March Madness brings in millions for colleges. But athletes still provide 'free' labor.

With employees nationwide getting ready to partake in their annual March Madness office pools, college athletes have never been closer to recognition as valued employees themselves.

In February, a National Labor Relations Board regional director ordered a union election for the Dartmouth College men’s basketball team, finding that the players are entitled to unionize as school employees under the National Labor Relations Act. The board’s decision is just one part of a rapidly evolving legal landscape that seems increasingly receptive to the idea that college athletes should be fairly compensated for the profits they produce for their schools.

The board’s decision aligns with the Supreme Court’s 2021 ruling in NCAA v. Alston, which signaled clearly that colleges and universities are not exempt from antitrust laws when it comes to profiting from student-athletes without fairly compensating them.

Antitrust laws exist to ensure fair competition in a free-market economy. Top college athletes should be allowed to operate competitively in the open marketplace. In fact, many Division I athletes drive sports programs that generate outrageously large profits for their schools. The Ohio State University athletic program, for example, raked in more than $250 million in revenue in just the fiscal year 2022.

But should college athletes be compensated as employees when they already receive non-employee-based compensation?

The Dartmouth NLRB decision on Feb. 5 found that “the players (play basketball) in exchange for compensation” but also that Dartmouth “does not provide (the players) with monetary compensation.”

How then are the players compensated? Athletic scholarships could be construed as compensation, but Ivy League schools don’t offer them.

Instead, the board found that the players were offered something arguably “more valuable” than an athletic scholarship: an “early read” of their applications or access to a “special admission process” to gain entry into a highly selective college, in addition to unconditional financial aid, athletic apparel and other amenities.

Supreme Court opened the door for NIL compensation

But the Supreme Court's unanimous decision in the Alston case in June 2021 suggests that college athletes are entitled to more than just non-cash compensation.

At oral argument, Justice Elena Kagan chastised the NCAA for appropriating the athletes’ “amateur” status as a basis to deny them compensation and, in a fiery concurring opinion, Justice Brett Kavanaugh invited broader challenges to the NCAA’s student-athlete compensation rules.

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Just weeks later, the force of the Alston ruling greased the skids for a combination of state law and NCAA regulation changes, through which college athletes acquired the ability to lawfully monetize their names, images and likenesses (NIL).

By accepting money from businesses in exchange for allowing them to use a personal likeness or image in advertisements, Division I athletes can now earn hundreds of thousands of dollars upon enrollment, often with the assistance of school-affiliated NIL collectives, which exist to source such opportunities for them.

Top Division I earners can reap millions, with USC freshman basketball player Bronny James (son of LeBron James) worth an estimated $5.9 million.

Shouldn’t a formal wage-based compensation scheme be offset by the value of the scholarships college athletes receive, in addition to any NIL earnings? The potential for those earnings, in addition to scholarship money and related benefits, is surely more than sufficient compensation for college water polo players or fencers, for example, particularly because the vast majority of them complete the degrees they were promised when recruited.

But the calculus is often different for athletes propping up massive revenue-generating institutions such as football or basketball.

The vast majority of those student-athletes never turn professional. Far from it − many of them are “used up” and “cast aside” without ever completing their degrees, as Justice Samuel Alito pointed out at oral argument in the Alston case.

Consequently, their earning potential is often never greater than it is during their time spent as part of powerhouse college athletic programs. The subtext of Alston is that those student-athletes should be permitted to capitalize on that potential. Those athletes now have the Dartmouth basketball team to thank for furthering their case to be valued as employees.

The irony? According to the college, Dartmouth basketball operates at a loss.

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Will colleges recognize athletes as employees?

The Dartmouth NLRB decision, moving college athletes ever closer to formal recognition as “employees,” is all the more important as the NCAA seeks to enforce rules that limit NIL earning power. Most recently, the attorneys general of Tennessee and Virginia sued in federal court to prevent the NCAA from enforcing those rules, which prohibit student-athletes from negotiating NIL deals during the recruitment process.

The presiding judge has already ruled in favor of the athletes, finding that the states are likely to succeed on the merits of their claims because the “NCAA's prohibition likely violates federal antitrust law and harms student-athletes.”

The NIL litigation comes just as the 3rd Circuit Court of Appeals considers whether college athletes are employees under the Fair Labor Standards Act, which sets minimum wage and overtime pay requirements. In that case, Johnson v. NCAA, a group of Division I athletes sued on the theory that they should be paid as employees under the FLSA for their time engaged in athletic activities on behalf of their schools. A ruling for the athletes would allow the case to move forward toward trial in the federal district court.

The net effect of the Dartmouth NLRB decision would be to bring athletes one step closer to unprecedented bargaining and earning power over colleges and universities that have, in many cases, enjoyed outsize institutional growth as a direct result of those athletes’ revenue-generating efforts.

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College athletes deserve to be compensated appropriately for their efforts, commensurate with the economic benefits their hard work confers upon their schools.

Of course, there remains the question of how any formal compensation scheme should be structured. As far as the law is concerned, the process of answering that question is well underway, and rightly so.

Alex Talel is an attorney and author. He served as law clerk to Judge Jon O. Newman of the U.S. Court of Appeals for the 2nd Circuit and to Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York.

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This article originally appeared on USA TODAY: NCAA basketball players like Caitlin Clark should be paid as employees