TAKEAWAYS

• Region 1 of the National Labor Relations Board (NLRB) found that student-athletes on the Dartmouth College men’s basketball team are “employees” within the meaning of the National Labor Relations Act (NLRA) and directed a secret ballot election as to whether the players will be represented by a union on a going-forward basis.
• An ultimate decision in this case is still subject to the NLRB’s lengthy appeal process; nevertheless, absent congressional action, it is likely that higher education institutions will increasingly face external pressure to treat student-athletes as employees in the coming years.
• Higher education institutions should seek counsel on labor issues to ensure that they remain prepared to address the myriad issues that are likely to stem from a requirement (or voluntary movement) to reclassify student-athletes as employees.

On February 5, 2024, Region 1 of the National Labor Relations Board (NLRB) issued a 26-page decision finding that members of the Dartmouth men’s basketball program (the “Players”) are “employees” within the definition of the National Labor Relations Act (NLRA) because they perform work under the direction of their employer (Dartmouth) for compensation. The Region’s decision directs an election to take place as to whether the Players will be represented by Local 560 of the Service Employees International Union (the Union). The Union has represented other employees at Dartmouth for decades, including, inter alia, employees in Dartmouth’s facilities, operations and security departments.

The Region’s decision is far from the final word on this matter, as Dartmouth has already stated its intent to appeal. That said, the decision is consistent with the NLRB’s current philosophical alignment, as set forth in a memo issued by the NLRB’s General Counsel in September 2021, asserting, inter alia, that student-athletes “perform services for institutions in return for compensation and subject to their control” and are, accordingly, “statutory employees, who have the right act collectively to improve their terms and conditions of employment[.]”

While final resolution of this matter is likely still years away, the Region’s decision is a noteworthy development for college athletics and signals that, absent congressional intervention, institutions of higher education will increasingly be faced with demands to treat their student-athletes as employees.

NLRB Jurisdiction
Under the NLRA, each region of the NLRB has the authority and responsibility to direct and oversee elections for union representation upon receipt of a petition from employees of a private company seeking to unionize. Of particular note with regard to college athletics, the NLRA does not apply to public employers, which excludes all state colleges and universities from its jurisdiction. Labor relations for public employers are governed by applicable state law, which varies widely between jurisdictions. However, the NLRB has taken the position in both the pending NLRB petition against the NCAA and Pac-12 Conference (discussed below), as well as in the General Counsel’s 2021 memo, that the NCAA and athletic conferences are “joint employers” of student-athletes. Thus, according to the NLRB, as “joint employers,” both public and private schools that belong to the NCAA and private athletic conferences would be subject to the NLRB’s jurisdiction.

The NLRA confers the right to unionize (or not unionize) on “employees,” which the Act defines to “include any employee, and shall not be limited to the employees of a particular employer, unless the Act explicitly states otherwise, […] but shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act […] or by any other person who is not an employer as herein defined.”

The NLRB has consistently interpreted the definition of “employee” broadly, and has previously held that an individual’s status as a student is not inherently inconsistent with their status as an employee, such as in the case of research and teaching assistants.

The Region’s Reasoning and Decision
The threshold question for the Region in this matter was whether the Players are “employees” of Dartmouth within the Act’s statutory definition.

In concluding that the Players are, in fact, “employees,” the Region focused on whether the student-athletes met the two-prong common law test of employment: (i) did the student-athletes perform work in exchange for compensation, and (ii) did Dartmouth exercise sufficient control over the student-athletes’ “work.” The regional director concluded the answer to both elements was “yes.”

With regard to “work,” the Region quickly concluded that the amount of time spent by the Players attending practices and games, participating in assigned fitness regimens, traveling, and attending alumni and other school-sponsored events all constitute “work” that benefitted Dartmouth, even in the face of evidence from Dartmouth that the basketball team results in a net loss for the school on an annual basis.

As to compensation, the Region was unpersuaded by Dartmouth’s attempt to distinguish prior cases on the basis that it does not provide athletic scholarships to student-athletes, and found that the Players’ receipt of a variety of benefits, both economic and non-economic (including the lifelong advantages of being a Dartmouth alumnus, free apparel, basketball tickets, tutoring, nutrition counseling, career development support and early/preferential access to admission benefits) constituted sufficient “compensation” to trigger employee status.

