The Chicago Daily Law Bulletin Published Timothy Liam EPSTEIN'S Article Entitled, "New student-athlete pay lawsuit arises"

Last month, a federal district court judge in the Eastern District of Pennsylvania struck down a motion to dismiss and allowed a student-athlete’s claim against Villanova University for compensation under the Fair Labor Standards Act (FLSA) to proceed. Livers v. National Collegiate Athletic Association, No. 17-4271 (E.D. Pa. 2018). The plaintiff, Lawrence Livers, is alleging that his former university violated the minimum-wage provision of the FLSA by refusing to compensate him for the work he did as a student-athlete.

This ruling contradicts many recent cases that have consistently held that college athletes do not qualify as employees and are not protected under federal labor laws.

Under the minimum-wage provision of the FLSA, employees can bring claims against their employers for failing to compensate them according to the federal minimum wage laws. During the 2014-2015 period when Livers was an athlete at Villanova, the minimum wage was $7.25 per hour.

The FLSA defines “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). According to the 3rd U.S. Circuit Court of Appeals, where Pennsylvania is located, courts must “look to the economic realities of the relationship in determining employee status under the FLSA.” Safarian v. American DG Energy Inc., 622 Fed. Appx. 149, 151 (3d Cir. 2015).

Livers alleges that he is an “employee” per the test in Glatt v. Fox Searchlight Pictures Inc., 811 F.3d 528 (2d Cir. 2015). The court in Glatt analyzed unpaid interns’ claims under the FLSA to be compensated for their work. Under that test, the court can look to a variety of factors to determine if the relationship between the parties constitutes an employer-employee agreement.

These factors include, among others: the expectation of compensation, type of training provided, how the work relates to the work of paid employees and connection to academic credit.

The court found that Livers had alleged sufficient facts under the test to survive a motion to dismiss, and the defendants conceded that the test in Glatt was the most appropriate if a multi-factor test had to be applied.

It remains to be seen, however, whether or not Livers’ claims will ultimately prevail. No court has ever held that an interscholastic student-athlete was an employee under any legal standard, including the FLSA.

The original complaint alleges that scholarships do not count as compensation, student-athletes are subjected to unique obligations and that there is no exemption for student-athletes under the FLSA. All of these arguments were raised to support the contention that Livers, in his capacity as a student-athlete, acted in a way that is indistinguishable from any employee.

An earlier-filed complaint did not survive a motion to dismiss because it failed to sufficiently allege facts that would overcome the statute of limitations under the FLSA.

Claims must be brought within two years, unless a one-year extension is granted for claims alleging “willful violations” of the FLSA. However, Livers’ amended complaint added details alleging that the defendants in this case willfully violated the FLSA when they refused to compensate him.

Livers presents a multilayered argument.

First, he contends that student-athletes are directly comparable to students employed in work-study programs. Those students are explicitly defined as employees under the FLSA. According to the complaint, student-athletes engage in their own form of work-study by contributing long hours to programs that profit the university.

Livers also distinguishes student athletes from student-run groups. While student-run groups do not have employees and do not engage in any kind of work under the supervision of university staff members, student-athletes are more akin to work-study students who are given a form of monetary compensation in exchange for their work in supervised activities.

All of these factors are included to support the contention that the defendants knew they were not compensating student-athletes even though they were essentially employees.

Livers furthers this argument by discussing the unreasonableness of the defendants’ refusal to compensate him. This distinction is important because under Pignataro v. Port Authority, 592 F.3d 265, 273 (3d Cir. 2010), a willful violation has not occurred if the defendant acts reasonably in its determination not to compensate.

Livers also makes a unique argument that could set his case apart from the unsuccessful claims that have come in the past. By showing that no university official has cited the FLSA provision in question before as justification for not compensating student-athletes, Livers raises the inference that administrative guidance on the FLSA does not make the defendants’ actions reasonable, despite their contentions to the contrary.

Looking forward, the claim still has an uphill battle. The debate over compensation for student-athletes has been active for years, but there has never been a breakthrough for the proponents of compensation. Even under Livers’ own preferred test, it is uncertain whether his allegations can satisfy the factors and be successful.

More importantly, precedent is not favorable to Livers’ claim. In 2015, the National Labor Relations Board (NLRB) declined to assert jurisdiction over a student-athlete’s claim for compensation under the National Labor Relations Act. 362 NLRB No. 167 (NLRB). In doing so, the NLRB opined on the similarity of student-athletes to employees, noting that they were different in a number of substantial ways.

Student-athletes are unlike their professional counterparts because they are required to be enrolled as full-time students. This raises the inference that they are participating in an extracurricular activity. This is problematic for Livers’ argument that because student-athletes contribute to a revenue-generating program, they are similar to work-study students. Work-study students are engaged in activities that are clearly not extracurricular.

While Livers survived the motion to dismiss with an amended complaint, it is far from certain that his claim will ultimately prevail. Indeed, the order disposing of the motion noted the strained interpretations made by Livers.

Further, student-athletes have never successfully brought a claim for compensation under any legal standard, and the FLSA and relevant administrative guidance support this finding.

Livers may be able to make a novel argument through his connections between student-athletes and work-study employees, but he will still need to overcome hurdles, including the fact that student-athletes already receive scholarships and engage in activities that are traditionally thought of as extracurricular.

At this point, like many of his predecessors, proving he is entitled to compensation from the university will be a tough sell.

Team Members: