I’m posting this in the wake of the Northwestern Football player’s move towards a union, and being considered employees of the school. I could’ve told you that D1 football players were employees of their school back in 2008. Here I detail IRS determinants of full-time employees and how UCF Athletics Department, QB Kyle Israel, the IRS, and other sources define D1 full scholarship players as employees. I hope you can learn from this, and enjoy it. I can’t find my works cited page so… sorry!
Division I Football Players As Employees of the School
Coming out of high school, thousands of prospective student-athletes will sign a National Letter of Intent contractually binding them to attend the offering institution of higher learning. These football programs will make millions of dollars during the four to five years the student-athlete is on campus, and will also pay out around twenty-thousand dollars per academic year, per scholarship player to field their team, whether undefeated or unvictorious. These scholarship athletes are an investment in the eyes of their respective universities, athletic departments, and programs. In the world of college football’s ‘Football Bowl Subdivision’ (also known as Division I football), the stakes are at their highest because of multi-million dollar television deals, major corporate sponsors, coaches’ ever-growing salaries, and the fans’ never yielding expectation to win in college athletics’ number one sport.
The investment on scholarship football players, and the contractual bindings that link the athletes to their programs, is always in its peak of conversation on National Signing Day. National Signing Day has become a cable sports television phenomenon where seventeen and eighteen year old high school students turn into red carpet heroes the first Tuesday in February of every year. National Signing Day is highlighted by press conferences that range from bizarre to downright boring. The epitome of bizarre took place on this year’s National Signing Day when unknown prospect, Kevin Hart, held a press conference where he would chose between the University of Oregon and The University of California. Hart chose Cal, however they had not even offered him a scholarship (“High Schooler Fakes Recruitment”).
Schools in the Football Bowl Subdivision (formerly known as Division I) can sign up to twenty-five prospects for each signing class, and are allowed a total of eighty-five scholarship athletes on the roster (Kennedy 1). These eighty-five players are signed to contracts, called scholarships, with the expectation that they will remain eligible academically, behave in a manner that represents the school appropriately, and remain dedicated to the greater good of the program (Malcolm). However, one question that goes unasked and one theory that goes unanswered is whether or not these players should be treated as employees, independent contractors, or even considered workers at the academic institution to which they are contractually bound.
An important initial step in examining any employee-employer relationship is to examine the agency that oversees the relationship. In the case of the student- athlete, that agency is the National Collegiate Athletic Association, or the NCAA, as it is often referred to. The NCAA serves as judicial, legislative, and executive branch over the academic institutions and their athletes, with few if any checks and balances presiding over the agency. The NCAA has the right to deem players ineligible, put schools on probation, and investigate suspect activity in an athletic department. Probation, as previously mentioned, can range from a loss of scholarships to a school’s particular sport that commits the violation, to restricted recruiting contact for coaches, to television blackouts, and even the Death Penalty. The only program to ever receive the Death Penalty, which is a loss of all scholarships and television rights, in the history of the FBS is Southern Methodist University. The NCAA determines the twenty hour in-season practice rule, the eight hour out of season rule, the twelve credit hour class schedule rule, and the amount of financial aid student-athletes are allowed to receive. The NCAA rules over the vast majority of information that will be provided in this research paper that relates to student-athletes.
The initial question that is in need of a definitive answer is whether or not the NCAA allows student-athletes to receive compensation under their by-laws. According to the NCAA Division I Athletics Manual, the NCAA does allow compensation under two terms. The first term is, “Only for work actually performed,” and the second term is, “At a rate commensurate with the going rate in that locality for similar services” (69-70). Throughout the research paper it will be proven that scholarship athletes do perform intense amounts of work, both on the field and in the classroom, that actually fall into the category of full-time status under the wage-hour guidelines. The paper will also prove that scholarship- athletes at the University of Central Florida, the researched institution for this paper, provides the student-athletes with all of the required funding that is typical of any other institution. Another significant by-law in the NCAA Manual on athlete compensation regards compensation based on an athlete’s popularity.
Section 18.104.22.168 states that, “Such compensation may not include any remuneration for value or utility that the student-athlete may have for the employer because of the publicity, reputation, fame or personal following that he or she has obtained because of athletics ability” (Division 1 Manual 69). This is salient because of the uniformity in full athletic scholarships at the Division I (FBS) level. These scholarships provide the same tuition and fees, housing, dining, and textbook funding for each athlete, regardless of if they are Reggie Bush or Chip Wingate.
The first step in making the decision between employee and an independent contractor is to determine whether the student-athlete is working at all. Scholarship players are required to attend practices, workouts, film sessions, and their full compliment of classes. The days and times of all of those items are determined by the individual football program. There is a maximum work week of twenty hours per week, and four hours per day in-season, and eight hours per week during the off-season (Division 1 Manual 220-222). The athletes then receive compensation through the scholarship.
