NCAA TRANSFER GUIDELINES LOOK A LOT LIKE NON-COMPETE: ANOTHER EXAMPLE OF HOW STUDENT-ATHLETES ARE TREATED AS EMPLOYEES

Photo Credit: Matt Slocum, Associated Press

The NCAA continues to assert that student-athletes are not employees, however, their rules suggest otherwise. The newest “tightening” of transfer guidelines looks just like a non-compete, which typically is used to restrict employee’s freedom.

The NCAA distinguishes its product from that of professional sports by branding its participants as “student-athletes.” The most basic difference between student-athletes and professional athletes is pay. While professional athletes earn salaries and bonuses, student-athletes may not receive pay for their participation in their respective sport. Student-athletes may receive scholarship funds to assist with the cost of attendance of their chosen institution, but any funds received through scholarship must strictly only be applied to tuition, room, and board, and may in no way result in cash in a student’s pocket. Defending its treatment of student-athletes, even in institutions where athletics are a predominant, if not main source of profit, the NCAA argues that not paying students maintains the integrity of the game. In doing so, the NCAA continues to maintain that student-athletes are not employees of the institution they play for and although student-athletes have challenged this position, the courts have continued to uphold the general rule. Why then, does the NCAA feel that it may enact other rules that seem painfully similar to those employers require its employees adhere to? By NCAA standards it seems that it is okay to treat student-athletes like employees only when the rule doing so advances the interests of the NCAA.

Institutions admitted to the NCAA must agree to adhere to the NCAA’s Bylaws. Especially in Division I, it is vital that institutions adhere to the Bylaws, given that by joining the NCAA these institutions become part of a multibillion dollar revenue machine. Article 14, Section 14.5 of the Bylaws governs the eligibility of transfer students. More specifically, Bylaw 14.5.5.1, the “Year in Residence Rule,” requires that “[a] transfer student from a four-year institution shall not be eligible for intercollegiate competition at a member institution until the student has fulfilled a residence requirement of one full academic year (two full semesters or three full quarters) at the certifying institution.” Although the NCAA argues that this rule exists to encourage student-athletes to consider academics as well as athletics at an institution, giving that student time to adapt to the academics of their new institution, it seems that the NCAA is simply restricting the athlete as many employers do with their employees through non-compete agreements.

At its core, the Year in Residence Rule prohibits students from immediately competing, regardless of the reason for transferring. In very limited circumstances, the student athlete may petition for a “hardship waiver,” where substantial adversity or other mitigating circumstances must be proven. Further advancing the understanding that this rule is less for the good of the student and rather for the good of the NCAA, it is exceptionally rare for these waivers to be granted for athletes engaged in Division I football and men’s basketball, which not coincidentally, are the highest profiting NCAA sports. In his extensive analysis of the Year in Residence Rule, UB Law Alum Joseph Schafer notes:

“[T]he Year in Residence Rule functions to prevent the small percentage of Division I athletes who are NBA and NFL prospects from shopping teams to increase their draft stock. Yet only 1.1% of 18,684 men’s basketball players and 1.5% of 73,660 football players go on to compete professionally. Unfortunately, the remaining 98% of Division I football and basketball players are forced to abide by the same rules as the few who would go on to a professional career. So, for instance, if a student-athlete transfers to a new school to pursue a major her previous school did not offer, she must sit out one year. If a student-athlete transfers due to a coaching change, where the new head coach chooses not to renew his scholarship, he will also be held from competition for one year. Finally, if a student-athlete transfers because he has been verbally or physically abused by a coach, he will also be forced to sit out a year.” Joseph W. Schafer, NCAA Division I Transfers “are now basically screwed”: The Battle Against the NCAA’s Year in Residence Rule in the Seventh Circuit, 66 Buff. L. Rev. 481 (2018). 
https://digitalcommons.law.buffalo.edu/buffalolawreview/vol66/iss2/4

Years later, the NCAA is back at it. On June 26, 2019, the NCAA issued “updated guidelines” regarding transfers, making the transfer process next to impossible for student-athletes. The NCAA asserts that these updated guidelines are merely “minor classifications” to guidelines that already exist. However, it seems at least on its face, that these guidelines do in fact further limit a student athlete’s abilities to transfer while also pursuing their goals athletically.

