Lamar Dawson (“Dawson”), a former University of Southern California football student-athlete, filed suit against the NCAA and Pac-12 Conference (collectively “Defendants”). In the suit, Dawson sought unpaid wages, including unpaid overtime compensation and interest thereon, required minimum wage payments, waiting time penalties, liquidated damages and other penalties, injunctive and other equitable relief and reasonable attorneys’ fees pursuant to claims for violations of the Fair Labor Standards Act, California Labor Code, California Code of Regulations, and California Business and Professions Code. The Defendants moved to dismiss Dawson’s complaint and Judge Richard Seeborg of the United States District Court, Northern District of California granted Defendants’ motion to dismiss and determined that the legal theories sought by Dawson were untenable, thus amendment would be futile.
Defendants argued that Dawson is not their “employee” under the FLSA. The FLSA defines “employee” as “any individual employed by an employer” and “employ” as including “to suffer or permit to work.” While the United States Supreme Court has instructed courts to construe the terms “employee” and “employer” expansively, it has also held that the definition of “employee” “does have its limits.” As a general rule, whether there is an employment relationship under the FLSA is tested by “‘economic reality’ rather than ‘technical concepts.’” To guide this inquiry, courts have developed a variety of multifactor tests. The Ninth Circuit has adopted a four-factor test, which asks “whether the employer (1) had the power to hire and fire the employees, (2) supervised and controlled employeework schedules or conditions of employment, (3) determined the rate and method of payment, and(4) maintained employment records.” That test, however, is not “etched in stone and will not be blindly applied.” The “ultimate determination” of employer status must be based upon “the circumstances ofthe whole activity.”
Here, the Court explained while it is not clear that either the Defendants is an “employer,” a separate question arises as to whether student-athletes can be considered “employees.” Dawson argued that Berger v. NCAA (a recent 7th Circuit decision)is distinguishable because it involved track and field athletes at the University of Pennsylvania, while this case involves Division I football players who earn “massive revenues” for their schools. Yet, Dawson offered no legal authority to support his conclusion. At most, he pointed to the concurrence in Berger v. NCAA and the decision of a regional director of the National Labor Relations Board (NLRB) in Northwestern University v. Collegiate Athletes Players Association.
The premise that revenue generation is determinative of employment status is not supported by the case law. “Leaving aside the policy question of whether and how Division I FBS college football players should be compensated, there is simply no legal basis for finding them to be ‘employees’ under the FLSA.” The Court concluded that guidance from the Department of Labor weighs against such a finding, as do the decisions from courts that have considered the issue. Dawson’s FLSA and related claim were therefore be dismissed.