Athlete Right to Organize Act would also authorize the NLRB to recognize the creation of multi-employer bargaining units composed of student-athletes from multiple schools within a single conference. This would allow student-athletes from various schools to join together to negotiate collective bargaining agreements to “establish uniform rules and standards related to compensation, hours, working conditions, and other related mandatory subjects of bargaining.”

This NCAA said the Murphy-Sanders bill would “directly undercut the purpose of college: earning a degree.” It added that “turning student-athletes into union employees is not the answer.”

Jackson Lewis’ Sports Industry Group will continue to monitor the progress of this bill and related legislation and their potential impact on college sports. Please feel free to reach out to any member of the Group with questions.

Soccer phenom, 15-year-old Olivia Moultrie has been granted a Temporary Restraining Order (TRO) in her challenge to the National Women’s Soccer League’s (NWSL) Age Rule. The league’s Age Rule requires players to be at least 18 years old to compete for a position on a NWSL team. United States Court Judge Karin J. Immergut granted the TRO on May 24, 2021, after written and oral arguments. In her opinion, Judge Immergut wrote,

“Given the information in the record at this time, this Court finds that Plaintiff has shown that the law and facts clearly favor her position that the NWSL’s Age Rule violates § 1 of the Sherman Act.”

Moultrie sued the NWSL on antitrust ground, arguing the league’s Age Rule violates the Sherman Antitrust Act, 15 U.S.C. §1, because “the ten teams that make up the NWSL have agreed among themselves, and with the League, not to contract with soccer players under the age of 18, without regard to their talents or ability to compete in the League.” As the only option available to women to play professional soccer in the United States, she argued, the Age Rule serves no legitimate business justification or procompetitive purpose.

Judge Immergut’s ruling effectively allows Moultrie to compete for a position on a NWSL team. The Judge agreed with Moultrie that the NWSL’s Age Rule

“excludes female competitors from the only available professional soccer opportunity in the United States because they are under 18, regardless of talent, maturity, strength, and ability.”

She also found the NWSL failed to offer any “legitimate procompetitive justification for treating young women who want an opportunity to play professional soccer differently than young men.”

An injunction was necessary, Judge Immergut stated, because the NWSL’s Age Rule irreversibly impedes Moultrie’s development as a soccer player and each day the Age Rule stays in place “represents a missed opportunity for [Moultrie’s] professional soccer career.”

When she was 13, Moultrie was already practicing and scrimmaging with the Portland Thorns (a NWSL team) when she signed a nine-year endorsement deal with Nike in 2019. In support of Moultrie’s Motion for a TRO, Portland Thorns’ player Becky Sauerbrunn stated that keeping Moultrie out of the NWSL would slow her development, delay her improvement, and impede her finite career. The Judge also commented that, with the Olympic Games this summer, there would be additional NWSL roster spots open and Moultrie would “receive even more meaningful playing time if the Age Rule is lifted promptly.”

Judge Immergut rejected the NWSL’s “single-entity defense,” that the NWSL is exempt from Section I of the Sherman Antitrust Act. She also rejected the argument that, if the Age Rule is lifted, NWSL’s expenses will skyrocket because it will have to establish guidelines to account for the presence of minors. Even though Moultrie already utilizes the Thorns’ locker room facilities and travels with the team to scrimmages, the NWSL did not offer any estimate of these expected increased expenses.

Importantly, the Judge emphasized that this decision does not lend itself to young players who want to challenge the age eligibility rules in the WNBA, MLB, NBA, NHL, and NFL, leagues that operate under collective bargaining agreements.

Unlike other professional leagues, the NWSL’s Age Rule is not the result of a negotiated collective bargaining agreement between the NWSL and its players’ association.

While the League argued that the age restriction should be exempt from anti-trust law scrutiny because the league has recognized the National Women’s Soccer League’s Players Association and commenced negotiations on the terms of a collective bargaining agreement, Judge Immergut held that the commencement of negotiations of a collective bargaining agreement is not the same as an Age Rule that is contained in an actual  negotiated agreement. Judge Immergut agreed with Moultrie and distinguished an age restriction that is negotiated and contained in an existing collective bargaining agreement from the league’s self-imposed Age Rule which has not been bargained for between the parties.

While the TRO is set to expire in 14 days (June 7), the Judge’s ruling implies this injunction will last much longer and Moultrie wi have an opportunity to finally compete in the NWSL.

Jackson Lewis’ Sports Industry Group will continue to monitor this case as it progresses. Please feel free to reach out to any member of our Industry Group with questions.