By Jarrod Loadholt, Tiffany Releford and Jotionette Jones, of Ice Miller
The House settlement (In re Coll. Athlete NIL Litig., No. 20-CV-03919 CW, 2025 WL 1675820 (N.D. Cal. June 6, 2025)) has ushered in a new era of revenue sharing in college athletics, adding to the massive economic and power shift toward athletes that began with the landmark O’Bannon and Alston cases. O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th Cir. 2015), (Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021). In establishing and protecting college athletes’ name, image, and likeness (NIL) rights and allowing them to fully monetize their collegiate athletics experience, the settlement created an economic relationship between universities and their athletes – particularly in the revenue-generating sports at the highest levels of collegiate athletics – that more closely resembles the one between employers and employees than ever before. Both legal commentators and collegiate athletics stakeholders are acknowledging the eventuality of employment and collective bargaining in college athletics.[i] With NIL and compensation now resolved, the next big question in college athletics is when – not if – college athletes will become employees and what collective bargaining could look like in college athletics.[ii]
Johnson v. NCAA (Johnson v. Nat’l Collegiate Athletic Ass’n, 108 F.4th 163 (3d Cir. 2024)), President Trump’s Saving College Sports executive order[iii], the Student Compensation and Opportunity through Rights and Endorsements (SCORE) Act (H.R. 4312, 119th Cong. (2025)), and ongoing efforts to lobby Congress broadly on collegiate athletics[iv] are all in motion and will ultimately decide college athletics’ employment question.
The State of Play in Johnson, the Impact of House, and Other Developments from Washington
Ralph “Trey” Johnson, a former running back at Villanova, sued the NCAA and several institutions, claiming that athletes should be recognized as employees under the Fair Labor Standards Act (FLSA). Johnson argues that athletes operate within a seemingly employer-employee relationship without receiving benefits such as an hourly wage and overtime pay. Additionally, the suit alleges athletes are forced to maneuver their academic schedule around athletic activities, precluding them from many courses of interest, needed prerequisites, and preferred majors. (Johnson, 108 F.4th at 174). Conversely, the NCAA asserts that athletes receive benefits – including NIL opportunities, revenue sharing, and scholarship payments – that cover attendance costs.
On July 11, 2024, the U.S. Court of Appeals for the Third Circuit affirmed, in part, the U.S. District Court for the Eastern District of Pennsylvania’s decision to deny the NCAA’s motion to dismiss. In doing so, the Third Circuit held that student-athletes could be classified as employees under the FLSA if they meet the “economic realities test.” The four-part test would classify student-athletes as employees if they “(a) perform services for another party, (b) ‘necessarily and primarily for the [other party’s] benefit,’ … (c) under that party’s control or right of control …, and (d) in return for ‘express’ or ‘implied’ compensation or ‘in-kind benefits.’” Johnson, 108 F.4th at 180. Currently, motions to dismiss by the NCAA and various institutions are pending before the Eastern District of Pennsylvania.[v] House’s linking of athletes’ performance directly to revenue bolsters the application of the economic realities test and may provide additional grounds to classify athletes under the FLSA.
Relatedly, President Trump’s executive order (order) issued on July 24 directs the Department of Labor (DOL) and the National Labor Relations Board (NLRB) to clarify the employment status of student-athletes to “maximize[s] the[ir] educational benefits and opportunities.” The wording of the order suggests that a nonemployee classification is forthcoming.[vi] While the order is instructive of the current administration’s views on this issue, the order is not binding law. Further, the college landscape is not as simple as it used to be with there now being endless avenues for revenue from athletics as technology evolves. Thus, the fate of this issue remains in the hands of the judiciary. Given the increasing revenue stream generated by athletes for private universities, as well as the desire of universities to control and maintain that revenue stream, it is inevitable that the judiciary will determine that based on the economic realities test, student-athletes are employees.
