What Exactly is the Long-Term Impact of the NLRB’s Decision? Part 3

by Dorsey & Whitney LLP

While the Northwestern decision applies to private universities, there is a good chance that this rule would affect public universities as well. States have individual statutes and related administrative bodies that govern public-sector labor relations and most of those administrative bodies rely heavily on the National Labor Relations Board (the “NLRB” or the “Board”) for guidance. In any event, news reports represent that the movement to unions for student-athlete has already started to spread to other schools, including public ones.

The Knee Jerk Effect

As an immediate result to student union formation, Ohio state legislators who oppose these union efforts have already introduced a bill to eliminate this as a legal possibility. The NCAA and officials from universities across the country have already made very clear that they also adamantly oppose this. In their view, which many legal commentators share, employment laws are just not equipped to even deal with student-athletes on this basis, and the very structure of college athletics may be changed if this development moves forward any more than it already has.

As another example of this opposition, Northwestern’s football coach has already written to his players expressing his own and Northwestern’s opposition. As many are not aware, employers also have a right within limits provided under the National Labor Relations Act (the “NLRA” or the “Act”) to state their own view against unionization, and other anti-union campaign steps from the University are likely to follow as the April 25 union election date nears.

The Legal Implications of Having Employee Status

One issue already being debated (and that Northwestern also raised) is whether the tax code could rationally continue to treat scholarship money as tax-free or instead would need to begin to tax this as wages. The implied if not express threat, of course, is that the student-athletes may lose money due to the taxes they must pay if this unionization issue moves forward. However, there is no resolution of that issue right now and outcomes either for or against this taxable “compensation” result are entirely possible.

The application of overtime, minimum wage, and other employment laws also could follow from similar “employee” findings based on the same approach the NLRB’s Chicago Region decision already takes. These results could happen on either a federal law or state-by-state level. Many, however, believe their application would break down the basic structure of how these athletes train and practice. Would players punch a clock when they went to ‘work’ each day? Would universities with tight budgets strictly limit the amount of time that players spend in the gym, working out on their own, or watching tape, in order to avoid costly overtime accruals?

And what about the myriad of other legal benefits and protections tied to having “employee” status? These could include, for example, workers compensation, unemployment compensation, and even OSHA coverage for player safety steps in football or any other injury-prone sport. The most prominent of these are the “concussion” syndrome claims that are developing for almost every contact sport. The seriousness of these potential injuries and the potential for claims arising from them make it even more likely that similar “employee” status legal claims on behalf of student-athletes will be pursued in many other legal arenas.

Given wages and other employment conditions can always be a subject of union bargaining, this could take many other directions once bargaining even begins. As a result, the NLRB’s Chicago Region decision is only the first of many strikes that will be made before this new version of a college athletic game is over.

We will continue to monitor this issue closely, as changes will come surely and steadily over the coming months and years. If you have any questions about these issues – how they will affect your private university or whether they will affect your state school – we would be pleased to offer our guidance.

This is the third piece in a three-part series on the recent NLRB ruling. Our first and second updates discussed the initial findings and the history of the case.

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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