NLRB Regional Director Rules College Scholarship Athletes Are ‘Employees’

by Davis Wright Tremaine LLP
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The director of Region 13 of the National Labor Relations Board ruled last week that scholarship football players at Northwestern University were “employees” within the meaning of the National Labor Relations Act, and therefore entitled to hold an election to determine whether they wished to be represented by the College Athletes Players Association for purposes of collective bargaining.

The decision
The regional director concluded that current scholarship football players were “employees” under the Act because they performed services in return for payment under a contract for hire, and were subject to Northwestern’ s control or right of control.

Services were provided because scholarship players were recruited and admitted for their athletic talent, and generated substantial revenues for Northwestern. Control existed because players were held to strict schedules and rules covering nearly all aspects of players’ on- and off-field lives. The contract for hire was the applicable scholarship agreement.  Players received payment because the scholarships paid for their tuition, fees, room, board, and books. Players did not have wage or FICA taxes withheld and were not issued a W-2. But this has never been a requirement under NLRB precedent when analyzing whether payment was received for services.

The regional director distinguished  prior Board precedent in the Brown University case that held that graduate students receiving stipends were not employees under the Act. The regional director stated that scholarship football players were not primarily students because they spent an average of 50 hours per week on football-related tasks and only 20 hours for school tasks. Moreover, the regional director determined that the players’ athletic responsibilities did not constitute a core element of their educational degree requirements, and, unlike prior precedent, the compensation being received was not financial aid. Instead, players were required to perform services for their scholarships, and they could risk losing their scholarships if they did not perform.

Significance
Employees under the Act are entitled to collectively bargain for the terms and conditions of their employment, including wages, hours, and terms of employment. Employers are prohibited from undertaking any act to interfere with employees’ rights or from retaliating against employees who exercise their rights. If the decision is upheld on appeal, players could demand pay, benefits, licensing rights for use of likenesses in promotional material, and restrictions on practice and game conditions. Moreover, coaches and athletic department personnel could be subject to unfair labor practice charges for a range of perceived or actual offenses.

Section 7 and 8 rights under the Act cover a wide range of policies and rules adopted by employers. Also, the Act covers employees who are not in a union. Employees not in a union may engage in concerted activity for mutual aid and protection with respect to wages and terms of employment. Thus, the decision could destroy the current foundation of NCAA rules governing scholarship athletes. Additionally, the decision might be a vehicle for the NLRB to reverse the Brown University holding  that other students on scholarship are not employees. Finally, the concept of “employee” status impacts other related fields such as wage and hour law, employment discrimination, workers compensation, and OSHA. The same reasoning and analysis could lead to scholarship athletes being classified as “employees” in these other areas of law.

Where do we go from here?
Although the NLRB does not have jurisdiction over public universities and colleges, most are subject to state-based labor relations acts that look to the National Labor Relations Act for persuasive guidance.

Athletic directors for private and public universities should consider several steps to best manage risk and potential liabilities.

  • Review the regional director’s decision.
  • Review scholarship agreements and offers to minimize the risk of having scholarship agreements characterized as contracts for hire.
  • Review academic standards and programs for scholarship athletes. Ensure that players are fulfilling academic requirements, and evaluate year-long commitments to athletic and academic requirements with an eye towards achieving balance between the two.
  • Review the programs, policies, and rules controlling scholarship athletes to ascertain what policies or rules can be eliminated or  revised to minimize “control.”
  • Ensure that personnel in athletic departments, especially coaching staffs and compliance department personnel, receive training in basic labor law principles.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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