Sports & Entertainment Law Section

By Mike Ingersoll

I. Introduction

As an increasingly contested topic since the rise of the Bowl Championship Series in the early-2000s and the NCAA’s 2010 multi-billion dollar March Madness broadcasting deal, as well as the recent advent of the College Football Playoff, the NCAA’s amateurism model has come under intense scrutiny—and with it the employment status (or lack thereof) of the student-athletes over which it governs.  Public opinion and scholarship has virtually wed the two issues at this point, and the modern revenue sport landscape has dictated heated discussion but yielded none of the drastic changes for which proponents of reform have called.

In what looked to be the latest body-blow to the efforts of student-athletes to attain employment rights, the push by the Northwestern University football team for right to unionize and thus collectively bargain was brought to a sudden halt in the National Labor Relations Board’s (“NLRB” or “Board”) 2015 decision Nw. Univ., 362 NLRB No. 167 (2015).  As the basis for its decision, the NLRB declined to address the status of Northwestern football players (and thus college athletes, generally) as statutory employees, instead relying on the “symbiotic relationship” between Northwestern—notably, a private school—and the Big Ten athletic conference.[1]  The Board also relied on “stability” of labor relations in college sport between the member institutions and the NCAA and member conferences,[2] declining to assert jurisdiction because the majority of NCAA member institutions are state universities:

After careful consideration of the record and arguments of the parties and amici, we have determined that, even if the scholarship players were statutory employees (which, again, is an issue we do not decide), it would not effectuate the policies of the Act to assert jurisdiction.  Our decision is primarily premised on a finding that, because of the nature of sports leagues (namely the control exercised by the leagues over the individual teams) and the composition and structure of FBS football (in which the overwhelming majority of competitors are public colleges and universities over which the Board cannot assert jurisdiction), it would not promote stability in labor relations to assert jurisdiction in this case.

Id. at *3.  Further, the Board held,

Despite the similarities between FBS football and professional sports leagues, FBS is also a markedly different type of enterprise.  In particular, of the roughly 125 colleges and universities that participate in FBS football, all but 17 are state-run institutions.  As a result, the Board cannot assert jurisdiction over the vast majority of FBS teams because they are not operated by “employers” within the meaning of Section 2(2) of the Act.[3] More starkly, Northwestern is the only private school that is a member of the Big Ten, and thus the Board cannot assert jurisdiction over any of Northwestern’s primary competitors.  This too is a situation without precedent because in all of our past cases involving professional sports, the Board was able to regulate all, or at least most, of the teams in the relevant league or association.

Id. at *5.  However, the Board made clear that its declination of unionization opportunities to Northwestern University’s football players applied strictly to Northwestern, stating, “We emphasize that our decision today does not concern other individuals associated with FBS football, but is limited to Northwestern’s scholarship football players.”  Id. at *6.

This distinction is important, because although Northwestern’s efforts were stymied, the movement toward college athlete unionization may have recently regained some traction.

II. The NLRB’s Columbia University Decision

In a petition filed by the Graduate Workers of Columbia (GWC) seeking statutory employee status for graduate student assistants, amongst other groups, the Board addressed the issue of “whether students who perform services at a university in connection with their studies are statutory employees within the meaning of Section 2(3) of the National Labor Relations Act.”  Colum. Univ., 364 NLRB No. 90, at *1 (2016).  Section 2(3) of the National Labor Relations Act states:

(3) The term “employee” shall include any employee, and shall not be limited to the employees of a particular employer, unless the Act [this subchapter] explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice, and who has not obtained any other regular and substantially equivalent employment, but shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act [45 U.S.C. § 151 et seq.], as amended from time to time, or by any other person who is not an employer as herein defined.

29 U.S.C.A. § 152(2)(3).

In overturning its 2004 Brown University decision—which held, “It is clear to us that graduate student assistants, including those at Brown, are primarily students and have a primarily educational, not economic, relationship with their university,” Brown Univ., 342 NLRB 483 (2004)—the Board in Columbia relied heavily on the language of NLRA § 2(3) and the common law definition of employment.[4]

The Board looked to Boston Medical Center, 330 NLRB 152 (1999), which “held that interns, residents, and clinical fellows (house staff) at a teaching hospital were statutory employees entitled to engage in collective bargaining with the hospital over the terms and conditions of their employment.”  Columbia, 364 NLRB at *2.  The Board also relied the Boston Medical Board’s finding that § 2(3) has a “broad scope” and was absent any “statutory exclusion for students or house staff,” and as such, extending “full statutory protection” to house staff would actually advance the policies of the NLRA.  Id.

