Game-Changer: Court Ruling Paves Way for College Athletes to Earn Paychecks

In a landmark decision, the 3rd US Circuit Court of Appeals ruled that some college athletes could qualify as employees under federal wage laws, challenging the National Collegiate Athletic Association (NCAA) 's long-standing policies regarding student compensation.

The Philadelphia-based court stated that athletes might be considered employees if they primarily perform services for their schools' benefit in exchange for compensation or in-kind benefits.

This ruling opens the door for these athletes to be eligible for minimum wage.

Although the court did not definitively classify college athletes as employees, it called for a test to differentiate between those playing for fun and those whose efforts qualify as work.

The decision also dismissed the NCAA's argument that student athletes' amateur status precludes them from being employees.

"The argument that colleges may decline to pay student athletes because the defining feature of college sports is that the student-athletes are not paid is circular, unpersuasive, and increasingly untrue," wrote US Circuit Judge Luis Felipe Restrepo.

He emphasized that playing sports can constitute compensable work, depending on the economic reality of the relationship between the athlete and the college or NCAA.

This ruling allows former college athletes to pursue a class action against the NCAA and their former universities, including Duke University, Villanova University, and the University of Oregon. Lawyer Paul McDonald, representing the plaintiffs, suggested athletes could earn $2,000 per month or $10,000 annually for participating in NCAA sports.

McDonald argued, "This notion that college athletes cannot be both students and employees is just not accurate when you have student employees on campuses. It's just beyond belief, the idea that the athletes would not meet the same criteria as employees."

This decision follows a $2.8 billion settlement by the NCAA and its five biggest conferences to resolve class-action lawsuits alleging antitrust law violations by restricting student compensation and benefits.

Since 2021, athletes have been able to receive payments for their name, image, and likeness (NIL), with some deals reaching seven figures.

In December, NCAA President Charlie Baker proposed changes to pay and treat athletes as university employees, signalling a potential shift in how college sports operate.