SEC Fears of Johnson v. NCAA Labor Case Laid Out in Amicus Brief

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In the latest sign that Johnson v. NCAA—a federal case which argues college athletes should be paid at least as much as their work-study classmates—is worrying the establishment, the Southeastern Conference and a group of 13 education associations have submitted amicus briefs to the U.S. Court of Appeals for the Third Circuit. They urge the appellate court to reverse U.S. District Judge John Padova’s ruling that rejected the NCAA’s motion to dismiss and supported the recognition of college athletes as employees under the Fair Labor Standards Act.

Sportico has obtained the two briefs, which were filed on June 7.

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The SEC’s interest in the case is clear even though none of the conference’s 14 member universities reside in the Third Circuit’s region (Pennsylvania, New Jersey, Delaware and the Virgin Islands). Those members are more likely to be deemed employers, and the conference is more likely to be deemed a joint employer, if Johnson succeeds. The schools and conference dread new labor costs, especially when, the SEC contends, most colleges already lose money on athletics.

The American Council on Education, the Association of Public and Land-grant Universities, the Association of Catholic Colleges and Universities, and the Council for Christian Colleges & Universities are among the 13 education-related groups filing a joint brief. They represent, and lobby on behalf of, numerous schools and academic leaders. Like the SEC, these associations recognize the paradigmatic shift that would occur if college athletes were owed minimum wage and overtime pay protections.

To be clear, if Johnson prevails, it would neither lead to million-dollar contracts for college athletes, nor allow those athletes to unionize. As Johnson lead counsel Paul McDonald recently told Sportico in an exclusive video interview, FLSA recognition would mean that athletes are paid akin to their work-study classmates, some of whom receive academic scholarships, for part-time work.

McDonald hypothesizes college athletes being paid $25 an hour and, if they worked up to the NCAA’s 20 hour per week limit, earning $500 a week and $2,000 a month during a four- or five-month season (and earn less during the off-season). Particularly given that colleges have long afforded work-study students and that the average pay for an FBS football coach was $2.7 million as of 2020, according to USA Today, McDonald scoffs at concerns that FLSA employment would somehow bankrupt schools.

Still, in insisting that playing sports “should be categorized as an extracurricular educational activity” rather than an employment activity, the SEC maintains that schools paying athletes a work-study wage would be cost prohibitive. “The overwhelming majority of colleges and universities,” the SEC notes, “must subsidize intercollegiate sports from other revenue sources.” If a school has 400 athletes, and pays each $2,000 a month during the season, the cost would be $800,000 a month—a figure that some schools might contend is incompatible with their economics, though athletics often provide additional value in terms of alumni fundraising, admissions and marketing.

Building on that same theme, the associations’ brief observes that “only about 2% of the NCAA’s 1,100 member institutions had athletics departments that generated enough revenue to cover operating costs in 2019, and the overwhelming majority of the 500,000 student-athletes in the NCAA participate on teams that generate little or no revenue.” The associations also argue that college sports “is not a business” but rather “a mosaic of programs that, at their core, enrich students’ educational experiences.”

Both briefs warn that recognizing athletes as employees would defy a “uniform understanding” enunciated by courts, federal agencies and legislative acts that playing college sports “should not be regarded as work by an employee.” To that point, two other federal circuit courts—the Seventh and Ninth—have declined petitions to recognize college athletes as FLSA employees.

The SEC frets about a “circuit split,” where appeal courts reach conflicting decisions on the same question of law. In this instance, college athletes would become FLSA employees in the Third Circuit while case law in the Seventh and Ninth Circuits (covering 12 Midwest and West Coast states plus Guam and Northern Mariana Islands) indicates they wouldn’t be employees. Meanwhile, in the nine other regional circuits—including those governing SEC schools—this question would be unresolved.

The SEC also accentuates a Field Operations Manual Handbook issued by the U.S. Department of Labor. The handbook is not “law” but serves as an internal manual for agency employees and has been cited by courts as a persuasive authority. The relevant portions of the handbook, the brief contends, have been in place since “at least 1993.” They instruct that “college athletes who participate in activities generally recognized as extracurricular are generally not considered to be employees” and that participation in “intramural and intercollegiate athletics” is not meant to be construed as “work” within the context of the FLSA.

Echoing the same sentiments, the educational associations argue that Johnson is “built on a false narrative that student-athletes are exploited by colleges and universities for profit.” As the associations see it, Johnson prevailing would set off what might be described as a parade of horribles.

“If colleges and universities are forced to pay their student-athletes,” the associations caution, “it is inevitable that many schools will simply eliminate athletics teams, with non-revenue sports teams the most likely to be on the chopping block. The result would be far fewer opportunities for students to experience the benefits of intercollegiate athletics.”

The association also forecasts a world where “schools that decide to continue to field teams in revenue-generating sports would be forced to compete for, and retain, athletes by offering higher and higher paychecks—including, potentially, to professional athletes who offer their services to the highest bidder.” Plus, in this world, “campus life and academics would become an afterthought” and “education through athletics” would transform “into a professional sports business.”

McDonald tells Sportico that as he sees it, the SEC’s and education associations’ briefs miss the point of the appeal, misstate the law and advocate quixotic viewpoints while ignoring modern realities.

“The only issue in the appeal,” the Princeton University and NYU Law grad stresses, “is the legal standard for a motion to dismiss.” In repelling previous efforts by college athletes to gain recognition as employees under the FLSA, the NCAA emphasized case law (Vanskike v. Peters) indicating that while the 13th Amendment abolished slavery and involuntary servitude, there is a so-called “slavery loophole” for prisoners and, arguably, college athletes. The key question for the Third Circuit is whether Judge Padova applied the appropriate test in dismissing the NCAA’s motion to dismiss.

McDonald, while referencing a South Park episode that satirized the NCAA and member schools as slaveholders, finds it telling that a core defense against paying college athletes is the slavery loophole. “The fact the NCAA—and now SEC—actually rely upon legal precedent about the 13th Amendment slavery loophole to defend the exploitation of free Student Athlete labor shows, in this case, truth is stranger than fiction.”

McDonald also questions the SEC’s emphasis on the Labor Department’s handbook. He says the handbook is “irrelevant at the motion to dismiss stage” and thinks it’s “also not particularly persuasive.” McDonald underscores the U.S. Supreme Court’s ruling in Skidmore v. Swift, in which the Court downplayed the importance of agency internal observations when they’re reached without accompanying proceedings that involve adversarial parties. Those observations, the Court found, are not binding (though courts have cited the handbook as an authority).

McDonald also maintains that even if the handbook were as authoritative as the NCAA and SEC suggest, its reference to non-employment activities contemplates student-run club sports, not NCAA sports. Regardless, he says, a non-employment activity must, in the words of the handbook, be “conducted primarily for the benefit of the participants as part of the educational opportunities provided to the students by the school.” McDonald says, “common sense tells us that NCAA sports are not conducted primarily for the educational benefit of participants—but rather, in fact, constrain, and interfere with, educational pursuits.”

Lastly, McDonald finds it “more than a little paternalistic, and condescending, for the [13 associations] to deign to speak for student athletes, who can speak for themselves” including in depositions and affidavits.

Perhaps those athletes will have the chance should Johnson advance.

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