The Region also found that Dartmouth “exercises significant control over the student-athletes’ work,” largely based on the constraints placed on the Players’ ability to schedule classes and/or make individual plans while traveling with the team.

Procedural Posture
As noted above, the Region’s decision to direct an election in this case is the start—not the end—of this story. Regional decisions are appealed first to the NLRB’s five-member board, sitting in Washington, DC. Board members are appointed by the President of the United States and confirmed by the Senate. Currently, four of the five board seats are filled (sufficient for a quorum). As the board’s composition changes to reflect each presidential administration, it is not uncommon for its positions to likewise change.

A decision from the NLRB can be appealed to the U.S. Court of Appeals for the judicial circuit in which the petition originated (in this case, the Second Circuit). Decisions can then be appealed to the Supreme Court, subject to the same writ of certiorari procedures applicable to all Supreme Court cases. Appealing a case through any level(s) of this process can take years to complete. In the meantime, the election at Dartmouth will take place as scheduled in early March 2024.

Related Unionization Attempts in College Athletics
Dartmouth’s basketball team is not the first group of student-athletes to seek union representation under the NLRA. In 2015, Region 13 of the NLRB rejected a petition filed by Northwestern University’s football players on largely technical grounds, declining to exercise jurisdiction in light of the conflict of laws and labor relations matters that would arise from Northwestern being the only private university in the Big Ten Athletic Conference, and thus the only school subject to the NLRA. Here, the Region noted that the Ivy League is comprised entirely of private schools, thus eliminating the potential conflict of laws and labor relations matters that were of concern at Northwestern.

Additionally, a similar petition is currently pending before Region 31 of the NLRB in California, where the National College Players Association (NCPA) has alleged that the NCAA, Pac-12 Conference, and certain schools have misclassified student-athletes as non-employees.

Given that Region 1 concluded the Dartmouth Players were employees absent any athletic scholarships or proof of profits from their program, the NCPA should be on even stronger footing in arguing that student-athletes receive significant athletic scholarships and other financial benefits, and that, at least in the case of football, the programs generate profits.

Legal Implications and Guidance for Clients
The Regional Director’s decision in the Dartmouth College matter comes as college athletics increasingly appears to be lurching into an uncertain future. The NCAA is defending against a spate of lawsuits challenging its authority to implement and enforce rules. The two most prominent Division I athletic conferences have announced a joint partnership to explore potential solutions to prominent issues. And the NCAA and its member institutions are likely contemplating (or should be contemplating) a future of revenue sharing with student-athletes or directly compensating them for their services.

As the NLRB now enters the arena, the legal landscape for college athletics only grows that much more complex. At its most basic and obvious level, classifying student-athletes as employees who are entitled to union representation will impose bargaining obligations on colleges and universities whose players avail themselves of this process.

As the NLRB acknowledged with regard to Northwestern, unions of professional athletes operate on a league-wide basis, such that certain teams are not subject to inconsistent laws or standards. Conversely, the NLRB’s inability to exercise jurisdiction over public colleges and universities could create significant problems in this regard for the overall network of college sports. For example, there are 14 private universities (including Notre Dame as an independent) that compete in one of Division I’s “power” conferences (the Atlantic Coast Conference, the Big 10 Athletic Conference, the Big 12 Conference and the Southeastern Conference) that are subject to the NLRA’s jurisdiction, and 54 public universities to which any NLRB decision would not apply. However, as noted above, the NLRB has taken the position that the NCAA and athletic conferences are “joint employers” of student-athletes. If the NLRB successfully argues this point in the pending petition against the NCAA and Pac-12 Conference, this could significantly expand the NLRB’s jurisdiction to include many public universities that previously were not considered to be covered by the NLRA.

We can also expect that, once unions start to represent student-athletes, there will be a push for other employment laws to follow suit. Student-athletes have already filed at least one class action lawsuit seeking minimum and overtime wage protections under the Fair Labor Standards Act. From there, a push for workers’ compensation and disability insurance programs, protected leaves of absence and more benefits and entitlements are likely to follow. And, so as not to allow a windfall for the student-athletes, federal and state taxing authorities may also seek to reclassify scholarships and financial aid packages as W-2 reportable and taxable income.

Although much remains to be seen, this much is certain: institutions of higher education must keep their eye on the ball and seek advice of experienced counsel as these legal matters continue to develop.

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