Next, the Board looked to the Brown dissent.  The Board stated, “The Brown University dissenters, in stark contrast [to the majority], noted that ‘[c]ollective bargaining by graduate student employees’ was ‘increasingly a fact of American university life’ and described the majority’s decision as ‘woefully out of touch with contemporary academic reality.’”  Id. at *3 (citations omitted).

The Board, relying on this interpretation of past rulings and rationales, as well as the common law employment relationship definition, extended statutory employment protections to student employees, including the GWC and undergraduate students.[5]  The Board stated,

The unequivocal policy of the Act, in turn, is to “encourag[e] the practice and procedure of collective bargaining” and to “protect[ ] the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing.”  Given this policy, coupled with the very broad statutory definitions of both “employee” and “employer,” it is appropriate to extend statutory coverage to students working for universities covered by the Act unless there are strong reasons not to do so

Id. at *2 (citations omitted).

III. Observations: Columbia’s Relationship to College Athlete Unionization

Columbia’s reliance on the common law definition of employment and expansive interpretation of § 152(2)(3) leaves the door cracked for the right case to one day arise and establish statutory employment status for college athletes, especially considering Columbia overturned Brown’s rejection of employment based on that same common law definition.  Further, the NLRB has shown that its own interpretation of § 152(2)(3) can evolve with time, devolve, then evolve yet again, as demonstrated by Columbia, Brown, and their progeny.  That, coupled with the fact that Northwestern explicitly dodged the issue of athletes as employees and applied only to Northwestern football, left the NRLB an opportunity to revisit—and perhaps establish—that relationship in the future under a better set of facts than those already presented.

The Columbia Board found that “Permitting student assistants to choose whether they wish to engage in collective bargaining—not prohibiting it—would further the Act’s policies.”  Id. at *7.  It also rejected the Brown Board’s argument that affording graduate students the opportunity to unionize and thus collectively bargain would “unduly infringe upon traditional academic freedoms . . . [such as the] right to speak freely in the classroom . . . .”  Id. (quoting Brown, 342 N.L.R.B. at 490) (citations omitted).  The Brown Board also argued “traditional academic decisions” as a basis for denying collective bargaining power for graduate students, which included “course length and content, standards for advancement and graduation, [and] administration of exams.” Id. (citations omitted).

The Board recognized its “discretion” to afford statutory employment status to student assistants under the NLRA.  Id.  However, in footnote 56, the Columbia Board did address the college athlete issue and how the Board viewed its discretion in this decision related to the Northwestern decision:

However, in exercising this discretion, we tread carefully and with an eye toward the Act’s purposes.  In [Northwestern], we denied the protections of the Act to certain college athletes—without ruling on their employee status—because, due to their situation within and governance by an athletic consortium dominated by public universities, we found that our extending coverage to them would not advance the purposes of the Act.  Here, conversely, we have no reason to believe that extending bargaining rights will not meaningfully advance the goals of the Act.

Id.  The disconnect, however, lies with the public versus private university distinction.  In Northwestern, the Board deferred to state employment laws in the states with schools making up the Big Ten to deny granting itself jurisdiction over the petition—effectively denying employment status to the Northwestern football players seeking unionization and collective bargaining capabilities.  However, in the context of student assistants—both graduate and undergraduate (per the Columbia holding)—the Board took no issue in asserting jurisdiction so as to grant statutory employment, nor did it take issue with the state versus private distinction in asserting jurisdiction in any of Columbia’s progeny (including Brown, NYU, and Boston Medical).

