College Athletes, NIL Money and the Shifting Line of Employee Status

Since 2021, NCAA athletes have been allowed to profit from their name, image and likeness — and a 2025-era class-action settlement now lets Division I schools share athletic revenue with them directly. That settlement, which resolved an antitrust suit brought by an Arizona State University swimmer and a Texas Christian University basketball player, marks the most concrete step yet toward a compensation model that looks much like an employment relationship.

For HR leaders outside college sports, the story matters as a case study in how the legal definition of "employee" moves. The plaintiffs had sought an injunction forcing the NCAA to lift restrictions on revenue sharing from broadcast rights. The NCAA's concession means athletes at the highest level of college sport can now receive direct payments from their institutions, on top of endorsement deals, social media sponsorships, appearances and licensing income NIL rules already permit.

What changed for college athletics?

Under the settlement, Division I schools may share athletic revenue directly with student-athletes — a break from the amateurism model that barred institutional payments for decades. Schools generate revenue through ticket sales, sponsorships, broadcasting agreements and merchandising, and participation often demands a year-round commitment from athletes.

Advocates for employee status argue the familiar tests of employment law now apply. Schools exercise substantial control over athletes' schedules, training requirements, conduct and outside activities, they contend. That control, combined with significant revenue generation, resembles the factors courts weigh in classification disputes.

Opponents counter that athletes attend institutions primarily for educational purposes. They receive scholarships, academic opportunities and developmental benefits rather than traditional wages. Reclassifying student-athletes as employees, opponents argue, would fundamentally alter the collegiate model.

Why does this sound familiar to employment lawyers?

The debate mirrors worker-classification disputes involving independent contractors, gig workers, interns and trainees. Over the last decade, businesses have faced heightened scrutiny of how they classify workers, and courts have increasingly focused on the realities of the workplace relationship rather than the labels employers assign.

Two themes will dominate the college athletics version of this fight, according to Marc Sugerman, an attorney in the Orlando office of FordHarrison whose practice focuses on labor and employment law and who represents employers in arbitrations, collective bargaining and unfair labor practice proceedings. The first is the extent to which an organization controls how work is performed. The second is compensation that takes forms beyond traditional wages — the exact questions HR teams already navigate in contractor and gig arrangements.

Whether student-athletes ultimately gain employee status remains unclear. What is clear is their trajectory: athletes are becoming increasingly organized and vocal in their advocacy for compensation and workplace protections, and Sugerman advises schools to expect continued activism.

What should employers take from the NIL era?

The core lesson extends beyond campuses. The definition of an "employee" is not static, and as business models and compensation structures evolve across industries, organizations must reassess workforce classifications against the realities of how work is performed.

The questions facing universities and athletic departments are the same ones employers confront daily in classification audits, contractor engagements and gig platforms:

• How much control does the organization exercise over how, when and where work gets done?
• Does compensation extend beyond wages into benefits, revenue shares or equity-like arrangements?
• Is the worker economically dependent on the organization?
• Do labels in contracts match the actual working relationship?

Courts and labor agencies have shown they will look past contracts to workplace reality. That scrutiny applies equally to a swimmer training year-round for a university that earns broadcast revenue and to a contractor staffing a company's core product.

The NCAA settlement does not settle the employee question — it accelerates it. As revenue flows to athletes and their organizing activity grows, employers across sectors should expect the boundaries of employment law to keep moving, and should audit their own classifications before regulators or courts do it for them.