NLRB Regional Director Rules College Football Players Can Unionize

On March 26, 2014, a regional director for the National Labor Relations Board (NLRB) issued a decision and direction of election in a union representation petition filed by the College Athletes Players Association (CAPA) seeking to represent Northwestern University’s football players. CAPA, led by former Northwestern quarterback Kain Colter, petitioned the Board for a ruling that Northwestern football players who receive grant-in-aid scholarships are university employees and therefore eligible to form a union and engage in collective bargaining under the National Labor Relations Act (NLRA). The United Steelworkers and the National College Players Association supported the student-athletes’ efforts. The university opposed the petition, arguing that scholarship athletes are not employees, but similar to graduate teaching assistants who receive stipends and whom the Board has historically held are not employees because their primary purpose and relationship to their schools is educational, not economic.

Breaking with past precedent, Regional Director Peter Sung Ohr in Chicago held that grant-in-aid scholarship football players are employees under the NLRA and directed that an election take place. If upheld on review, all grant-in-aid scholarship football players who have not exhausted their football eligibility will be eligible to vote to decide whether they will be represented by CAPA for collective bargaining purposes. The regional director excluded walk-on players from the group, concluding that they are not employees and thus ineligible to vote in any forthcoming union election or join the union should the grant-in-aid scholarship players ultimately vote to form one. Northwestern issued a statement disagreeing with the decision and confirming its intent to appeal the ruling to the full Board in Washington, D.C. The National Collegiate Athletic Association (NCAA) also issued a statement, which read in part, “While not a party to the proceeding, the NCAA is disappointed that the NLRB Region 13 determined the Northwestern football team may vote to be considered university employees. We strongly disagree with the notion that student-athletes are employees.”

Based on the “right of control” test typically used by the NLRB to decide whether individuals are independent contractors or employees, the regional director concluded that grant-in-aid scholarship football players are “employees” permitted to form a labor union because they perform services for Northwestern’s benefit for which they receive compensation. The regional director made extensive factual findings focusing heavily on the fact that Northwestern’s football program generated revenues of approximately $235 million from 2003 to 2012 through ticket sales, television contracts, merchandise sales, and licensing agreements. The regional director found that each scholarship football player received financial “compensation” valued at as much as $76,000 per calendar year for the “athletic services” they performed. Applying the “right of control” test, the regional director found that the players were “employees” of the university because of the following factors:

• Grant-in-aid scholarships used to pay for tuition, books, room, and board are akin to compensation for services.
• The substantial hours devoted by players in pre-season camp, during the football season, and in voluntary off-season activities demonstrates that the student-athletes are primarily devoted to football and not academic activity.
• The university exercises control over the players through extensive scheduling, the imposition of behavioral rules and expectations, and through other requirements, notwithstanding the fact that many such rules are to ensure compliance with NCAA requirements.

The regional director rejected the “primary purpose” test applied by the NLRB in Brown University (2004) and prior cases, which held that graduate student teaching assistants were not employees eligible to organize for purposes of collective bargaining. In Brown University, the NLRB relied on the academic context of the relationship between the university and the graduate students. In this case, the regional director concluded that the football players are not “primarily students.”

The regional director’s decision to apply the “right of control” test rather than the “primary purpose” test raises a potential issue upon which his decision might be challenged. Further, the regional director’s statement and application of the Brown University factors may be challenged. In Brown University, in holding that graduate student teaching assistants were not employees, the majority relied heavily on the following facts:

• Teaching assistants are students and must be enrolled in the university.
• The principal time commitment on teaching assistants, looking at the overall year, is being a student and working towards a degree.
• Service as a teaching assistant is integral to some programs and is part of the overall educational experience.
• The stipend money received is not compensation for work, and other students who do not serve as teaching assistants receive similar financial aid.

A fair application of such factors for scholarship athletes weighs more heavily toward finding that they are students, not employees.  Indeed, the regional director appeared to minimize the students’ academic activity occurring outside of the football season and their study time and other academic time outside of the classroom. Additionally, the regional director minimized the argument that athletics and other extracurricular activities (including music, theatre, debate, student government, and fraternal organizations) are generally considered an important part of the overall educational experience for students at U.S. colleges and universities.

Also absent from the decision is any effort to reconcile the ruling with other federal administrative law and judicial decisions that have consistently held that the activities of student-athletes are primarily educational in nature, not economic. For example:

• While the NLRB’s regional director found that grant-in-aid scholarships are compensation for services, the Internal Revenue Service has consistently held, to the contrary, that such scholarships and other aid are not taxable income from work.
• The requirements of Title IX of the Education Amendments of 1972 consider all athletic activities for both income-producing sports (which typically include only men’s Football Bowl Subdivision (FBS) football and Division I basketball) and non-revenue sports to be equivalent and all part of the educational mission of the sponsoring schools.
• The Supreme Court of the United States and other federal courts have consistently held that NCAA rules and other restrictions placed on student athletes by colleges and universities are outside antitrust scrutiny because they are critical to preserving amateurism in sport and to the educational mission of the schools.

If upheld, the ruling will impact student-athletes enrolled at private colleges and universities, but would not apply to public institutions. Although public colleges and universities are not covered by the NLRA, in some states, they could come under the jurisdiction of a state labor relations board governing public sector employees.

Lessons Learned

While there remains significant legal wrangling ahead, the NLRB’s decision is seismic in its potential impact across the spectrum of collegiate sports at the FBS Division I level. If this decision stands, universities could find themselves being compelled to bargain with student-athletes in matters ranging from the size of scholarships, the quality of student housing, and additional academic support, to health care, benefits, the length, frequency and nature of practices, and royalties from merchandise sales. Or, in the other extreme, institutions might devise academic programs such as “football studies” in an effort to circumvent the reasoning of today’s ruling. Others might cease offering revenue-generating extracurricular activities altogether. Time will tell, so stay tuned.