Additionally, Columbia’s reasoning is at odds with the Northwestern discussion regarding the special relationship between college athletes and their universities (the “symbiosis”).  Its decision to grant employment to non-athlete students who also provide a service to the university (an arguable concept in the athlete context) appears to be an inadvertent acknowledgement of unique nature of the athlete-university relationship, which the case law implies to be more elevated than the relationship between the regular student and that same school (“symbiosis” implies specialty, or elevation).  If the Board did consider that relationship too elevated for it to address, it begs the question—if a lesser relationship warrants employment and collective bargaining protection, would the elevated relationship not command at least as much?

Further, for those who agree with the NCAA that student-athletes are “students first and athletes second,” [6] then why—as students—are they not entitled to participate in the collective bargaining process that the Board stated would “further the Act’s policies”?  See Columbia, supra.

IV. Solutions

Conceding the state employment law rationale used by the Board for punting on the college athlete employment issue in Northwestern, as it currently stands, only private schools would thus be able to unionize.  The Big Ten having Northwestern as its sole private institution is clearly not an ideal candidate to lead the charge on unionization.[7]  Vanderbilt University of the Southeastern Conference (“SEC”) presents a similar problem as it is the SEC’s only private member, although its positioning in the anti-union South, its presence in the current most influential football conference, and its academic prowess make it an interesting candidate (Vanderbilt, like Northwestern, has the type of academically-impressive players on its roster—a function of extremely strict admissions standards—to be ideal candidates to make cognizable pro-union arguments to the rest of the country).

The Pac-12 falls into a similar trap despite its membership including Stanford University and the University of Southern California—two of the most prestigious academic institutions in the country.  The Atlantic Coast Conference (“ACC”), however, does not face the same woes as other conferences.  Six of the ACC’s member schools are private—Duke University, Boston College, the University of Miami (FL), Notre Dame, Syracuse University, and Wake Forest University.  These, too, are some of the most prestigious institutions in the country, and playing in a Power-5 conference, all generally have access to the type of exposure necessary to effectuate a unionization movement.

If unionization were to be allowed, it could have adverse consequences for the supporters of the current Power-5 college athletics model for revenue sports.  Consider a national players union of private schools.  If all Power-5 private schools joined, it would include schools like Miami (FL), Stanford, Notre Dame, Southern California, Texas Christian (“TCU”), and Baylor, among others. These are major national players and some fairly storied programs, along with some others like Baylor and TCU who are up-and-coming national powers.  Southern Methodist University (“SMU”) is also interesting if it could ever recover from the Death Penalty.  In that regard, early-1980s SMU is far more attractive than modern SMU, but the concern is still the same: what if they all broke away and formed their own conference?

This seems like a far-fetched concept, but as with everything with regard to modern collegiate revenue sports, its sway is in recruiting.  If the idea of unionization starts to carry any weight with high school athletes, these schools could get a stranglehold on recruiting.  As a personal observation, high school athletes are becoming far more sophisticated in terms of big picture considerations when it comes to their recruitment, which is likely a result of a rounder world in terms of communication and access to other players through social media.  This often leads to players recruiting each other as much as any school.

Consequently, there is nothing to stop a savvy top high school athlete from choosing a university based primarily on its collective bargaining ability and his understanding of the benefits thereof, and then recruiting fellow top players to that same program.  This would of course lead to a surplus of talent, more wins, and thus more money for that private school conference.  The rest of this story is easy to see.  The public schools’ cry to allow its players to unionize to re-level the playing field could tip the scales.  This is, of course, purely speculative, but it is an interesting possibility, and is hardly a novel theory.  See generally Marc Edelman, NLRB Decision To Unionize Columbia Student Workers May Help College Athletes’ Union Movement, Forbes (Aug 26, 2016, 2:52 PM), http://www.forbes.com/sites/marcedelman/2016/08/26/nlrb-decision-to-unionize-columbia-student-workers-may-help-college-athletes-union-movement/#6a9aa3ab5a1a.

Proponents of a union-based structure for revenue sport athletes argue that the benefits far outweigh the drawbacks, including Baruch College Zicklin School of Business Professor Marc Edelman (referenced above), who argues that unions will help athletes “win new financial rights, and secure improved health-care benefits and pension plans.”  Marc Edelman, YES: It’s Time to Give Students More Control Over Their Employment, WSJ.com (Sept. 15, 2015, 10:01 PM), http://www.wsj.com/articles/should-college-athletes-be-allowed-to-unionize-1442368889?mg=id-wsj.  Edelman continues, “A union also might help them obtain important protections such as notice and a hearing before being punished, and perhaps even give them the freedom to voice their opinions on social media without their college’s interference.”  Id.

