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Dawson v. NCAA: Ninth Circuit Concludes Athletes are Not Employees of the NCAA or PAC-12

Lamar Dawson (“Dawson”) played football for the University of Southern California (“USC”), a Division I FBS member of the NCAA’s PAC-12 Conference (“PAC-12”). In this matter, Dawson does not allege that he was an employee of USC, so the pure question of employment was not before the Ninth Circuit (“9CCA”), and, thus, the 9CCA did not consider whether he had employment status as a football player, nor whether USC was an employer. The 9CCA said “[t]hat question is left, if at all, for another day”. The only issue before the 9CCA was whether the NCAA and PAC-12 were Dawson’s employers under federal and state law.

In his complaint, Dawson alleged that the NCAA and the PAC-12 acted as an employer of the class members by “prescribing the terms and conditions under which student-athletes perform services.” Dawson claimed that the NCAA and PAC-12, as joint employers, failed to pay wages, including overtime pay, to Dawson and to class members in violation of federal and state labor laws. The NCAA and the PAC-12 moved to dismiss Dawson’s complaint for failure to state a claim upon which relief can be granted. The district court granted the motion, and dismissed the complaint without leave to amend.

A. FLSA Claims

Dawson’s theory is that NCAA regulations prohibit NCAA student-athletes from accepting compensation beyond scholarships limited to cost of attendance. He did not claim that the defendants provide scholarships; whether “compensation” or not, scholarship funding comes from his school. The limitation on scholarships does not, as a matter of law, create any expectation of compensation from the NCAA/PAC-12.

Dawson did not demonstrate that the NCAA or the PAC-12 had the power to fire or hire him. Dawson alleged that the NCAA/PAC-12 asserted complete control over the lives of student-athletes, on and off campus, including a student-athlete’s: “(a) living arrangements; (b) athletic eligibility; (c) permissible compensation; (d) allowable behavior; (e) academic performance; (f) use of alcohol and drugs; and (g) gambling.” Dawson alleged that the penalties for violating these rules include “loss of financial aid and eligibility for sports.” Dawson also alleged that the NCAA/PAC-12 controlled and regulated student-athletes’ “training and game schedules, academic schedules, and other collegiate activities.”

The NCAA Bylaws pervasively regulate college athletics. The complaint, however, did not allege that the NCAA/PAC-12 has the right to “hire and fire,” or exercise any other analogous control, over student-athletes. The complaint did not allege, and moreover, the record did not demonstrate, that the NCAA and PAC-12 choose the players on any Division I football team, nor that they engaged in the actual supervision of the players’ performance. Rather, the allegations of the complaint, taken as true, demonstrated that the NCAA functions as a regulator, and that the NCAA member schools, for whom the student-athletes allegedly render services, enforce regulations.

The 9CCA stated there is no evidence tendered by Dawson that the NCAA rules were “conceived or carried out” to evade the law. The relevant rules were first promulgated in the early 1920’s, and some version of them has “existed for a long time.” In contrast, Congress enacted the FLSA in 1938. Even though “economic reality” in college sports is much different today, the 9CCA concluded there was no evidence in the record that the NCAA rules were “conceived or carried out” to evade the law.

Dawson argued that the labor of student-athletes generates substantial revenue for the NCAA and PAC-12, and that this “economic reality” alters the analysis. The revenue generated by college sports does not unilaterally convert the relationship between student-athletes and the NCAA into an employment relationship. The 9CCA stated the NCAA and PAC-12 are clearly not Dawson’s employers. They did not admit him to the school or pick him for the team; they cannot remove him from the team; they do not supervise his schedules or activities in practices or games; they do not maintain his scholastic records; and, although they put caps on what he may receive as a scholarship, they do not determine whether he gets a scholarship or in what amount.

In sum, the 9CCA found that the district court correctly held that the NCAA and the PAC-12 were not Dawson’s employers. The NCAA and PAC-12 are regulatory bodies, not employers of student-athletes under the FLSA. The 9CCA concluded the district court properly dismissed the FLSA claims.

B. California State Law Claims

The 9CCA also concluded the district court also correctly dismissed Dawson’s California law claims for failure to state a claim, relying on the California Legislature’s decision to except student-athletes from workers compensation benefits and decisions of the California Courts of Appeal that interpret the student-athlete exception. Dawson argued that the district court erred in dismissing his state law claims because the exception does not apply to the wage and hour provisions at issue here.

The exclusion of student-athletes from the Workmen’s Compensation Act at Section 3352(k) of the Labor Code is informed by Section 3350, which provides that “[u]nless context otherwise requires, the definitions set forth in this article shall govern the construction and meaning of the terms and phrases used in this division.” Cal. Labor Code § 3350. Dawson emphasized the Legislature’s use of the phrase “this division,” and argued that expressio unius est exclusio alterius—the expression of one thing excludes the expression of another—“confirms that Section 3352(k) is confined” to the Worker’s Compensation section of the Labor Code. However, California’s appellate courts have interpreted the Legislature’s actions differently.

Furthermore, other actions of the California Legislature supported that the student-athlete falls outside of California labor law. Specifically, in 2012, the California Legislature enacted a Student Athlete Bill of Rights. Cal. Educ. Code §§ 67450–67453. The statute’s findings recognized that student-athletes “spend approximately 40 hours per week participating in their respective sports” and that their efforts “generate large revenues.” Cal. Educ. Code § 67450(c). The Education Code then recognized that student-athletes may incur “medical expenses incurred from injuries suffered while participating in intercollegiate athletics.” Cal. Educ. Code § 67450(e). Instead of extending employment-related protections to student-athletes, however, the Legislature provided for scholarship compensation and the payment of insurance deductibles and medical expenses for injured students, the availability of financial and life skills workshops, and due process protections for student-athletes involved in disciplinary actions facing loss of athletic scholarship funds. Cal. Educ. Code §§ 67452 (a)(1), (b), (c); 67453(a).

The 9CCA concluded there is no authority that supports an inference that, even though the student-athletes are not considered to be employees of their schools under California law, the NCAA and the PAC-12 can nevertheless be held to be “joint employers” with the students’ schools. Consequently, the 9CCA held that student-athletes are not employees of the NCAA/PAC-12 under the California Labor Code.

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