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  • Ellakisha S. OKelley, Esq.

Economic Realities Test and The Student Athlete


This article is not an attempt to roll out the full argument for the position of whether a student-athlete should be considered an employee or not. This article gives a short legal analysis of what a court takes into consideration when determining if someone is an employee or independent contractor; and how this test balances against being a student-athlete. The full discussion of student-athlete pay for play argument is too lengthy for this comment. I have written a full 60-page directive research on whether there should be consideration given to this idea and what that could look like. I am still working on adding more information to the already 60-page document. Therefore, that is not the goal here, but I would like to get the wheels spinning when thinking about what a court looks at when determining the employee status.

There have been a few recent cases that some may be familiar with, one notable to mention, is the Northwestern case that was centered around its football team. Ultimately, the National Labor Relations Board (NLRB) “punt the ball” on that case by stating their jurisdiction is over private not public schools. However, that door is now cracked open and whether someone kicks that door wide open, or finally gets it shut once and for all, is still yet to be seen.

Economic Realities Test

The economic realities test consists of four elements that are used to determine one’s employment status; 1) control 2) payment, 3) right to hire/fire; and 4) integral part of duties. The Department of Labor has expanded the four-prong test to a new six-prong (integral part of business, managerial skill, relative investment, special skill, permanent relationship, and control) test.[1] Since there truly is no one single test for determining the employee status, for efficiency purposes, I will focus on the test that many courts, including the United States Supreme Court, have deferred to- Economic Realities Test.[2] In applying the four-prong economic reality test, this article will analyze some key factors that entail the student-athlete and university relationship. There are a few court cases that will be referenced throughout this article’s discussion; they are footnoted for your review.

1. Control.

If an employer has the right to control and direct the work of an individual, not only as to the result to be achieved but also as to the details by which that result is achieved, an employer/employee relationship is likely to exist.[3]In determining who has control in the working relationship, the Kisner[4] court elaborated on the following factors in reaching its conclusion: 1) intent, 2) power to fix the price in payment for the work, 3) who furnishes the means and appliances for the work, 4) who has control of the premises, 5) who furnishes the materials upon which the work is done and receives the output thereof, 6) who has the right to prescribe and furnish the details of the kind and character of work to be done, 7) who has the right to supervise and inspect the work during the course of the employment, and 8) who has the right to direct the details of the manner in which the work is to be done.

INTENT- What is the intent of the athlete and coach (university) when they establish a relationship?

When looking at the intent to form a certain type of relationship a court will generally look to a contract and its language as being indicative to a certain degree. A student-athlete who has recruited on a scholarship signs an NLI[5] and a statement of financial aid in addition to any other documentation the University may require. These documents bind the athlete to the university by creating a contractual relationship. They lay out the expectation of the services to be provided to the university, and what the university will give in return. They provide the amount of compensation to be received in the form of a scholarship for these services. They lay out the stipulations that would result in the university’s decision to consider the agreement null and void.

POWER TO FIX PAYMENT- The courts would like to know who has the power to fix the payment for work or service offered?

The coach decides how many scholarships they are willing or able to offer. They decide if they will pay it in the form of tuition and fees, room, and board, books, and/or stipend under NCAA bylaw, Article 15. The coach also decides if this will be paid out each year upon renewal or in the case of a Division I programs, more than a year. The student-athlete has no control over the amount offered, only to accept or reject it with very little room to bargain.

FURNISHES THE MEANS- The courts will ask who furnishes the means and appliances for the work?

When competing for a collegiate program, it is the university that supplies the facilities to train at for preparation of competition. It provides equipment. It provides school issued uniforms with the school’s identification on it, mandated for the athlete to compete in. It provides the transportation to get to and from the competition. During travel, it provides meals (or per diem) for the athletes.

CONTROL OF PREMISES- The courts would like to know who control the premises occupied by the parties involved?

The premises would be the training facilities, transportation, and the university in and of itself. A student-athlete would not have control of any of the above.

FURNISH MATERIAL WHERE WORK IS DONE- The courts analyze who furnish the materials upon which the work is done and receives the output thereof?

The coach chooses where the athlete will compete by compiling a competition schedule. When the athletes compete at these sites, if applicable, the university receives plaques, school records, championship titles, and any guarantees or bonuses negotiated as a result of the output.

