Melanie Kilpatrick ([email protected])

On Tuesday, a decision was issued by the U.S. District Court finding that student athletes who play on NCAA teams are not "employees" entitled to minimum wage payments under the Fair Labor Standards Act ("FLSA").  At first glance, it might seem that this decision does not impact typical employer-employee relations, but it serves as a reminder that it can be easy to run afoul of the federal wage-and-hour provisions when hosting unpaid internships.

In Berger v. NCAA, the student athletes alleged that they were employees under the test set forth in a 2010 Department of Labor "fact sheet" for determining whether internships qualify as employment under the FLSA.  The court refused to follow the Department of Labor's test for determining whether an intern is an employee.  Instead, it approved of the following factors when analyzing whether a trainee is an employee:

  • Do the intern and the employer both clearly understand that there is no expectation of compensation?
  • Is the training provided similar to that which would be given in an educational environment?
  • Is the internship tied to a formal education program by coursework or receipt of academic credit?
  • Does the program correspond with the intern's academic calendar?
  • Is the duration of the internship limited to the period in which the internship provides the intern with beneficial learning?
  • Does the intern's work complement, rather than displace, work being done by paid employees?
  • Is there an understanding that the intern is not entitled to a paid job at the conclusion of the internship?

The court held that even these factors failed to capture the nature of the relationship between student athletes and their universities.  Placing significance on the educational experience provided by the universities and the fact that students vie for the opportunity to play college sports with no thought of being paid wages, the court concluded that the students' participation on NCAA athletic teams did not make them employees for FLSA purposes.

Employers should keep the above factors in mind when determining whether internships can legally be "unpaid," or whether interns must be paid minimum wages for the experience they receive.


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