In my interview with UCF Senior Quarterback Kyle Israel, he said, “I have never spent money on anything in school.” Kyle was referring to my question that asked whether tuition, fees, books, room and board, and meals are included in his full athletic scholarship. The contract of a scholarship is binding for the signed upon school year, in our case the 2007-2008 academic school year (Jay Malcolm). At UCF, the football players on scholarship received free schooling for that year, which totaled up to an average of $23,717, when taking all aforementioned aspects into consideration. According to the Fair Labor Standards Act, “The reasonable cost or fair value of board, lodging, or other facilities customarily furnished by the employer for the employee’s benefit may be considered part of wages” (Handy Reference Guide to the Fair Labor Standards Act). Thus, according to the FLSA, the student-athletes receiving room and board, meals, and travel through the team’s funds, are all considered part of the payment for their work.
The full extent of a scholarship football player’s wages through the scholarship is broken into four categories for the purpose of this research paper. Those four categories are: tuition and fees, housing, dining, and books. The tuition to attend the University of Central Florida totals to an average of $3,619.50 per full semester for both the fall and spring, and I have divided that in half to reflect a summer semester, which comes to $1,809. Thus, total tuition, on average, per scholarship-athlete is $9,146 (Tuition & Fees). Housing costs are taken on by UCF’s scholarship fund that is supplied by the NCAA. Housing for 2007-2008 will total $8,096 per year to stay in Tower IV (Agreement Rates), which is where the entire football team is lodged for the 2007-2008 school year. Seniors are the only players who are allowed to stay off-campus, and four chose to do so this year. Players opting to stay off-campus received the cash equivalent to staying in Tower IV (Israel).
Dining is another benefit of being a scholarship football player. Typically, UCF has given the dining hall’s meal plan to athletes, but this year the football players were given three team dinners per week, and two $800 checks for the fall, as well as two $900 checks for the spring (Israel). Textbooks are also covered by the scholarship. The average cost of textbooks for an undergraduate student taking twelve credit hours in the fall and spring semesters, and six in the summer semester, is $500 per semester for the former, and $300 per semester for the latter. Thus, the average annual textbook fee is $1,300. This $1,300 sum is covered by the academic institution as well.
According to the IRS, the difference between an employee and independent contractor is the “degree of control,” that the employer holds over the employee. To determine whether a worker is an employee or an independent contractor, the IRS created a checklist called the ‘determinants of control.’ The determinants of control are statements that an employer can use to discern between the two forms of worker. The determinants of control are as follows: the site location of the job being performed, ownership of the equipment, the hiring of the assistants, the ownership of supplies and services, the work to be performed, the length of contract, the benefits package, the method of pay, and the level of training involved in the job (Independent Contractors vs. Employees).
College athletes, and especially football players, would be considered an employee because of the following points taken from the article “Independent Contractor or Employee: How Government Agencies Make the Call.” The article states that “…the IRS is more likely to classify a worker as an employee if they: can be fired at any time by the hiring firm, are paid by the hour, receive instructions from the hiring firm, receive training from the hiring firm, work full time for the hiring firm, receives employee benefits, have the right to quit without incurring liability, and provide services that are an integral part of the hiring firm’s day-to-day operations” (Contractor or Employee).
The scholarships that college athletes receive act as contracts binding them to the school year they are signed for. As Jay Malcolm stated in our interview, “Aid can be cancelled for ineligibility, serious misconduct, dropping below twelve credit hours, voluntary withdrawal, missing class, and missing practice, among other reasons” (Malcolm). Thus, the player can be fired by the hiring firm at any time, and does not have to have their contract renewed annually. The second factor is “paid by the hour,” and while the players are not paid by the hour, they are not eligible for exempt status either, as will be discussed later in this research paper. Another of the determinants is the receiving of instructions and training from the hiring firm. Scholarship athletes receive a multitude of instructions ranging from which classes to take and where to take them; to where to live; what, where, and when to eat; amongst other things. They also receive training from the hiring firm, the athletic department, in the form of off-season and in-season conditioning, and the training established in practice sessions and film sessions. College football players are highly trained athletes, and there is actually only one level of training considered more adequate, the National Football League.
An important determinant is whether or not the worker is employed full-time. A student is required to attend ‘twelve’ hours of class a week to stay eligible, based on the credit hour allotment. In-class time is supposed to add up to three hours per week for each class, and an hour outside of class to study per each hour in class. Under that established theory, scholarship football players spend twenty- four hours per week on scholastics alone, not including the twenty hours per week of football. The total per week totals forty-four hours, which is full-time employment.
Another determinant of employee status is receiving benefits from the company of which you work for. In my interviews with Jay Malcolm and Kyle Israel we discussed the medical insurance policy that the university holds for student- athletes. The policy is, according to Malcolm, that the majority of the student- athletes are on their parents’ medical insurance, but if they do not have insurance, the university will pay to have the student insured (Malcolm). Israel added that athletic insurance is also included for major injuries, such as when he broke his leg and the surgery required a steel rod to be inserted; all surgeries are fully covered by the institution of higher learning (Israel).
