Scholarship Players for College Football Team are Employees under the NLRA: NLRB Region 13

Practical Law Legal Update 5-562-7225 (Approx. 8 pages)

Scholarship Players for College Football Team are Employees under the NLRA: NLRB Region 13

by Practical Law Labor & Employment

Background

Northwestern is a private university that maintains an intercollegiate athletic program governed by the rules of the National Collegiate Athletic Association (NCAA). As part of this athletic program, Northwestern has a varsity football team. 85 members of that team receive football grant-in-aid scholarships typically totalling $61,000 to pay for tuition, fees, room, board and books. NCAA rules now permit universities to offer four-year scholarships to those players. A recruit who receives a scholarship offer must sign a National Letter of Intent and a four-year scholarship offer known as a tender. The tender includes the terms and conditions of the offer, including that the scholarship can be reduced or cancelled at any time during the term of the award if the player does any of the following:

Becomes ineligible for intercollegiate competition.
Engages in serious misconduct warranting discipline.
Accrues criminal charges.
Abuses team rules.
Voluntarily withdraws from football.
Accepts compensation for football.
Acquires an agent.

The tender also explains that the scholarship award cannot be reduced based on the player's athletic ability or injury.

Northwestern's grant-in-aid football players must comply with a number of team and athletic department rules not applicable to the regular student population. For example, grant-in-aid players must:

If freshmen or sophomores, live in dormitories. Upperclassmen may live off campus but must submit their leases to the head coach for approval.
Obtain permission from the athletic department before entering into any outside employment (to ensure they are not receiving additional compensation or benefits based on their reputation or athletic ability).
Disclose to coaches detailed information about the vehicles they drive.
Adhere to a stringent social media policy controlling what they may post and prohibiting them from denying their coaches' friend requests.
Not engage in media interviews unless arranged by the athletic department.
Not swear in public or embarrass the team.
If they transfer to another school to play football, sit out one year before competing for the new school.
Not profit from their image or reputation, including through the sale of merchandise or photographs.
Sign a release allowing Northwestern to use their name, likeness and image for any purpose.
Follow strict drug and alcohol testing, anti-hazing and anti-gambling policies.

In addition, during the regular season, grant-in-aid players must:

Wear a suit to home games and team-issued travel sweats when travelling to an away football game.
Remain within a six-hour radius of campus before football games.
If they are late to practice, attend one hour of study hall on consecutive days for each minute they are late.
Run laps if they violate team rules.
Maintain a specific grade point average and attend six hours of study hall per week.

Players are also required to attend a rigorous pre-season training camp, and, during the football season and post-season devote 40-60 hours per week to football-related activities. Significantly, the players:

Do not receive any academic credit for playing football and none of their coaches are academic faculty.
May not (according to the senior quarterback's testimony) miss football practice during the football season if they have a class conflict.
May enroll in summer classes that are six weeks long, as eight week long classes would clash with pre-season training.

The College Athletes Players Association (CAPA) filed a petition under Section 9(c) of the NLRA to represent Northwestern's football players who received grant-in-aid scholarships, and an NLRB hearing office received evidence about the proposed bargaining unit. CAPA asserted that football players receiving grant-in-aid scholarships from Northwestern University are employees under the NLRA and are therefore entitled to vote to be represented in collective bargaining with Northwestern. Northwestern contended that:

Its football players receiving grant-in-aid scholarships:
- are not employees under the NLRA; and
- are more like the graduate students who have been found not to be employees under the NLRA in Brown University, 342 N.L.R.B. 483 (2004).
In the alternative, its players are temporary employees who are not eligible for collective bargaining.
The petitioned-for bargaining unit is arbitrary and not appropriate for bargaining, in part because it excludes student athletes who walked-on to the football team and share an overwhelming community of interest.

Outcome

The regional director of the NLRB Region 13, held that:

All grant-in-aid scholarship players for Northwestern's football team who have not exhausted their playing eligibility are employees under Section 2(3) of the NLRA.
An immediate secret ballot election should be held among the eligible employees in the unit to determine whether they should be represented by CAPA for purposes of collective bargaining with Northwestern.

