University Can Take Football Case to NLRB, But Courts May Make Call on Player Rights

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Lawrence E. Dubé  

March 28 --A National Labor Relations Board regional director decided March 26 that scholarship football students at Northwestern University are employees under federal labor law who have a right to determine whether they wish to be represented by a union, but a final ruling on the rights of the Northwestern players and other student-athletes may be far down the road, several attorneys told Bloomberg BNA March 28.

Northwestern has until April 9 to ask the NLRB in Washington to review the decision by Regional Director Peter Sung Ohr (58 DLR A-14, 3/26/14).

Jonathan C. Fritts, who represents employers at Morgan Lewis & Bockius in Washington, predicted that the board will deny the request for review. Whatever happens at the board level, Fritts and several other attorneys agreed, if the Northwestern players vote for union representation, the university's challenge to their organizing efforts will likely be presented to, and resolved by, a federal appellate court.

The regional director's decision has prompted a number of questions about the legal rights and obligations of universities and student-athletes, many of them outside the NLRB’s jurisdiction.

Elected officials have taken divergent views of the Chicago regional director's action, while unions have been supportive of the Northwestern players' organizing effort and an NLRB ruling that is the first of its kind. Lawyers are still trying to assess the implications for universities, students, and college sports, but they expect the ruling will be the subject of discussion and debate for a long time to come.

Decision Cited 'Transfer of Economic Value.'

Ohr acted on a petition for a secret-ballot election filed by the College Athletes Players Association (CAPA). The union sought to represent approximately 85 grant-in-aid scholarship football players at Northwestern, but not approximately two dozen other “walk-on” players who did not receive the same scholarship benefits from Northwestern.

Northwestern opposed the request for an NLRB-supervised election, arguing among other things that the scholar-athletes are not employees under the National Labor Relations Act, but Ohr disagreed.

“As the record demonstrates,” he wrote, “players receiving scholarships to perform football-related services for the Employer under a contract for hire in return for compensation are subject to the Employer’s control, and are therefore employees within the meaning of the Act.”

The regional director found that the players' efforts support a football program that generated revenues for Northwestern of approximately $235 million during the 2003-2012 period. Northwestern, which participates in the NCAA Division I and the Big Ten football conference, receives revenues through ticket sales, television contracts, merchandise sales, and licensing agreements. The university, Ohr noted, uses the revenue not only for its football team but for other university programs.

Grant-in-aid scholarship football players receive “a transfer of economic value,” as Ohr described it, totaling as much as $76,000 per year. Under the scholarship program, Northwestern pays for the players' tuition, fees, room, board, and books for up to five years of player eligibility.

Northwestern does not treat the scholarship money as the players' taxable income, but Ohr said under the NLRA that fact is “not dispositive of whether it is compensation.”


“[P]layers receiving scholarships to perform football-related services for the Employer under a contract for hire in return for compensation are subject to the Employer’s control, and are therefore employees within the meaning of the Act,” NLRB Regional Director Ohr wrote.  

 


Director Cited 'Contract' and Control

The regional director also stressed that Northwestern give players a written “tender” of the terms and conditions for each football scholarship before scholarship aid commences. The tender, which is signed by the scholarship recipient, serves as an “employment contract,” in his view.

It is clear, the regional director said, that scholarships given the football players are provided in exchange for the athletic services they perform. “Indeed,” he wrote, “the scholarship is clearly tied to the player’s performance of athletic services as evidenced by the fact that scholarships can be immediately canceled if a player voluntarily withdraws from the team or abuses team rules.” That has happened only twice in the last five years, Ohr acknowledged, but he said “the threat nevertheless hangs over the entire team and provides a powerful incentive for them to attend practices and games, as well as abide by all the rules they are subject to.”

University rules covering the football players are detailed and extensive, the regional director wrote, describing athletic coaches as having “control over nearly every aspect of the players' private lives by virtue of the fact that there are many rules that they must follow under threat of discipline and/or the loss of the scholarship.”

