Even though collegiate athletes brings in untold fortunes for schools, TV networks, merchandise makers, ticket vendors, and the hospitality and travel industries, they are not — according to a federal appeals court — employees of their schools and are therefore not entitled to be paid anything.

In Oct. 2014, a class action lawsuit [PDF] filed against the NCAA and its many Division I member schools alleged that student athletes at these colleges are, in fact, unpaid employees. Under the Fair Labor Standards Act (FLSA), employees are to be paid at least the federal minimum wage.

The plaintiffs argued that schools pay students in the work-study program at least minimum wage, while student-athletes are expected to give up significant chunks of their time training and competing for schools that benefit greatly from the students’ work but pay them nothing.

“[B]y comparison to work study participants, student athletes are subject to stricter supervision by full-time staff of NCAA Division I Member Schools, hired expressly to supervise them… confer as many, or more, tangible and intangible benefits on NCAA Division I Member Schools through NCAA athletics inextricably linked to school identity and spirit and used in promotional, commercial and fundraising appeals; and perform as many, and more rigorous, hours preparing for, and participating in, NCAA athletics,” reads the amended complaint [PDF].

What about scholarships? The plaintiffs argued that scholarships are only for a small number of student-athletes and that the primary purpose of a scholarship is to “defray the academic cost of attendance and facilitate maintenance of academic eligibility,” which they contended is different from being paid for doing a job.

Earlier this year, a federal court in Indiana dismissed [PDF] the complaint against the NCAA and all the defendant members schools except for the University of Pennsylvania — where the three named plaintiffs had been on the track and field team — ruling that these track stars had no standing to sue these colleges or the athletics organization. Then the court dismissed the claim against Penn, finding that the student-athletes had failed to state a claim under the FLSA.

The plaintiffs took their dispute to the Seventh Circuit Court of Appeals, who this week shot down their efforts to have student-athletes classified as employees entitled to minimum wage.

The appeals court first upheld the previous dismissal of claims against the NCAA and the Division I schools, noting that the three plaintiffs’ connection to these defendants “is far too tenuous to be considered an employment relationship.”

But can these student-athletes be considered “employees” of the actual school for which they competed?

The plaintiffs had likened their situation to interns at a company who deserve to be paid. Previous appeals courts have devised tests to determine if an internship crosses the line into actual employment, and the Penn alumni argued that this test should be applied for NCAA Division I athletes.

However, the Seventh Circuit agreed with the district court judge that this intern test should not apply here because it fails to “capture the nature of the relationship between the Plaintiffs, as student athletes, and Penn.”

The appeals court panel points to the “revered tradition of amateurism in college sports” and concludes that the intern analogy “simply does not take into account this tradition of amateurism or the reality of the student-athlete experience.”

The panel also notes that the legal consensus thus far has held that “student athletes are not employees in the workers’ compensation context and are thus not entitled to compensation from their schools for injuries they suffer while playing their respective sports.”

Chapter 10 of the Department of Labor’s Field Operations Handbook explains that schools may permit or require students to engage in activities in connection with dramatics, student publications, glee clubs, bands, choirs, debating teams, radio stations, intramural and interscholastic athletics… Activities of students in such programs, conducted primarily for the benefit of the participants as a part of the educational opportunities provided to the students by the school or institution, are not work” as contemplated under the FSLA and “do not result in an employer-employee relationship between the student and the school.”

“Because NCAA-regulated sports are ‘extracurricular,’ ‘interscholastic athletic’ activities, we do not believe that the Department of Labor intended the FLSA to apply to student athletes,” explains the Seventh Circuit. “Appellants in this case have not, and quite frankly cannot, allege that the activities they pursued as student athletes qualify as ‘work’ sufficient to trigger the minimum wage requirements of the FLSA. Student participation in collegiate athletics is entirely voluntary. Moreover, the long tradition of amateurism in college sports, by definition, shows that student athletes—like all amateur athletes—participate in their sports for reasons wholly unrelated to immediate compensation.”

In a concurring — but cautious note — Seventh Circuit Judge David Hamilton says that while this particular case may have had a clear resolution because the plaintiffs were involved in a largely “non-revenue” sport, that might not be the case if a complaint were brought on behalf of student-athletes in a big-ticket sport.

“I am less confident… that our reasoning should extend to students who receive athletic scholarships to participate in so-called revenue sports like Division I men’s basketball and FBS football,” explains Hamilton. “In those sports, economic reality and the tradition of amateurism may not point in the same direction. Those sports involve billions of dollars of revenue for colleges and universities. Athletic scholarships are limited to the cost of attending school. With economic reality as our guide, as I believe it should be, there may be room for further debate, perhaps with a developed factual record rather than bare pleadings, for cases addressing employment status for a variety of purposes.”

This ruling is the second recent big blow for the movement to have NCAA athletes compensated for their contributions. In 2015, the Ninth Circuit Court of Appeals agreed with a lower court’s ruling that the NCAA’s amateurs-only requirement violates federal antitrust law but simultaneously shut down that court’s plan to have players paid.

Both sides appealed to the Supreme Court, but in October the nation’s highest court declined to take up either petition.

[h/t CourthouseNews]

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