The Seventh and Ninth Circuits have ruled that student-athletes are not employees (Berger v. Nat’l Collegiate Athletic Ass’n, 843 F.3d 285 (7th Cir. 2016); Dawson v. Nat’l Collegiate Athletic Ass’n, 932 F.3d 905 (9th Cir. 2019)), while the Third Circuit held in Johnson that if they meet the economic realities test, they could be classified as employees. Because the court in Johnson applied the economic realities test in light of evolving legal standards, it is increasingly difficult for courts to reconcile these realities with a nonemployee designation, particularly as college athletics more closely resembles traditional employment. Additionally, the NLRB rescinded prior guidance supporting employee classification and has indicated it will not pursue such cases for now, though it retains the authority to issue new guidance in the future.[vii] It is possible that the question of student-athletes’ employment status could ultimately be decided by the Supreme Court, though given Justice Kavanaugh’s past skepticism of amateurism, we would not assume the conservative majority would align with the Seventh and Ninth circuits’ rulings.[viii]
Adding further to complexity is the House of Representatives’ SCORE Act.[ix] The act was introduced on July 10, and it explicitly denies employee status for student-athletes under state and federal labor laws. Though the act is bipartisan, it has only been introduced in the House, and if it were to pass the House, it would only likely prevail on a party-line vote.[x] Further, the act does not have a Senate companion and would require at least seven Democrats to support it for any legislation to pass. There is no indication that bipartisan Senate consensus exists to support the SCORE Act or any collegiate athletics legislation. As of this publication, the bipartisan Senate negotiations around collegiate athletics have yet to yield legislative text, and Senate Commerce Committee Ranking Member Maria Cantwell – arguably one of the most pivotal Democrats on this issue in the Senate – has publicly opposed the act.[xi] Thus, as of this publication, the likelihood of congressional action denying employee status for student-athletes is low.
Taken together, the legal and policy developments in this space suggest that circuit splits, congressional inaction, and states seeking to regulate collegiate athletics may be the reality into the foreseeable future, absent clarity on the employment question and collective bargaining.
Employment as a Prelude to Collective Bargaining
As the possibility of an employment designation looms, so does the possibility of student athletes collectively bargaining.[xii] Employment status under the FLSA would enable formal labor negotiations, allowing athletes to collectively bargain across a host of issues that have been raised as problems in collegiate athletics – such as the transfer portal, standards and a licensing framework for agents, and eligibility, as well as the more traditional workplace issues that tend to dominate labor negotiations (e.g., compensation, health and safety, educational benefits).
How collective bargaining would look is an open question, but there is an emerging network of college players associations that have outlined what collective bargaining could look like, irrespective of an employee designation, as well as public receptiveness to collective bargaining from major collegiate athletics leaders like the University of Tennessee’s Athletics Director Danny White.[xiii]
What Happens If the NCAA Prevails?
If Johnson results in a ruling in favor of the NCAA – aligning with Seventh and Ninth circuit opinions – and the NLRB issues nonemployment guidance in response to the order as expected, the status quo will remain intact for the time being. But the status quo is still a largely unfavorable one for all parties involved because of the lack of a resolution on the employment question.
For example, many of the objections to the House settlement preview future litigation that could be avoided if there were an employment designation and collective bargaining.[xiv] States also retain the authority to enact their own labor laws absent a definitive federal resolution.[xv] Thus, even a favorable ruling for the NCAA in Johnson would not eliminate the growing pressure for structural reform or future antitrust litigation.
How Athletic Programs Should Prepare for the Road Ahead
The legal and regulatory landscape surrounding student-athlete employment status is undergoing significant transformation. Even in the absence of a definitive legal reclassification, developments such as the House settlement’s revenue-sharing provisions and the Third Circuit’s endorsement of the economic realities test reflect a growing recognition of the labor contributions made by student-athletes, the growing likelihood of an employment classification, and the possibility of collective bargaining.
In response, athletic departments must be proactive and strategic in their approach. This includes developing their own Johnson contingency planning to account for potential payroll obligations, establishing mechanisms to administer benefits, and ensuring compliance with labor laws. Institutions should also prepare for the possibility of collective bargaining, and the growing popularity among major program coaches and athletic departments of potential nonemployee collective bargaining for college athletes further suggests that collective bargaining could come without an employee classification.[xvi] Athletic departments should start thinking about recruiting strategy if money traditionally earmarked for that effort is now diminished to allow for compensation to be paid to athletes, as well as prepare for issues regarding backpay and overtime that may be owed to student-athletes.
