A landmark $2.8 billion settlement announced by the National Collegiate Athletic Association (NCAA) in an antitrust class action filed by former college athletes reportedly sets a path for schools to share revenue with players. Although many of the details of the settlement haven’t been made public and the judge has yet to approve it, many commentors are predicting a massive restructuring of college athletics, a torrent of Title IX suits, and the possible unionization of students working at colleges and universities—beyond the football and basketball players involved in the settled lawsuit.
Impact on Low Revenue Sports and Title IX
Under the reported terms of the settlement, colleges will be allowed to pay their athletes as much as $22 million annually through television and ticket revenues—while also spending an additional $5 million to $10 million in a new model with unlimited scholarships. Even major universities in the so-called “Power 5” conferences will have difficulty finding that kind of money unless they make major cuts to low revenue sports, including particularly women’s sports. Such cuts, however, raise numerous issues under Title IX, a federal statute that prohibits discrimination based on sex in education programs and activities.
At the heart of the issue is how revenue will be proportioned among sports. It has been reported that the settlement provides damages for former athletes that will be divided unequally, with 90% of payments estimated to be distributed to former football and men’s basketball players. However, Title IX may force a more equitable sharing among all athletes. At a minimum, Title IX’s guarantee of equal opportunities for male and female students to participate in athletics will have to be respected to avoid endless litigation.
It’s also not known how the Education Department’s Office of Civil Rights regards the state of affairs. When the details of the settlement and the judge’s ruling are revealed, the settlement may well be the beginning of turmoil, not the end.
Does This Mean College Athletes Are Employees?
Many labor experts have opined that the settlement could strengthen efforts at the National Labor Relations Board (NLRB) to define athletes as employees under the National Labor Relations Act (NLRA). Currently, the Board is deciding two cases on athletes as employees: a petition by Dartmouth College basketball players to unionize and an unfair labor practice case accusing the University of Southern California, Pac-12, and the NCAA of unlawfully classifying athletes as student-athletes instead of employees. In addition, the U.S. 3rd Circuit Court of Appeals will soon rule on whether college athletes can pursue claims in a lower court that they are employees under the Fair Labor Standards Act (FLSA) who should be entitled to wages.
In a September 2021 memo, NLRB General Counsel Jennifer Abruzzo stated her belief that student-athletes at private universities are employees under the NLRA. In light of that, the Board may need little additional persuasion to rule that college athletes are employees. Nonetheless, most reviewers believe the NCAA settlement would give athletes another point in their argument and make it even more certain to prevail.
Congress or Collective Bargaining?
The confluence of the NCAA settlement and the likely ruling that athletes at private colleges are employees raises so many novel and complicated issues that many believe Congress may have to act to clarify the situation—from antitrust carve-outs to the status of college athletes under the NLRA to rationalizing Title IX requirements in this new setting. However, this Congress in an election year is not likely to turn its attention to college athletics. On the other hand, in the face of strikes and mounting litigation, many colleges may decide that collective bargaining may provide them with the most comprehensive solution.
Written by the editors of the Federal Employment Law Insider.