The region:

Noted that:
- the US Supreme Court has found that a broad definition of "employee" under Section 2(3) of the NLRA should be applied, and in applying this broad definition it is necessary to consider the common law definition of "employee" (NLRB v. Town & Country Electric, 516 U.S. 85 (1995));
- under the common law, an employee is 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 (Brown Univ.);
- the scholarship players generate millions of dollars in revenue for Northwestern through ticket sales, television contracts, merchandise sales, licensing agreements and positive impact to Northwestern's reputation (resulting in increased applications and alumni giving);
- the scholarships pay for the players' tuition, fees, room, board and books for up to five years. Since NCAA rules prevent the players from receiving any additional compensation or profit from their athletic ability or reputation, the players are dependent on their scholarships for basic necessities;
- the players are required to sign a tender that gives the players detailed information about the compensation they will receive;
- under the tender, the head coach and athletic department are entitled to reduce or cancel the players' scholarships for several reasons;
- Northwestern and its coaches dictate players' schedules for most of the year, including the players' daily and travel itineraries, wake-up and bed times;
- football is a significant time commitment for the scholarship athletes (at least 40-50 hours per week);
- coaches may punish and threaten to punish players with losses of scholarships to enforce team rules;
- coaches exert authority over the players' private lives including restricting where they may live, monitoring what cars they may drive and regulating their social media posts and interviews with the press; and
- some of the team rules affect players' academic education.
Concluded that the football players who receive grant-in-aid from Northwestern are employees because:
- the scholarships are a transfer of economic value;
- the players receive scholarships as compensation to perform football-related services for Northwestern under a contract for hire;
- the players are subject to Northwestern's control and are therefore employees within the meaning of the NLRA;
- the scholarship is clearly tied to the players' football performance, which provides a strong incentive for them to attend practices and games and abide by all the rules; and
- although some of the team rules are put in place to protect the players from breaking NCAA eligibility rules, the NLRB cannot discount the amount of control the coaches exert over the players' daily lives.

The region also concluded that unlike the grant-in-aid scholarship recipients, walk-on (reserve) players do not meet the common law definition of employee because they do not receive compensation for football services, do not sign a tender and are permitted more flexibility to miss practices if they conflict with their academic schedule.

The Region considered Brown University, in which the Board found that graduate assistants were not employees under the NLRA, based on four factors:

The status of graduate assistants as students.
The role of the graduate student assistantships in graduate education.
The graduate student assistants' relationship with the faculty.
The financial support they receive to attend Brown University.

The Region also concluded that:

The four-prong Brown University test is inapposite because the players' football duties are unrelated to their academic studies, unlike the graduate assistants whose teaching and research duties were inextricably related to their graduate degree requirements.
If the Brown University test were applied, the scholarship athletes would still be employees, because in Brown the graduate assistants:
- were primarily students because they spent only a limited number of hours performing their duties. Their main time commitment was their academic studies. Unlike in Brown, the Northwestern scholarship football players are not primarily students. They spend 40-60 hours per week on football-related duties and only 20 hours per week attending classes, which they are often required to miss;
- received academic credit for performing their assistant duties, which were a requirement for them to receive their degree. Therefore, their teaching and research duties constituted a core element of their graduate degree requirements. In contrast, the Northwestern scholarship players do not receive any academic credit for playing football. Also, playing football is not a requirement for their degree. Their relationship with the university is economic, involving the transfer of scholarships, rather than academic;
- had a relationship with the faculty which directed, controlled and oversaw their work. The Northwestern scholarship players, however, are overseen by football coaches who are not members of the academic faculty. This lack of relationship with the faculty goes against the finding that the players are merely students; and
- compensation received was not pay for services performed but financial aid to attend the university. The financial aid was the same for the graduate assistants as for the graduate students for whom teaching and research was not required and was not tied to the quality of their work. Unlike Brown, Northwestern never awards a scholarship to a prospective student unless the student intends to provide an athletic service. The football players' scholarships would be cancelled if they withdrew from the team. Therefore the grant-in-aid scholarship players compensation cannot be said to be financial aid.

