The Legal Debate Over Student-Athlete or Athlete-Student: Why This Group Should Not Be Classified as Employees

Collegiate athletics has undergone significant transformation with the introduction of Name, Image, and Likeness (NIL) agreements that allow student-athletes to profit from endorsements and sponsorships. While NIL has provided an unprecedented amount of financial opportunities for athletes, it has also sparked legal debate over whether student-athletes should be classified as employees under federal labor laws. This issue has been in the middle of numerous cases recently. Johnson v. NCAA (2024) is one of the biggest ones — this case challenged the NCAA’s definition of student-athletes, yet did not make a definitive ruling on the debate of employment status.

While it is argued that college athletes provide substantial economic value to their universities and, therefore, should be classified as employees, this article argues that student-athletes should continue to be classified as students rather than employees. Reclassifying collegiate athletes as employees would undermine the educational foundation of collegiate athletics, introduce significant legal and financial complications, jeopardize non-revenue sports, and raise tuition rates affecting all students.

I. The NCAA’s Definition of Student-Athletes

The legal foundation of the student-athlete model is built on decades of legal precedent and deference to the NCAA’s amateurism framework. The NCAA curated the term “student-athletes” in the 1950s as a legal strategy to protect colleges from liability and workers’ compensation claims by athletes. The term categorizes students who participate in intercollegiate athletics, specifically at the amateur level, emphasizing the primary role of this specific group being academic not professional. [1] Courts have historically upheld this interpretation, ultimately reinforcing the notion that student-athletes are students first and competitors second.

In Johnson v. NCAA (2024), the Third Circuit Court of Appeals ruled that college athletes have the right to sue under the Fair Labor Standards Act (FLSA). The FLSA officially governs wages and work hours. [2] However, the ruling did not definitively establish that student-athletes qualify as employees, which left this matter unresolved. The NCAA has argued that student-athletes receive scholarships and benefits that are tied directly to their education. This distinguishes them from traditional employees who receive wages in exchange for services. Courts have generally deferred to this logic which reinforces the unique nature of collegiate athletics. [3]

While NIL agreements have allowed athletes to profit from their personal brand, they do not alter the fundamental student-athlete relationship with universities. A student’s ability to earn compensation through external endorsements does not equate to an employment contract with their institution.

II. Legal and Financial Risks of Classifying Student-Athletes as Employees

If courts rule that student-athletes are employees, it would introduce significant financial and legal consequences for both universities and athletes.

Financial Implications:

One of the strongest legal arguments against employment classification for athletes is the economic weight that would be placed on universities. If colleges were required to pay salaries rather than provide scholarships then they could reallocate scholarship funds, but this would not fully offset the additional costs of benefits like health insurance, workers’ compensation, and unemployment benefits. [4] Schools with smaller budgets or non-revenue sports programs would likely struggle to afford these expenses.

Some argue that revenue-generating sports such as football and basketball could fund athlete salaries. However, NCAA financial reports show that only 25 out of 350 Division I athletic programs actually turn a profit. [5] If employment status were granted, schools might cut funding for non-revenue sports or even increase tuition in order to cover the additional expenses.

Institutional Control and Performance Pressure:

Another legal concern is that employment status would fundamentally change the relationship between student-athletes and universities. Employment law requires contractual obligations which could mean stricter performance requirements and reduced academic flexibility for athletes. If schools could terminate an athlete’s “employment” because of injury or poor performance, it could both contradict Title IX protections and limit athletes’ access to education. [6]

III. Counterarguments — NIL and Labor Protections Are Not the Same as Employment:

NIL and Employee Status Are Two Separate Issues:

Advocates of employment classification argue that NIL proves that athletes should be treated as employees. However, NIL compensation is earned independently through endorsements and third-party deals at the leisure of each individual athlete, not from universities themselves. Employment status, on the other hand, implies a direct contractual relationship where schools control wages and working conditions. [7] Courts have recognized this critical distinction in cases such as NCAA v. Alston (2021). In this case, the Supreme Court upheld education-related benefits but did not mandate direct salaries for athletes. [8]

The Impact of NIL Collectives and the Transfer Portal:

