Are Student-Athletes Considered U.S. Employees? Observing Compensation in College Sports

Image by Nicole Foguth via Wikimedia Commons

Overview

In the U.S., college sports generate over $1 billion a year while university coaches, trainers, and other staff receive yearly salaries – yet, historically, athletes themselves have received no financial compensation. Institutions like the National Collegiate Athletic Association (NCAA) are criticised for exploiting these athletes, but they maintain that it is important to distinguish amateurism within collegiate athletics from professional sports. Student-athletes have only been entitled to benefits like scholarships to assist their education. In addition to emphasising that college athletes are students first, the NCAA cites amateurism as a way to promote competition different from professional sports.

U.S. antitrust law, however, discourages businesses like the NCAA from monopolising industries and developing their own competition regulations. In NCAA v. Alston (2021), Justice Kavanaugh wrote in his concurring opinion regarding the NCAA that “nowhere else in America can businesses get away with agreeing not to pay their workers at a fair market rate… it is not evident why college sports should be different. The NCAA is not above the law.”

When student-athletes sign the National Letter of Intent (NLI) as a formal commitment to their university, they are agreeing to a set of duties, obligations, and ultimately, sacrifices. What is often left unstated in these contracts is how athletes may compromise their health, education, and future from long hours of training and competition – physical and mental labour that generate significant revenue and branding for these universities. Since NCAA v. Alston, student-athletes have gained agency and can now be compensated for their names, images, and likenesses. However, they are yet to receive direct financial compensation, which begs the question of whether student-athletes should be considered U.S. employees and what the future of compensation within collegiate athletics will look like.

NCAA in Court

In the last decade, two legal cases involving the NCAA have played a significant role in initiating compensation for college athletes. In O’Bannon v. NCAA (2015), former UCLA basketball player Ed O’Bannon saw himself in the video game, EA Sports NCAA Basketball, which he did not permit nor receive compensation for. O’Bannon filed a class-action lawsuit against the NCAA on the grounds of antitrust violations. While he was not awarded monetary compensation, both the District Court and Ninth Circuit Court of Appeals ruled that the NCAA had indeed violated antitrust law. In another battle against the NCAA’s amateurism defense, NCAA v. Alston (2021), Shawne Alston and other student-athletes made similar claims. These Division I football and basketball players brought a lawsuit based on the NCAA’s restrictions on “non-cash education-related benefits” like certain scholarships, academic programs, and other resources. The Supreme Court recognised the NCAA’s antitrust violations once again; while the institution did not have to alter its structure entirely, its weakened control over amateurism has paved the way for student-athletes to receive compensation through name, image, and likeness.

Name, Image, and Likeness

Name, Image, and Likeness (NIL) refers to student-athletes’ rights to be compensated by third party sponsors. While these athletes still cannot receive direct wages or salaries from their universities, they can now profit from their name, image, and likeness through brand partnerships, endorsement deals, ambassador roles, social media, and more. At the moment, there are no federal NIL laws, and these rights must comply with school and state-specific regulations. As of 2024, however, 32 states have already signed NIL into law with a push for a more unified, federal system.

Comparing U.S. Employment with Student-Athletes

The Fair Labor Standards Act (FLSA) defines a U.S. employee as an individual, employed by an employer, who is entitled to compensation for their labour. NIL rights have paved the way for student-athletes to finally monetise their performance, but collegiate athletics has yet to see a system in which athletes can receive direct wages and the same rights employees are entitled to under U.S. labour laws.

Not only is the NCAA’s “revered tradition” of maintaining amateurism becoming less upheld, but it is also becoming seen as unlawful. Students who work non-sporting roles on campus, such as teaching assistants, resident assistants, or researchers, provide services for their university and get financially compensated. Athletes, on the other hand, do not get the same employment classification despite their roles of providing a service for their universities. The National Labor Relations Board (NLRB) and courts throughout the U.S. have begun considering financial compensation for these athletes, but there are still important considerations.

For instance, it is unknown where this money would derive from and how this would change the structure of the NCAA and other collegiate-sport institutions. Additionally, it may be difficult to determine a cutoff for which student-athletes should get paid – a top football or basketball player at a top Division I institution assists in generating much more money than an athlete in a less popular sport within Division III. This dilemma is also uniquely American, as no other country has developed collegiate athletics into such a massive industry, making comparisons to other models and cases difficult.

Nonetheless, a system to provide wages or salaries can be modeled after professional sports in the U.S. by basing compensation on statistics and performance, with the ultimate goal of establishing a uniform, federal system.

Conclusion

In discussing whether college athletes should receive financial compensation, there are many economic, ethical, and practical implications. NIL laws today vary from state to state; ultimately, establishing federal NIL or direct compensation laws would be the most effective. For the future of the NCAA, the institution can hope Congress passes a “miracle bill” in which student-athletes will never be considered employees, preventing antitrust lawsuits. Or, the NCAA can reshape its regulations so that the institution adapts to NIL and the future of direct financial compensation. The previously mentioned court decisions, the recently enacted NIL laws, and other movements have opened the door for what could be the recognition of student-athletes’ rights as U.S. employees. The question of whether these athletes will one day receive financial compensation remains undetermined as one of the largest legal battles within American sports.