In 2018, the NCAA adopted a new standard that would allow waivers on a case-by-case basis if the athlete could prove “documented mitigating circumstances outside of the student-athlete’s control and directly impacts the health, safety, or well-being of the student-athlete.” Unfortunately, following this new standard, several well-known Division I NCAA football players transferred, causing the NCAA to consider tightening the once broad standard. Approximately one year later, the NCAA has revised this language to require “documented extenuating, extraordinary, and mitigating circumstances outside of the student-athlete’s control that directly impacts the health, safety, or well-being of the student-athlete.” The addition of the terms “extenuating” and “extraordinary” tightens the standard.

A few other key changes came about in June 2019. Presently, the NCAA is requiring that student-athletes who claim their scholarships were revoked for non-disciplinary reasons or that a coach prevented their participation on the team provide a written statement from their prior athletic director stating that the athlete would not have had the opportunity to return to the team and elaborating on why the student athlete is transferring. So basically, the NCAA is requiring an eighteen-year-old kid to approach the athletic director (or should I say the director of his school’s multi-million dollar athletic industry) to obtain a written statement allowing him to transfer to what is most likely the competition. Doesn’t this seem reasonable and not at all restrictive of the student’s freedom to play where he chooses?  

Also, the previous guidelines allowed waivers to be granted for “egregious behavior by a staff member or student at the previous institution.” Now, the guidelines state that waivers should be granted for documented cases where the athlete was a victim of “physical assault or abuse, sexually inappropriate behavior, racial abuse, religious discrimination, questioning of sexuality by a staff member or student at the previous institution,” thus effectively removing any discretion the committee used to have when evaluating waivers.

All of these restrictions make one question whether the NCAA truly does not view its student-athletes as employees, especially in such a profitable, competitive market. However, the most significant change that makes these guidelines look a lot like an employer’s non-compete is the location restriction. Currently, if a student athlete desires to transfer within a 100-mile radius of their home due to (1) injury, (2) illness of an immediate family member, or (3) pregnancy, the NCAA’s proposal requires more paperwork from both the current school and the school the student athlete would be transferring to. This paperwork includes “a treatment plan detailing the student-athlete’s caregiving responsibilities.”

The strict standard of scrutiny for student-athletes to transfer within a certain radius reads like a non-compete, a type of agreement employers may require of employees when the employer wants to prevent its employees from competing against them in their subsequent position. In the employment law realm, non-compete agreements are contracted for between the employer and employee and must not be unduly restrictive of an employee’s freedom to work. However, in the NCAA realm, student-athletes are not employees and therefore, the NCAA and the institution are able to restrict a student athlete’s freedom of his athletic pursuits and studies in the blink of an eye. Student-athletes have no freedom to contract for or negotiate around these restrictions, as their only other option is to simply not play in the NCAA. Despite the various excuses the NCAA and its institutions may offer, it is clear that in this competitive, profitable market they do not want to see student-athletes transfer to more successful programs, risking the “fairness” and “integrity” that the NCAA claims it desires to uphold.

Unfortunately, it seems there is little to no notion of fairness when it comes to the NCAA’s policies restricting its student-athletes’ freedom to play. In this case, the NCAA gets the best of both worlds by enacting a provision that looks a lot like a non-compete, but not having to adhere to some of the restrictions employers must adhere to when enabling non-competes, since student-athletes are not employees. Non-compete agreements are scrutinized under state law and therefore the analysis varies, but some common factors courts look at are whether the agreement will prevent the employee from making a living, whether additional compensation or benefits were offered in return for the employee signing the agreement, and the length of the agreement. The NCAA’s guidelines could, in practice, completely restrict a student athlete from playing and lasts as long as the student athlete is participating at an NCAA institution. Further, the student athlete is given nothing additional in return for signing an agreement that restricts his freedom to play. Unfortunately, this analysis falls on deaf ears since the NCAA (and more importantly, the courts) continue to refuse to acknowledge student-athletes as employees.

The NCAA may argue that student-athletes are not employees and unfortunately, as long as the courts agree there will be no relief for those who are responsible for the NCAA’s multibillion dollar industry. However, as the NCAA continues to treat its student-athletes as employees in circumstances where all the gain is reserved for the NCAA and none for the student, students will continue to push back and bring issues to light. Hopefully, it is only a matter of time before the NCAA pushes too far and must recognize (and reward) its student-athletes for the immense revenue they rake in each season. 

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