Northwestern and its coaches appear to value the academic careers of the college football players, Ohr said, but control over the players' schedules impacts their academic pursuits. The regional director said the university supports a number of programs to assist student-athletes in balancing their athletic and academic obligations, but Ohr said “these noble efforts by the employer … only further highlight how pervasively the players' lives are controlled when they accept a football scholarship.“

Graduate Assistants Case Called Distinguishable

Stating the common-law definition of the term “employee” should be considered in determining employee status under the NLRA, Ohr concluded that the scholarship students are employees under the act, while the walk-on football players who did not receive compensation like the grant-in-aid scholarship students, and did not sign “tender” agreements like their teammates, cannot be considered employees.

Ohr acknowledged that Northwestern argued the scholarship players did not meet the definition of employee status articulated by the board in Brown University, 342 N.L.R.B. 483, 175 LRRM 1089 (2004) .

In Brown, Ohr wrote, the board found that graduate assistants were primarily in an educational relationship with the university, not an economic one. However, Ohr said, Brown graduate students worked only a limited number of hours, in contrast to the long hours required of Northwestern football players.

Ohr said there were other important distinctions between Northwestern and Brown. The NLRB considered that the teaching and research duties performed by graduate students at Brown were core elements of the university's requirements for them to earn graduate degrees in their academic specialties. On the other hand, Ohr said, football is not a part of any of the academic programs awarding undergraduate degrees at Northwestern.

“The fact that the players undoubtedly learn great life lessons from participating on the football team and take with them important values such as character, dedication, perseverance, and team work, is insufficient to show that their relationship with the employer is primarily an academic one,” the regional director wrote.

Observing that Northwestern spends more than $5 million per year on 85 scholarships ranging from $61,000 to $76,000, Ohr wrote that “this relationship is an economic one that involves the transfer of great sums of money to the players in the form of scholarships.”

Director Approved Exclusion of 'Walk-On' Players

The NLRB regional director rejected several other arguments made by the university, and found that the unit of scholarship players requested by the union was an appropriate one under the NLRA.

Northwestern argued that, under the board's decision in Specialty Healthcare & Rehabilitation Center, 357 N.L.R.B. No. 83, 191 LRRM 1137 (2011) (169 DLR AA-1, 8/31/11), a unit would not be appropriate if it excluded employees who had “an overwhelming community of interest” with the employees sought in the union’s petition.

Northwestern argued that excluding the walk-on players is exactly the kind of fracturing of a unit that is impermissible under Specialty Healthcare, but the regional director disagreed, citing the substantial scholarships provided to the grant-in-aid recipients.

“Fundamentally,” Ohr wrote, “walk-on players do not share the significant threat of possibly losing up to the equivalent of a quarter million dollars in scholarship if they stop playing football for the Employer as do the scholarship players.”

Ohr also found that the walk-on players are not employees under the NLRA because they do not receive compensation. “In the absence of a finding that the walk-on players are employees,” he found, “a fractured unit cannot exist, and the petitioned for unit is an appropriate unit.”


Ohr wrote it is appropriate to exclude “walk-on players” from the unit because they “do not share the significant threat of possibly losing up to the equivalent of a quarter million dollars in scholarship if they stop playing football for the Employer as do the scholarship players.”  

 


Ruling Called 'Formidable' Challenge for Northwestern

If, as expected, Northwestern files a petition for review, the board can simply deny the request, allowing the regional office to proceed with the representation election, or the board could grant review in order to consider some or all of the legal issues. The board also has an option of allowing the election to go forward, with ballots impounded until after the resolution of legal issues in the case.

Christopher David Ruiz Cameron, a professor of law at Southwestern Law School in Los Angeles who teaches both labor and employment law and sports law, told Bloomberg BNA March 27 that the NLRB regional director “made a pretty strong case” for directing an election among the Northwestern scholarship players.

Cameron said the NLRB has gone back and forth “on whether analogous folks--mostly, graduate teaching assistants and interns/residents--are more students or more employees.”

The law professor noted, however, that the extensive control exercised over college athletes resembles the control that may be exercised over professional athletes, while the detailed handbook given to Northwestern players “looks an awful lot like an employee handbook or manual.”

Cameron said the regional office decision made “a formidable case that the university will have to beat.”