PRESCRIBE WORK TO BE DONE- The courts want to know who has the right to prescribe and furnish the details of the kind and character of work to be done?

It is the coach that has the ultimate decision in choosing what position an athlete will play, or what event he/she may run. Or, even if they will play or run at all for that matter. The coach also has autonomy in prescribing the workouts that the athletes must do, including, how they are to execute performance in those workouts.

SUPERVISION AND INSPECTION- Furthermore, courts ask is there a right to supervise and inspect the work?

Each university or athletic department sets their own policies that define the control of their athletes. The coach supervises athletes at practice and competitions. Additionally, most coaches and athletic departments have athlete handbooks that list restrictions that typically don’t apply to the general student body. Some actions taken to supervise student athletes may include but are not limited to, mandatory team meetings, curfews, or random drug testing etc.

RIGHT TO DIRECT DETAILS- Finally, the courts consider whether there is a right to direct the details of the way the work is to be done?

A coaching job is to assess the training and performance of the athlete and give direction on how it can be improved, changed or executed. A coach directs how overall goals and objectives will be accomplished at practice and competition.

These above facts indicate that a student-athletes “job duties” are exclusively controlled as it relates to this prong. However, exercising partial control would be enough for a court. In Fitzgerald case, the court held exclusive control is not required.[6]

2. Payment of Wages.

This was a big issue in the Northwestern v. CAPA case, where it was originally held by NLRB Region 13 Director Peter Ohr that the grant-in-aid scholarship is the payment of wages.[7] Northwestern disputed Ohr’s finding on the payment of wages and fired back by saying, “the Tender is plainly an offer of financial aid, granted to football student-athletes to defray the costs associated with obtaining a first-rate education.” Due to precedence, a court can find that the scholarship grant-in-aid will satisfy the definition of payment in the manner NLRB Regional Director Ohr did in Northwestern.

3. Right to Hire, Fire and Discipline.

A court will address; 1) whether the principal has the power to terminate the contract at will, and 2) whether there is a right to employ and discharge the person and fix their compensation?

NCAA bylaw, Article 15 gives a coach a right to recruit and offer aid, hence, hire a student-athlete.[8] A student-athlete can join a team without being recruited. Someone who would join a team under this circumstance would be referred to as a walk-on. Nevertheless, without the coach’s express interest in a student-athlete joining the team he/she would not be able to do so, regardless if it is a walk-on or recruit. Moreover, NCAA Bylaw 15.3.4.2[9] lays out how a coach can reduce or cancel a student-athletes financial award, hence, fire a student-athlete.

4. Performance of Duties as an Integral Part of Employer's Business.

A court would also want to know if the performance of duties is an integral part of the athletic business?Coaches identify, select, recruit, and pray to sign the best talent that they can get. They also hope that a walk-on has enough talent to contribute to the team, and if they do, they may get a financial aid offer to stay on the team. Talent converts to more chances for success, which equals more chances for championships, institutional financial gains, notoriety for the university, and more interest in prospective students wanting to attend that university. Not to mention, leverage for coaches’ salary increases!

[1] https://www.lexisnexis.com/legalnewsroom/labor-employment/b/labor-employment-top-blogs/archive/2015/08/12/independent-contractor-or-employee-do-you-pass-the-economic-realities-test.aspx

[2] Legal website discussing Economic Reality Test: http://definitions.uslegal.com/e/economic-realities-test/

[3] Spirides v. Reinhardt, 613 F.2d 826, 831- 832 (D.C. Cir. 1979)

[4] Kisner v. Jackson, 159 Miss. 424, 132 So. 90 (1931

[5] Sample NLI: http://www.hamptonroadssports.org/uploads/docs/Sample%20NLI%20Document.pdf

[6] Fitzgerald v. Mobil Oil Corp., 827 F. Supp. 1301, 1304 (E.D. Mich. 1993).

[7] Northwestern University v. College Athletes Player Association, UNITED STATES GOVERNMENT BEFORE THE NATIONAL LABOR RELATIONS BOARD REGION 13 Case 13-RC-121359

[8] NCAA Division I Manual: 13.9.1 Requirements for Offer of Athletically Related Financial Aid.; 15.3.7 Renewals and Nonrenewals

[9] NCAA Division I Bylaw 15.3.4.2 Reduction or Cancellation Permitted. Institutional financial aid based in any degree on athletics ability may be reduced or canceled during the period of the award.

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