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Posted on Friday, March 28, 2014

NLRB Continues the March Madness by Recognizing College-Athletes as Employees

Yesterday, the Chicago regional office of the National Labor Relations Board (“NLRB”) issued a decision that could dramatically change the landscape of college athletics as we know it today. The Regional Director for the NLRB found that scholarship football players at Northwestern University are considered employees within the meaning of the National Labor Relations Act (“NLRA”), and therefore, eligible for union representation. This drastic departure from the traditional notion of a student-athlete will almost certainly be appealed and litigated for years to come.

In reaching its conclusion, the Regional Director defined an “employee” as “a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment.” The RD found that the scholarship football players performed valuable services for the university that resulted in Northwestern generating approximately $235 million in revenue over a nine year period. The RD found that these players were compensated in the form of tuition, fees, room and board up to $76,000 per year and that the “tender” they signed before being granted a scholarship was akin to an employment agreement. The RD also found the players are subject to the university’s control taking into consideration the fact that players devoted almost 40-50 hours of their time each week to football-related activities and the coaches exercised control over most aspects of the players’ private lives, including living arrangements, outside employment, and even Internet postings.

The university argued that the scholarship football players were analogous to graduate assistants, who were previously found by the NLRB to not be employees. The Regional Director distinguished this argument by finding that football players are not primarily students given their time commitment to football-related activities, the fact that their athletic duties did not constitutes a core element of their educational degree, and ultimately found “that the overall relationship between the graduate assistants and their university was primarily an educational one, rather than an economic one.”

The Northwestern football players are seeking to bargain for guaranteed scholarships, post-career medical benefits, and limited contact for practices. If this ruling is upheld, players would now be able to bargain for additional matters such as allowing athletes to accept endorsements while in school or even being paid for playing collegiate athletics. As we’ve seen with professional sports, collective bargaining can also lead to player strikes and lock outs, which has canceled seasons in their entirety in the event players and universities are at an impasse.

Though this could lead to a significant change in college athletics, the decision is limited to scholarship players (not walk-ons) at private schools. Public universities comprise the vast majority of FBS Division I teams, and they would need to follow their own state’s laws related to collective bargaining. However, the ripple effects of this decision could lead to other employment related consequences, such as a determination that players are considered “employees” under the FLSA, thereby entitling them to back wages and potential overtime claims, workers compensation claims from football-related injuries, and unemployment compensation in the event a student is cut from the program.

In our opinion, this decision undermines the true meaning of collegiate student athletes – they are students first, and athletes second. By regarding students as “employees,” this administration is now taking the position that these players should be considered blue-collar workers. By treating students as blue-collar workers, the true reason for why they are at a given university – to receive an education – is eroded even further, if not entirely as universities will now view their players purely through economic lenses and measured by the revenue they bring in.

A more practical approach to solve this dilemma may be to set up an educational trust for these athletes. Revenue generated from collegiate programs could go into a trust that is set-up exclusively to benefit these athletes’ continued educational pursuit. The vast majority of collegiate athletes will not go on to play professionally and by setting up a trust that can be used to pursue graduate and doctoral degrees, you are incentivizing these athletes to continue their education, and using their prior athletic commitment as a means to fund that pursuit. This is just one of the alternatives we feel is better than throwing blue collars on these student athletes and leaving the majority of them at the end of their collegiate career without any means to pursue a career in anything other than sports. The government should not pigeonhole these student athletes into the football field or basketball court, but rather, promote incentives that allow these players to continue their educational pursuit beyond their playing days.

Nick Johnson is an attorney with Washington, DC business law firm Berenzweig Leonard. He can be reached at njohnson@BerenzweigLaw.com.

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