Everyone recognizes that college athletics are big business for the schools, but do they exploit the student athletes under the guise of amateurism? Thanks to a new decision out of the Chicago office of the National Labor Relations Board, we will likely find out if scholarship athletes will be treated as employees with the right to unionize under the National Labor Relations Act. On March 26, 2014, the NLRB regional director concluded that the scholarship recipients on the Northwestern University football team are employees and ordered an election to determine if they desire union representation.
Background of the Case
The issue arose when the College Athletes Players Association filed a petition with the NLRB seeking an election so that scholarship recipients on the Northwestern University football team would be entitled to vote for union representation. This is the first step in what may be a long road, but one which could radically transform collegiate sports.
Following its usual procedures, the NLRB regional director scheduled a hearing primarily to determine whether the players are “employees” within the meaning of the Act. Northwestern contended vigorously that they are students: not employees.
Who is an employee can differ significantly from one law to another because different laws apply different tests. A person can be a student receiving a scholarship for tax law purposes and an employee for purposes of the antidiscrimination statutes. Someone may be an independent contractor for Social Security purposes but an employee when it comes to unemployment compensation. It all depends on what test is being applied.
It would be a colossal understatement to say that the NLRA is not very instructive about what test to use. The Act states that the term employee shall include “any employee, and shall not be limited to the employees of a particular employer ….” Although the statute then goes on to exclude agricultural workers, supervisors and others, the definition is essentially circular. The Supreme Court has said that in applying this broad definition, it is necessary to consider the common law definition of employee. Under the common law, someone is an employee if that person performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment.
Why Did the Regional Director Find the Football Players To Be Employees?
Although NCAA rules generally prohibit schools from paying compensation to their athletes, players on a scholarship at Northwestern receive grant-in-aid totaling $61,000 each year, or $76,000 if the player enrolls in classes over the summer. Besides tuition, fees, books, room and board, players may also receive an allowance for required dress clothes, traveling home for a family member’s funeral, fees for graduate school admittance tests and tutoring. Upperclassmen can live off campus and receive $1,200 to $1,600 a month to cover their living expenses.
Football players are subject to special rules that other students do not have to follow that cover where they may live, what part-time jobs they may hold, whether they may drive personal vehicles or travel off campus, and what they may post on social media. Players who fail to maintain the required grade point average must also attend a special study hall.
The regional director spent several pages of his opinion addressing the time commitment that scholarship athletes are required to dedicate to their sport. Their activities are highly regulated during and after the season, when they are expected to devote 40-50 hours a week. Even over the spring and summer, they spend 20-25 hours a week on workouts and training.
In what will come as no surprise to fans of Big Ten football, the regional director noted that scholarship players are identified and recruited in the first instance because of their football prowess and not because of their academic achievement in high school. Scholarship recipients must maintain their eligibility by being enrolled as full-time students, making adequate progress toward obtaining a degree and maintaining a minimum grade point average of 1.8 going into their second year, 1.9 going into their third year and 2.0 in their fourth or fifth years. Northwestern boasts that its players have an average GPA of 3.024 and a 97 percent graduation rate and ranks first in the country among football teams.
The regional director noted that the Northwestern football team generated total annual revenues last year of more than $30 million and produced a profit of approximately $8 million. These funds were used to subsidize other sports, all of which lose money except for Northwestern’s basketball team.
Based upon this record, the regional director concluded that the players received scholarships to perform football-related services for Northwestern under a contract for hire (their scholarship letter) in return for compensation and that they were under the school’s control. In reaching this conclusion, he brushed aside the fact that the scholarships and stipends are not treated as taxable income. By contrast, however, he found that the walk-on players were not employees for the fundamental reason that they do not receive compensation for the services they perform.
Aren’t the Players Students?
One of the difficult issues the regional director had to address was NLRB precedent from 2004 that graduate assistants at Brown University are not treated as employees. There, the NLRB concluded that the relationship between the graduate assistants and the university was primarily as educational one. According to the regional director, the football players are different because they are not “primarily” students due to the relative number of hours they spend between their studies and their sport. They are selected for their football skills, not their academics. The players’ athletic duties are not a core element of their education in the way that graduate teaching duties are, and the coaches’ supervision of players is not the same as supervision by academic faculty.
The regional director also brushed aside two other arguments Northwestern made. First, he said that football players were not exempt temporary employees, even though their playing time is of a limited duration. Second, the presence of walk-on players on the team did not render the union’s proposed bargaining unit inappropriate. Although the walk-ons share some community of interest with the scholarship players, they do not receive scholarships and are not subject to the same threat of losing their assistance if they stop playing football. Because the walk-ons are not employees under the statute, their presence on the team does not result in any fracturing of an otherwise appropriate bargaining unit.
The regional director’s decision is only the first step in what may be a long process. Northwestern has the right to request a review by the National Labor Relations Board, which is due by April 9, 2014. The current Labor Board is viewed as much more highly pro-union than it has been in years, so there is a good chance it will affirm the regional director’s decision. The next step would be for the athletes to vote in an election. If the union is certified as a bargaining representative, Northwestern will have a choice: either bargain over the terms and conditions of employment or face an unfair labor practice charge. That is where things get really interesting.
Suppose Northwestern bargains but refuses to make any concessions to the union. As long as it bargains in good faith it is not required to make a concession. If Northwestern cites the NCAA rules, will the NCAA be dragged into the process as a joint employer? Will the NCAA again find itself enmeshed in an antitrust suit?
If Northwestern refuses to bargain, it will be able to test the validity of the NLRB’s decision by taking the case either to the federal Court of Appeals in Chicago or the District of Columbia, wherever it thinks it has a better chance, with any ultimate appeal to the Supreme Court. Such a ruling is probably at least three years off, assuming that the Northwestern players do not reject the idea of union representation. You can expect that there will be some pretty heavy campaigning going on, not only by the school and the union, but by alumni, booster clubs and fellow students.
And what about the players? If they select a union, will it have any practical ability to bargain? Will the players risk their scholarships by engaging in a strike? Will other labor unions refuse to cross informational picket lines at stadiums? Should we get ready to hear, “First and 10, let’s picket again.”
A study by the Drexel University Sport Management Department estimates that college football and basketball players would receive an additional $6 billion per year over and above their scholarships if NCAA rules did not prohibit them from being paid their fair value. With that kind of money at stake, it is hard to predict how this drama will play itself out.
In every field there are critical moments upon which major events turn. Looking back years from now we may find this is the pivotal event that transformed college sports. Or we may just yawn and ask, “What was the regional director thinking?”
In today’s legal climate, does anyone want to place a bet on the outcome?