Legal Defense Strategies | The Legal Edge: NIL
Issue Date: November 14, 2025 | Issue #21
A Quick Welcome from the Founder
Hey Everyone!
This week, we are analyzing the biggest, most fundamental threat to college sports: The classification of student-athletes as employees. The House v. NCAA settlement—which allows direct revenue payments—has intensified this legal fight, pushing institutions, athletes, and the federal government toward a decision that could radically reshape the amateur model forever. This legal status affects everything from Title IX to taxes and the ability to unionize.
Let's dissect this high-stakes legal status bomb.
Sincerely,
Rebekah Ballard, 3L
This Week’s Strategic Insight
The Employment Status Bomb: Why NIL is Pushing Athletes Toward Unionization
The direct revenue sharing authorized by the House settlement has intensified long-running legal challenges to classify athletes as employees. This classification would grant labor rights (minimum wage, workers' compensation, unionization, etc.) but introduce massive financial and regulatory liabilities for universities, threatening the viability of non-revenue sports.
The Line of Scrutiny: From Amateur to Employee
The concept of "amateurism" has been fundamentally challenged by both NIL and recent court rulings. The distinction now rests on whether the athlete is primarily a student receiving a scholarship or an employee providing a service for economic benefit.
The House Settlement’s Impact
Allowing schools to pay up to $20.5 million per year directly to athletes as "revenue sharing" is the strongest evidence yet that the relationship is economic, strengthening the argument for employee status.
The Johnson Test: The Economic Realities Gateway
Federal courts, led by the Third Circuit in the Johnson v. NCAA case, are applying an "economic realities test" to determine if athletes are employees under the Fair Labor Standards Act (FLSA). This four-factor test hinges on:
Services performed for the university.
Services performed primarily for the university's benefit.
Institutional control over the athlete.
The expectation of compensation or benefits.
The House settlement's direct payments provide powerful new evidence for the Compensation factor (4) and further underscore the Institutional Benefit (2) and Control (3) that schools exercise, heavily weighting the test toward employee status post-House.
The Core Legal Battle: Congress, Courts, and the NLRB
The question of employee status is being fought on three simultaneous fronts:
Legal Arena | Key Development (Current as of Nov 2025) | Significance |
Federal Legislation | Congress is actively debating the SCORE Act, which would explicitly ban athletes from being classified as employees under federal law (NLRA/FLSA) and override state laws that attempt to classify them as such. | This shows the urgency to prevent unionization. If passed, it would provide a permanent legal defense for the NCAA's current structure. |
National Labor Relations Board (NLRB) | The NLRB ruled that Dartmouth men's basketball players are employees under the NLRA, clearing the path for unionization at private universities. However, the team and other major cases later withdrew their petitions to avoid a binding reversal from the incoming General Counsel. | The NLRB is the gateway to unionization. Despite strategic withdrawals, the Dartmouth ruling confirms the legal viability of collective bargaining for private-school athletes. |
Pending Lawsuits | The Johnson v. NCAA case is proceeding, arguing that athletes deserve minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). Also notable is the House v. NCAA settlement, which established the revenue-sharing framework that now fuels the employee argument. | A positive ruling for the athletes would instantly require schools to track and pay overtime for practice/training time, creating a major, immediate financial crisis. |
These simultaneous legal and legislative battles underscore the high stakes. Should the courts or the NLRB succeed in classifying athletes as employees, the resulting fallout would be immediate and severe.
The Consequences: Why Employee Status is a Bomb
The fight over employee status is the ultimate legal defense strategy for every institution. For athletes, gaining employee status offers powerful new labor rights and financial security, but it risks leading to massive cuts in scholarships and non-revenue sports.
Financial Fallout: The True Cost of Employment
If athletes are legally deemed employees, the financial and regulatory implications for universities are immense:
Financial Liability: Schools would owe minimum wage, overtime pay (for all practice/travel/games), and contribute to Social Security and Medicare taxes.
Benefits: Athletes would gain workers' compensation (meaning universities would have long-term liability for career-ending injuries), unemployment insurance, and the right to collectively bargain wages and working conditions.
Title IX & Equal Pay Risk: Since most revenue is concentrated in men's sports, paying athletes as employees would trigger Equal Pay Act concerns, forcing universities to either pay women's teams equitably or find equal employment opportunities, dramatically raising Title IX financial compliance risks. The amateurism label is not a shield against the mandates of the FLSA.
The amateurism label is not a shield against the mandates of the FLSA.
The Athlete Playbook
What You Can Do Today
Monitor Compensation: Understand that direct payments from the university (revenue sharing) make the employment argument stronger. Know exactly how much revenue sharing you receive and how it is classified (as compensation, not just aid).
Document Hours: Track all time spent on training, practice, and travel. This information is critical evidence for future employment lawsuits, should they continue to be filed.
Stay Informed on Legislation: Monitor bills like the SCORE Act. Their purpose is to define your legal status, and their passage or failure will dictate your ability to organize or access certain benefits.
Evaluate Risk: Consult with your counsel on whether the pursuit of employment status outweighs the risk of program cuts or union dues.
NIL Quick Hits
In Her Likeness
Cincinnati Athletics is hosting its annual “In Her Likeness” event, spotlighting women’s sports and the expanding role of NIL advocacy and opportunities in collegiate athletics.
Latest NIL Go Data
The College Sports Commission (CSC) released data showing NIL activity has surged, with a total value of $87.5M as of early November, and processing speeds through the NIL Go portal have improved, with 53% of deals are now resolved within 24 hours and 74% within a week.
Read the full story here:
The Breakdown
The Overtime Track Star
A track athlete, who receives a full scholarship and an academic stipend, spends 45 hours a week on training, practice, travel, and competition. They generate no direct NIL revenue. However, their school's track program brings prestige and donations to the university.
The Legal Edge’s Take
The Johnson Test is a multi-factor balancing test based on "economic realities," not a simple checklist. The court must weigh all factors under the "totality of the circumstances."
Under the Johnson Test, the athlete's status hinges on whether their services are performed "necessarily and primarily for the school’s benefit" (Factor 2) and whether the university exercises "control" over their activity (Factor 3).
The strict time commitment (45 hours/week) and the high level of institutional control strongly suggest an employment relationship. Even though the athlete receives no direct compensation (Factor 4), their activity provides a clear "tangible benefit" to the school's brand and fundraising. This ambiguity—between receiving no direct pay and providing substantial institutional value—is precisely why the Johnson Test must be applied to determine if they meet the Fair Labor Standards Act (FLSA) definition of an employee.
Legal Lingo Explained
What is the ‘National Labor Relations Act (NLRA)’?
The NLRA is the federal law that guarantees employees the right to organize, form unions, and bargain collectively with their employers.
Why Does This Matters?
The NLRB determines who qualifies as an "employee" under the NLRA. If the NLRB rules that athletes are employees, the players in revenue-generating sports would gain the legal right to form a union and negotiate their terms of employment, including salary (above and beyond the House settlement revenue sharing caps) and benefits.
Your Toolkit
Athlete Pro Tip
Your legal defense strategy must assume that you are operating in a gray area where you are considered an employee for labor rights, but a student for educational rights. Documenting your time and monitoring federal legislative action is the best preparation.
What’s Next?
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Disclaimer: This newsletter provides educational insights and general information related to the legal side of Name, Image, and Likeness (NIL). It does not constitute legal, financial, or professional advice, and should not be relied upon as such. This content is for informational purposes only, and you should always consult with a qualified professionals for advice tailored to your specific situation.
NIL laws are constantly evolving, and the information provided might not be the most current at all times.