Some universities use NIL collectives. These are programs that operate similarly to that of a payroll system. It offers structured compensation to athletes. While this might seem like an argument for employment status, it actually shows that athletes can be fairly compensated without being classified as employees. [9] The transfer portal, which allows athletes to switch schools for better NIL deals, has further complicated this issue. It is creating an instability in college athletics. If athletes were classified as employees, they could break contracts for higher salaries, which would further undermine team structures. [10]

The Impact of Athlete Employment on Tuition Rates and Non-Student Athletes:

A ruling in favor of student-athlete employment would also affect non-athlete students. Universities would be required to fund athlete salaries, workers’ compensation, and other employment benefits. This likely would lead to increases in tuition. Most athletic departments already operate at a funding deficit, meaning these additional expenses would be passed on to students through tuition hikes or cuts to pivotal academic resources. [11]

Non-student athletes would take on the financial liability of these changes. If tuition rises to cover athletic employment salaries, it could very well increase student-loan debt and make higher education less accessible. Some may argue that largely funded programs, such as football and basketball, could cover these costs, but as previously stated, only a small percentage of athletic programs actually turn a profit. [12] This makes it unlikely that employment status could be sustained without affecting university finances.

Legal Precedent — Courts Have Not Yet Ruled in Favor of Employment Status:

The courts have not ruled definitively that student-athletes are employees. While some cases have allowed athletes to challenge compensation restrictions, no court has required universities to pay salaries or provide employment benefits. The legal test for employee status, established in cases such as National Labor Relations Board v. Yeshiva University (1980), examines whether students meet the criteria for employment under the National Labor Relations Act (NLRA). [13] In the case of student-athletes, universities can very well argue that athletes participate voluntarily and receive educational compensation. They can also argue that student-athletes do not perform work in the traditional way that is required for employment status.

The debate over student-athlete employee status will continue as NIL and labor disputes evolve, but courts should carefully consider the legal definitions of employment before making any decisions. Courts do not rule based on economic or political consequences — they rule based on legal precedent and statutory interpretation.

The classification of student-athletes as students rather than employees preserves their access to education, prevents unnecessary financial strain on universities, and upholds the legal distinction between students and employees. The student-athlete model provides valuable academic and athletic experiences. Instead of shifting toward an employment model, legal reforms should focus on improving NIL regulation and transfer-portal regulations, and fight to ensure fair treatment within the existing system.

Bibliography

[1] Henry Bushnell, “Friendly Reminder: The NCAA Invented The Term “Student-Athlete” To Get Out Of Paying Worker’s Comp,” Inside NU, https://www.insidenu.com/2014/1/28/5355988/ncaa-student-athlete-kain-colter-union-workers-comp.

[2] Johnson v. NCAA, 22-1223, 3d Cir. (2024).

[3] “Johnson v. National Collegiate Athletic Ass’n,” Harvard Law Review, https://harvardlawreview.org/print/vol-138/johnson-v-national-collegiate-athletic-assn-108-f-4th-163-3d-cir-2024/.

[4] NCAA, “Financial Reporting FAQs,” https://ncaaorg.s3.amazonaws.com/ncaa/finance/NCAAFIN_FAQs.pdf.

[5] Knight-Newhouse College Athletics Database. https://knightnewhousedata.org/.

[6] Title IX of the Education Amendments of 1972. 20 U.S Code § 1681, https://www.law.cornell.edu/uscode/text/20/1681.

[7] Dan Gartland, “SI:AM | NIL, One Year Later,” Sports Illustrated, https://www.si.com/college/2022/07/12/ncaa-name-image-likeness-one-year-anniversary.

[8] NCAA v. Alston, 141 S. Ct. 2141 (2021).

[9] On3, “NIL Collectives Directory,” https://www.on3.com/nil/collectives/.

[10] Dan Murphy, “NIL contracts have employment and pay-for-play all over them, experts say,” ESPN, https://www.espn.com/college-sports/story/_/id/44107758/nil-ncaa-sec-college-contracts-name-image-likeness.

[11] NCAA, “College Athletics Finances,” https://www.ncaa.org/sports/2021/5/4/finances.aspx.

[12] Robert Farrington, “More Parents Are Saving For College, But Worry About Rising Costs,” Forbes, https://www.forbes.com/sites/robertfarrington/2024/08/26/more-parents-are-saving-for-college-but-worry-about-rising-costs/.

[13] NLRB v. Yeshiva University, 444 U.S. 672 (1980).