The right to quit without liability towards the employee is another of the IRS determinants. Student-athletes who terminate their contract with the academic institution they are attending incur no liability on themselves. Once the contract expires, which is the end of the year, the student is free to attend any other university, with the only penalty being that if they wish to participate in the sport in which they were participating at the former institution, they must sit out one season if their transfer is on the same athletic level. This is parallel to the non- compete contract signed by employees at companies that wish to protect their valuable information as an asset (Fla. Stat. Sec. 542.335.). An example of this would be when Brock Berlin transferred from the University of Florida after his sophomore year of eligibility, and enrolled at the University of Miami Berlin was required to sit out one year based on NCAA transfer regulations. However, he could be on scholarship, attend classes, and practice sessions. Thus, no financial liability rests on the student-athlete if they chose to terminate their contract.
The final determinant that will be discussed is more ambiguous and subjective than the other determinants previously mentioned. This determinant asserts that the services performed by the worker are integral to the company. While this is more subjective it is obvious that student-athletes are integral to their athletic team, or twenty thousand dollars an academic year would not be invested in these athletes. Individual athletes are also an integral piece because they are part of a team or unit that co-exists based on the dedication and abilities of the athletes around them. Starting players aren’t the only ones who hold value either. Even third team players have value as they are often used on the “scout” team, which are players who run the opposing teams’ offense and defense for that week. These back-up players are valuable because they prepare the starting offense and defense for the battle on Saturday, and at times are called into active duty.
An example of a reserve player being called on in a drastic time of need is the story of Larry Jones at the University of Miami in 1991. At the time Jones, who was a third team fullback for the Hurricanes, was mistaken for an offensive lineman when he reported to fall camp fifty pounds overweight. Jones entered Orange Bowl game for the national championship as the third back on the depth chart until the starter was injured and the second team player was suspended. Jones amassed 144 yards rushing and a touchdown to go with MVP honors in a 22-0 thrashing of the Nebraska Cornhuskers. Jones proved that value lies in each and every player on the roster.
Before a scholarship athlete can be determined to be an employee, their status with the Fair Labor Standards Act must be evaluated. First the employer must find the regular rate of pay. To find the regular rate of a salary employee, the employer must divide the salary by the number of hours for which the salary is intended to compensate. In the football player’s case, the regular rate of pay is $23,717 divided by 1,976 hours worked. Thus, the regular rate is $12 per hour worked. In our example above, the hours worked are totaled by multiplying twenty-six weeks of work by forty-four in season hours, and then adding the total to twenty-six weeks worked multiplied by thirty-two hours worked. The student- athletes are making above the federal minimum wage requirement of “$5.85 per hour effective July 24, 2007” (Compliance Assistance). As previously stated, the scholarship football players’ hourly rate is totaled at $12 per hour based on the above calculations.
Now that it has been established that the academic institution employs the student-athletes, it is important to discern whether or not these employees are salary exempt, salary non-exempt, or hourly employees. Salary exempt status is determined by a multitude of factors depending on which exempt status the employee may be qualified for. The different status’ are as follows: executive, administrative, professional, computer, outside sales, and highly compensated. The salary exemption is given to only to employees who are on salary based or fee based pay except for outside sales and highly compensated employees. The highest financial requirement per week to be earned to become exempt is $455.00 per week, and based on the $23, 717-income estimation, that was previously determined, over a fifty-two week period the scholarship-athletes earn $456.00 per week.
Where the scholarship football player fails in finding exempt status is that he/she does not make management decisions, or retention decisions. The athlete is not employed in a field of science or learning in the way that learning is defined here, which is as an instructor, not a student. The student-athletes also do not work exclusively with computers; they do not perform an outside sales job, and are not compensated at $100,000. Thus, scholarship football players should not be considered exempt employees (Fact Sheet #17A). However, scholarship athletes should not be considered hourly employees either, based on the information we have previously provided. Their compensation is not based on an hourly distribution of time. The athletes are not independent contractors, but they also do not receive overtime pay and have the previously mentioned “Daily and Weekly Hour Limitations” according to section 22.214.171.124 in the NCAA Manual (217). Thus they would be considered salary non-exempt employees.
I feel as though the NCAA and the academic institutions will never consider student-athletes employees for a variety of reasons. The most pertinent being liability through workers compensation beyond the year the academic contract binds the school to the student-athlete. Under the current system, after one year, the school can release the player and leave him/her on his/her own financially to recover from a serious injury or any lingering injury. Basically, it’s all monetary in my opinion.
Scholarship-athletes may never be considered employees by their respective academic institutions, or the NCAA. Nonetheless, they truly are employees in every sense of the term. The athletes sign binding contracts upon employment, receive equal but fair compensation, have a governing agency, and fall into the IRS’s determinants of control for an employee, amongst other key factors. While student athletes may never officially receive the designation, they truly are employees of the institution, athletic department, and program for which they toil day in and day out over the course of four grueling years as both students and athletes at their college or university.