The Lessons (and Wisdom) of Rihanna

13 October 2015 Labor & Employment Law Perspectives Blog

Everyone these days seems to think they are entitled to more money, from the United States Department of Labor (DOL) claiming that there really are no independent contractors to the thousands of United Automobile Workers (UAW) members who recently rejected a tentative agreement with Fiat Chrysler Automobiles because union membership claimed the agreement did not go far enough to raise wages.

The latest group in “the search for more money” (Spaceballs reference intended) are National Collegiate Athletic Association (NCAA) student-athletes. As the companion article to this update explains, earlier this year the National Labor Relations Board (NLRB) determined that student athletes on scholarships are not “employees” for the purposes of union organizing, which would have included the ability to bargain for wages and benefits. A recent court decision dealt another blow to student-athletes, essentially capping the amount of money student-athletes can be paid by universities.

Ed O’Bannon, Jr., former star basketball player at the University of California, Los Angeles (UCLA), filed suit back in 2009 on behalf of himself and other similarly situated student-athletes seeking compensation for the use of their names, images and likenesses. In August 2014, a district court in California barred the NCAA from instituting a policy prohibiting member schools from giving student-athletes scholarships up to the full cost of attendance as well as up to $5,000 per year in deferred compensation, to be paid once the student-athlete leaves college.

The Ninth Circuit court of appeals, however, recently clarified the district court’s decision on how student-athletes may be paid. First, the Ninth Circuit confirmed that the NCAA’s amateurism rules are subject to antitrust scrutiny and must be scrutinized under the Rule of Reason, which includes a three-step framework, looking at: 1) anticompetitive effects; 2) procompetitive purposes; and 3) less restrictive alternatives.

Second, based on the Rule of Reason, the NCAA’s rules have significant anticompetitive effects on the college education market. The Ninth Circuit agreed with the district court that one proper alternative to the NCAA’s current compensation rules is to allow NCAA members to give scholarships up to the full cost of attendance. However, the Ninth Circuit rejected the additional payment of up to $5,000 per year and declined to enforce the district court’s ruling to the extent it required such payments.

The Ninth Circuit’s decision will not end the debate over whether student-athletes should be paid. However, it does place some specific limits on such payments, for the time being. Like employees across the U.S., student-athletes will undoubtedly continue to seek more compensation for their efforts. And as the wise Rihanna once said, “… better have my money! Pay me what you owe me.”

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