Waiting for a legal mandate is no longer a wise course of action. Institutions should engage with athlete groups and increase transparency around NIL and revenue sharing now to avoid the most likely sources of potential future litigation.
In an environment where the only constant is change, thoughtful and comprehensive contingency and risk planning that considers what employment and collective bargaining could mean – irrespective of an employment designation – is a must for athletic departments.
Jarrod Loadholt, a partner at Ice Miller, represents clients in regulatory and government affairs matters and leads the firm’s Collegiate Athletics Practice. Tiffany Releford is also a partner at Ice Miller and part of the firm’s Workplace Solutions Group, where she helps clients navigate complex human resource issues. Jotionette Jones is an associate in Ice Miller’s Workplace Solutions Group.
[i] Cut College Sports’ Gordian Knot: Go Straight to Collective Bargaining (Part I) and Could collective bargaining be the answer for college sports? Some ADs are ready to say the quiet part out loud
[ii] Cut College Sports’ Gordian Knot: Go Straight to Collective Bargaining (Part II)
[iii] Exec. Order No. 14,322, 90 Fed. Reg. 35,821 (July 29, 2025), https://www.federalregister.gov/documents/2025/07/29/2025-14392/saving-college-sports.
[iv] Power 4 stakeholders lobby for NIL legislation on Capitol Hill and Mid-major conferences launch coalition to lobby Capitol Hill and protect their future in college sports
[v] Institutions with pending motions to dismiss before the Eastern District of Pennsylvania are Duke University, University of Arizona, Tulane University, Purdue University, University of Oregon, University of Notre Dame, Cornell University, Marist College, Lafayette College, Sacred Heart University, and Villanova University.
[vi] Trump College-Athlete Mandate Seeks DOL Input Amid Cases – Law360 Employment Authority
[vii] GC 25-05 Rescission of Certain General Counsel Memoranda
[viii] Alston, 594 U.S. at 107–12 (Kavanaugh, J., concurring).
[ix] Education & Workforce, Energy & Commerce, and Judiciary Committees Introduce Bipartisan NIL Legislation | Committee on Education & the Workforce
[x] Student Compensation and Opportunity through Rights and Endorsements Act: Hearing on H.R. 4312 Before the Subcomm. on Com., Mfg., and Trade, 119th Cong. 1 (2025) (committee vote on act).
[xi] Press Releases | News | U.S. Senator Maria Cantwell of Washington
[xii] Standing Shoulder Pad to Shoulder Pad: Collective Bargaining in College Athletics; Cut College Sports’ Gordian Knot: Go Straight to Collective Bargaining (Part I); Penn State’s James Franklin Goes in Depth on NIL, Revenue Sharing and the Future
[xiii] College athletic administrators begin public discussions on athlete collective bargaining; Can Collective Bargaining Bring Stability To College Athletics?; 23 Power Four GMs back collective bargaining in closed-door Athletes.Org meeting; An Invisible Union for an Invisible Labor Market: College Football and the Union Substitution Effect
[xiv] Cut College Sports’ Gordian Knot: Go Straight to Collective Bargaining (Part I); The Drake Group Report: An Analysis of Objections to the Proposed Settlement of College Athlete NIL Litigation (aka House/Carter v. NCAA and Power Five conferences)
[xv] House bill would allow college athletes to form labor unions
[xvi] College athletes will be paid by schools this season, but their future is messier than ever (“‘Far too many college athletes are treated like workers by their universities, and they deserve every single right that any other worker has, including the right to collectively bargain and form a union. … These athletes put their bodies, time, and futures on the line to generate billions of dollars for universities, coaches, and corporations. And yet, they still don’t a have a real say in decisions that impact their health, safety, and livelihoods.’” – U.S. Rep. Summer Lee of Pennsylvania) and Union-Free NCAA Collective Bargaining Idea Gains Backers