Predictions Board May Deny Review

Fritts, a Morgan Lewis partner, said he was surprised by the regional office decision and by the regional director's relying first on common-law employee definitions and treating the board’s ruling in Brown University as an alternative test of whether there is a relationship that is primarily academic or economic.

Fritts noted that the decision by the Chicago regional director is not binding on other NLRB offices, although he said it may influence their decisions. The lawyer expressed his opinion that the five-member board in Washington will likely deny Northwestern’s request for review of the decision. That would clear a path for a secret-ballot election among the football players with grant-in-aid scholarships.

If the players vote to unionize, Fritts said, the university would then have the option of refusing to bargain with the union. That action would draw an unfair labor practice charge from the union, and an eventual NLRB decision that the refusal was unjustified would be appealable to a federal appellate court.

John B. Langel, a partner at Ballard Spahr LLP in Philadelphia who chairs the firm’s litigation department and represents employers including colleges and universities, offered a similar view to Bloomberg March 28.

Langel said he is not sure the same regional office decision would have been issued during the Bush administration when Republican appointees controlled the board. But he said the case in support of the Northwestern petition was well-presented, and he would not be surprised to see the current board let the ruling stand.

Fallout May Reach Other Schools, Other Laws

The regional director's ruling has already provoked a lot of discussion, and Langel said he expects there will be debate in state legislatures about how to treat student-athletes at public universities, which make up most of the NCAA’s Division I schools. Public institutions are not covered by the NLRA, he said, but state legislators and officials will certainly take note of the Northwestern case.

Langel observed that the decision’s immediate effect is on one university and one football team, but it raises a number of other questions, including the legal status of players in other college sports, including some that are only partially funded by scholarship programs like Northwestern’s.

The lawyer said the debate about the rights of student-athletes also will probably intersect with legal developments under statutes other than the NLRA.

Noting Ohr’s conclusion that the Northwestern walk-on players are contributing their athletic efforts without pay, Langel questioned whether some of those players will now explore claims that they are serving the university in unpaid “internships” that violate the minimum wage or overtime provisions of the Fair Labor Standards Act.

Strongly Divergent Reactions

Early comment by legislators on the decision was divided.

Sen. Lamar Alexander (R-Tenn.), the ranking Republican on the Senate Health, Education, Labor and Pensions Committee, said March 26: “Imagine a university’s basketball players striking before a Sweet Sixteen game demanding shorter practices, bigger dorm rooms, better food, and no classes before 11 a.m. This is an absurd decision that will destroy intercollegiate athletics as we know it.”

But Rep. Jan Schakowsky (D-Ill.), whose district includes the Evanston, Ill., main campus of Northwestern, issued a statement supporting Ohr's decision.

“I am pleased with the NLRB ruling that correctly recognizes Northwestern football players as University employees. These young men dedicate 40-plus hours a week for much of the school year to the football program and they deserve the right to unionize,” Schakowsky said.

Steelworkers Supporting CAPA

The United Steelworkers have provided support to the College Athletes Players Association for the Northwestern organizing drive, and other unions have expressed their approval of the drive.

AFL-CIO President Richard Trumka in a March 27 statement said the decision “affirms the basic principle that people who work hard deserve fair treatment. It’s that simple, whether on a playing field or anywhere else. Fairness and justice are universal rights.”

The American Federation of State, County and Municipal Employees posted a statement online March 27 saying, “AFSCME applauds the efforts of these players to form their own union to bargain collectively.”

On the other hand, the NCAA March 26 posted a statement by its chief legal officer, Donald Ramey, saying, “We strongly disagree with the notion that student-athletes are employees.”

Ramey said NCAA’s member colleges and universities have been reevaluating rules for athletic programs. “While improvements need to be made,” Ramey said, “we do not need to completely throw away a system that has helped literally millions of students over the past decade alone attend college.”

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com


Text of the NLRB regional director's decision is available at http://op.bna.com/dlrcases.nsf/r?Open=ldue-9hktnz, Northwestern's brief to the regional director at http://op.bna.com/dlrcases.nsf/r?Open=ldue-9hlu8z, and CAPA's brief at http://op.bna.com/dlrcases.nsf/r?Open=ldue-9hlu74.