Are Student-Athletes Employees – Explored Through the Lens of NIL

The debate over whether student-athletes should be considered employees has persisted for decades but has recently gained renewed traction—especially during high-profile events like March Madness. The conversation started back in 1950 when Ernest E. Nemeth, a football player at the University of Denver, filed for workers’ compensation after sustaining an injury during spring football practice. Judge Francis Knauss ruled in favor of Nemeth, recognizing him as an employee of the university. This case was pivotal in establishing that student-athletes could be considered employees, making them eligible for workers’ compensation benefits if injured while performing athletic duties. While it has been 75 years since the Nemeth court case, Name, Image, Likeness (NIL) has brought this issue back to center stage.

The Evolution of Name, Image, and Likeness (NIL) 

Name, Image, and Likeness (NIL) refers to the rights of student-athletes to earn money from their personal brand. This can include income from endorsements, sponsorships, social media activities, and other business ventures that utilize their name, image, or likeness. During her college career, Caitlin Clark, a basketball player for the WNBA, capitalized on NIL deals with Nike and Gatorade, along with nine other known partnerships, amassing an estimated worth of $3.1 million. These deals enabled her to leverage her growing fame and on-court success, setting the stage for even greater opportunities as she transitioned to the professional level. 

The NIL era truly began in 2021 when the NCAA updated its rules, allowing student-athletes to receive compensation for their NIL rights. This shift has significantly impacted college sports, creating new financial opportunities for athletes while also introducing new challenges and considerations for both the athletes and their institutions. 

Historical Milestones in NIL Rights 

1. 1956: The NCAA began allowing student-athletes to receive athletic scholarships without regard for their academic ability or financial hardships.
2. 1984: The U.S. Supreme Court determined that the NCAA's monopoly over college football television broadcast rights infringed upon antitrust laws, thereby granting individual schools greater independence in negotiating their own broadcast agreements.
3. 2015: The Ed O’Bannon case highlighted the issue of athletes' likenesses being used without compensation.
4. 2019: California passed SB 206 "Fair Pay to Play Act," the first state law allowing college athletes to earn NIL compensation.
5. 2021: The NCAA adopted an interim NIL policy, allowing student-athletes to benefit financially from their NIL rights without fear of NCAA penalties.
6. 2024: In 2024, the National Labor Relations Board (NLRB) recognized a petition filed by Dartmouth College to create a union for the men's varsity basketball team. The petition voted on May 13 with a result of 13 to 2 in favor, is currently under appeal. Later in May, a proposed settlement in the House v. NCAA case allowed Division I schools to share athletic department revenues with varsity athletes starting in the 2025-26 academic year. The initial revenue-sharing cap per school is set at $20.5 million per year, highlighting the significant financial implications of NIL and broadcast rights. 

Federal Interest: 

Naturally, as NIL became a prominent topic, Congress took an interest. NIL has been a bipartisan issue, with some bills introduced by Democratic sponsors, others by Republican sponsors, and some by both. Legislation has been introduced dating back to 2019 and continues to be a theme of new legislation, including the following notable ones: 

• Student-Athlete Equity Act (HR. 1804 116th): Sponsored by Rep. Mark Walker (R-NC). This bill aims to change the definition of tax-exempt amateur sports organizations to exclude those that significantly limit student-athletes from using or being fairly compensated for the use of their name, image, or likeness by third parties. Check out this SI article on the bill.  

• Collegiate Athlete Compensation Rights Act (S. 4855 117th): Sponsored by Sen. Roger Wicker (R-MS). This bill aims to establish a national framework for student-athlete NIL compensation, protecting athletes from exploitation and ensuring consistent rights across states while preserving the amateur nature of college sports. Here is the press release to read more. 

• College Athletes Bill of Rights (S. 4724 117th): Sponsored by Sen. Cory Booker (D-N.J) and Sen. Richard Blumenthal (D-CT). This bill seeks to provide comprehensive rights for college athletes, including health care, lifetime scholarships, and revenue sharing. Additionally, it prohibits institutions of higher education, intercollegiate athletic associations, or conferences from restricting the ability of college athletes to market and profit from their Name, Image, and Likeness (NIL). 

• Student Athlete Level Playing Field Act (HR 3630 118th): Sponsored by Rep. Mike Carey (R-OH) and Rep. Greg Landsman (D-OH). HR 3630 seeks to establish a uniform national standard for NIL compensation while protecting athletes from unfair practices. Learn more in this press release.  

• College Athlete Economic Freedom Act (HR. 4948 118th): Sponsored by Sen. Chris Murphy (D-CT) and Rep. Lori Trahan (D-MA). This bill grants college athletes the right to market their NIL without restrictions from colleges, conferences, or the NCAA. It guarantees athletes the ability to secure their own representation, protects against discrimination in NIL deals, and allows international athletes to market their NIL without jeopardizing their visa status. Learn more in this press release.  

State Legislation on NIL Rights 

As of 2024, 32 states have enacted legislation regarding Name, Image, and Likeness (NIL) rights for student-athletes. California led the way with the Fair Pay to Play Act (CA SB26), inspiring many other states to model their laws after this groundbreaking bill. Below are the states with active NIL laws: 

• Alabama 

• Arizona 

• Arkansas 

• California 

• Colorado  

• Connecticut 

• Delaware  

• Florida 

• Georgia 

• Illinois 

• Kentucky 

• Louisiana 

• Maine 

• Maryland  

• Michigan  

• Mississippi 

• Missouri 

• Montana  

• Nebraska 

• Nevada 

• New Jersey  

• New Mexico 

• New York  

• North Carolina 

• Ohio 

• Oklahoma 

• Oregon 

• Pennsylvania  

• South Carolina  

• Tennessee 

• Texas 

• Virginia 

While there is significant federal and state interest in this matter, the question of whether student-athletes are employees remains unanswered. In 1950, Judge Knauss ruled that students were employees, and just this past July, the Third Circuit Court of Appeals ruled that student-athletes are not barred from being considered employees under the Fair Labor Standards Act (FLSA). Despite these rulings, the NCAA has not definitively answered whether college student-athletes should be viewed as employees. Additionally, Congress is currently considering Rep. Bob Good's (R-VA) bill, the Protecting Student Athletes’ Economic Freedom Act of 2024 (H.R. 8534118th), which aims to ensure student-athletes are not classified as employees of their institutions, conferences, or associations solely based on their participation in intercollegiate athletics. At present, student-athletes must rely on state legislation to understand if they could be covered as employees. As this discussion continues, it will be interesting to see how NIL affects college athletics and, ultimately, college admission rates.