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What would D-II sports look like in a post-employee world?

Plus! Important newsletter news!

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Anyway, enough of the meta stuff. Let’s talk about college athletes becoming employees.

Yesterday, our paid subscribers got a newsletter that discussed the basics of the oral arguments from Johnson v NCAA, a federal court case centered around whether some college athletes should be categorized as employees, rather than ‘student-athletes’, and thus due minimum wage.

We’re still months, if not years, from a final resolution in this case, but the early questioning did not go well for the NCAA. As federal judges of multiple political persuasions are looking at the NCAA’s model with much more skepticism post Alston, I think there is a very good chance that the NCAA will have other bad days in court over the coming years…be that with Johnson, House, the NLRB, or cases to come.

The question I’ve gotten the most…in my DMs, inbox, text messages, etc…is what might happen to D-II or D-III sports in a world where some group of college athletes are deemed to be employees.

As I understand this particular case, the distinction isn’t really about the money

I try to avoid using the term Revenue Sports, because a quick look at an FRS report shows basically all sports generate at least some revenue, but I think we all know that the vast majority of athletic department revenue, especially broadcast revenue, is generally tied to college football and college basketball. No athletic department is getting fat and rich from soccer ticket revenue or cross-country MMR rights.

So should those athletes be deemed employees too? Should these questions only be asked of FBS football players?

With the massive caveat that, again, I am not a lawyer, my understanding from these arguments is that the core question here isn’t about whether college athletics generates so much revenue that it must be shared directly with the athletes. That may be an important political or moral question, but it isn’t one to be decided in Johnson.

The question is more about control. If a coach or school has broad latitude to control an athlete’s conduct, or if the school controls the hours, place or method of “work”, if the school is directly recruiting an athlete to participate in a team, potentially limits what they can study and when…all of these factors could potentially somebody an employee, and thus subject to the Fair Labor Standards Act.

On that note, here’s a quote from Sarah Wake, a partner at McGuireWoods, gave to The Athletic: 

“The judges definitely have a nuanced understanding of the collegiate model and the way in which it’s been shifting,” said lawyer Sarah Wake, a partner at McGuireWoods who previously served in-house at Northwestern University and as a Title IX coordinator at Notre Dame. “Their questions suggested that they think student-athletes should be considered employees for purposes of the Fair Labor Standards Act — at least at this stage in the case.

“The questions that they were asking about the level of control that an institution exerts over their student-athletes really signaled to me that they understand how regimented a student-athlete’s life is. They were asking those questions because a major component of whether somebody can be considered an employee under the FLSA is how much control the employer exerts over the employee.”

How much money somebody generates for the organization isn’t part of those control tests. Theoretically, one could be considered an employee even if the entity isn’t making any money at all. Granted, that kind of company probably wouldn’t be around very long. But it could happen.

I may very well be wrong about this…but when I hear many low-major D-I programs or administrators at D-II or D-III schools claim that they could not afford to function as athletic departments in an employee model… I believe them. The potential back pay those institutions may owe, the payroll taxes, the Worker’s Comp, the insurance…all of that would add up in a hurry for departments that are usually already running pretty lean.

Ohio State can do this. I legitimately doubt Ohio Dominican can.

Losing ODU athletics would be tragic, in my humble opinion, but labor law doesn’t say that you’re exempt from compliance if failing to do so would have negative social consequences. You have to comply with the law.

Maybe a post-employee model forces America to come up with other funding sources that would allow the majority of Olympic sports programs and small college programs to operate. We recently wrote about a proposal to fund similar programs with a nationwide tax on sports gambling, for example. Perhaps there are others.

But I wonder if an alternate path forward here, at least for smaller colleges, would be to radically reimagine college sports with substantially less control over athletes as a way to comply with the law.

I’m spitballing a bit here, since we’re on a daily deadline over at Extra Points HQ, but I wonder if there is room in the FLSA guidelines to move D-II or D-III sports to something slightly closer to a Club Sports type model, where coaches and athletic departments no longer can academically cluster athletes into specific majors, or where mandated meeting times dramatically decrease, and the off-the-court obligations much more closely mirror that of a student newspaper or marching band.

If spending more is not a practical option, perhaps schools could simply ask less of their athletes.

Maybe that isn’t practical….and if that’s the case, then I recommend every single-bid D-I conference, and every D-II and D-III league, start having some pretty hard conversations about compliance in a post-employment model world would look like.

That’s not a vapid thought exercise…that is preparing for a reality that could happen in the next 24 months.

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