The region rejected Northwestern's alternative argument that the players are temporary employees not eligible for collective bargaining. Applying the Marian Medical Center test, which states that:

Employees may be part of the bargaining unit and vote even if their tenure is indefinite.
If employees are employed for only one job, for a set duration or have no substantial expectancy of continued employment and are informed of that fact, they are excluded from the bargaining unit and vote as temporary employees.

(339 N.L.R.B. 127 (2003)).

The region also relied on Boston Medical Center, in which the Board clarified that house officers who worked at the hospital for three to seven years were not temporary employees just because their employment would terminate on a certain date (330 N.L.R.B. 152 (1999)). Applying these precedents, the region found that the substantial length of the football players' employment (four or five years) preclude it from finding that the scholarship athletes are ineligible temporary employees.

The region also rejected Northwestern's assertions that the petitioned-for bargaining unit is an appropriate "fractured" unit because it excludes walk-on student athletes who share an overwhelming community of interest. Applying Specialty Healthcare and Rehabilitation Center of Mobile, 357 N.L.R.B. slip op. 83 (2011), the region concluded that walk-on football players at Northwestern:

Are not employees since they do not receive compensation in the form of a scholarship. Since they are not employees they could not be in a bargaining unit approved by the NLRB and their exclusion from a petitioned-for unit cannot create an improper "fractured" unit.
Even if they were employees, do not share an overwhelming community of interest because, in part, they have no scholarships to lose if they cease playing football or refuse to comply with team rules.

Practical Implications

Although this is only one region's decision, it is noteworthy because it is the first case in which the NLRB has ruled that student athletes qualify under the NLRA as employees of a university and therefore are permitted to unionize. Shortly after the ruling, Northwestern released a statement confirming its plan to appeal the decision to the panel (Board) heading the NLRB's judicial functions in Washington, D.C. In its statement, Northwestern said in part:

While we respect the NLRB process and the regional director's opinion, we disagree with it. Northwestern believes strongly that our student-athletes are not employees, but students. Unionization and collective bargaining are not the appropriate methods to address the concerns raised by student-athletes. Northwestern plans to appeal today's decision to the full National Labor Relations Board in Washington, D.C. The University will continue to explore all of its legal options in regard to this issue.

Northwestern must submit its request for review to the Board by April 9, 2014.

How this case will impact other private colleges and universities is far from certain. Unless the Board grants review and approves the Regional Director's analysis, this decision is not precedential. Even if the Board adopts the region's analysis, the factors relied on for concluding that certain student athletes at Northwestern are employees covered by the NLRA may not apply at other colleges and universities (or even to other student athletes at Northwestern).

This case will likely take several years to run its course. The Board will need to grant review and issue a decision approving or disapproving of the region's analysis. If the Board affirms that the petitioned-for bargaining unit is appropriate, the election ballots must be counted and any election objections must be decided. If the Board approves the Regional Director's analysis, the union wins the election and the Board certifies CAPA as the student athletes' collective bargaining representative, Northwestern will likely refuse to bargain and become subject to an adverse unfair labor practice decision by the Board. Northwestern may appeal that decision to the US Court of Appeals for the District of Columbia or Seventh Circuit to obtain federal court review of the Board's analysis in the underlying representation case. By the time that court of appeals decision issues, anyone who voted in the election would likely have graduated.

In any event, this decision will likely open Pandora's box for other private universities and colleges, as thousands of student athletes who never considered their athletic endeavors to be employment or themselves to be employees of their schools might be under the NLRA. Inevitably some of these athletes might be inspired by this decision to test whether they are covered by other labor and employment statutes, such as the Fair Labor Standards Act or state workers' compensation laws. The decision may spur similar test union organizing cases at public universities, which would be governed by any applicable state labor relations laws.

Scholarship Players for College Football Team are Employees under the NLRA: NLRB Region 13 | Practical Law