Detractors, like Northwestern University School of Law Professor Zev J. Eigen, recognize that athletes have legitimate grievances, but legally, there is no employment relationship between the university and the athlete.  See Zev. J. Eigen, NO: College Athletes Work Hard, but They Are Not Employees, WSJ.com (Sept. 15, 2015, 10:01 PM), http://www.wsj.com/articles/should-college-athletes-be-allowed-to-unionize-1442368889?mg=id-wsj.  “The fundamental exchange for all students and all universities is tuition money for an education,” Eigen says.  Id.  “Some college athletes get comped the tuition in exchange for playing a sport, but that does not alter the fundamental nature of their relationship with the school.”  Id.

If a restaurant comped meals for a celebrity in exchange for his or her lending their celebrity status to the restaurant (generating revenue for the business), no one would suggest that the celebrity is therefore an employee of the restaurant. That’s because the fundamental relationship between the celebrity and the restaurant hasn’t changed—it’s still money for food.

Id.  There is also a concern that allowing players to unionize would force smaller, less revenue-producing programs out.  Id.  However, that is countered with an incentive argument—that is, “the players and other rational participants in those sports would not have the incentive to even attempt to unionize.”  See Edelman, supra.

The arguments on both sides are compelling, and the solution becomes less and less clear as the college sport industry grows at an alarming rate while athlete input in to the regulation of their own collegiate careers remains relatively static.

V. Unionization Consequences

There is calamity associated with the effort to unionize and finally receive employee status, however.  At the point that a college athlete receives employee recognition and the ability to unionize, he or she will also be subject to basic employment principles—taxes and firing.

Currently, the Internal Revenue Code excludes the value of the athlete’s scholarship as taxable income.  But with employee status, will that change?  There is an argument that the scholarship should then be considered compensation, or income.  Even Would cash-poor athletes even have the ability to pay the tax bill that will come along with their “compensation” when they only receive the “value” of the scholarship?

As far as firing, scholarships are traditionally one-year renewable, with the recent move toward four-year agreements.  As such, an athlete can only be removed from scholarship at year’s-end (under normal circumstances).  But, as employees, would the scholarship be deemed an at-will employment contract instead, and thus terminable at any point?  How would this compound the ability to pay consideration with the tax bill they may now be receiving, if at all?  These are interesting questions with difficult—and maybe murky—answers.  But there is serious thought that must go in to the push for employment and unionization recognition—is it enough to have won over hearts and minds, or do college athletes truly want to see the current system changed?  The lofty benefits may be offset by loftier consequences.

VI. Conclusion

Northwestern, though a damaging decision for college athlete unionization efforts, is not fatal, and it may even prove not all that crippling.  The NLRB’s declination to address the issue of whether college athletes are, in fact, university employees actually left alive some interesting possibilities.

Some argue that the employment relationship is apparent, and others argue that the law is settled on the issue.  In early February, Richard Griffin, the NLRB’s General Counsel, circulated a memo within the NLRB which stated that FBS-level private school football players are henceforth to be considered employees under the National Labor Relations Act because “they perform services for their college and the NCAA, subject to their control, in return for compensation.”  The memo was circulated to clarify the Northwestern panel’s decision to punt on the question of whether the Northwestern scholarship football players were employees (pun intended).

This is a massive step forward in the push for employment recognition, and though it is only a memo and not a binding NLRB decision, it sets the groundwork for the next labor dispute heard before the NLRB.  It will be interesting to see if the new General Counsel who replaces Griffin will rescind the memo or will allow it to survive for use in review of future disputes.  Regardless, Columbia created a line of reasoning that could provide the basis for establishing unionization and collective bargaining rights in college athletics and illuminated the NLRB’s willingness to evolve.  That willingness could prove fruitful for unionization efforts in the future.

[1] “There is thus a symbiotic relationship among the various teams, the conferences, and the NCAA.  As a result, labor issues directly involving only an individual team and its players would also affect the NCAA, the Big Ten, and the other member institutions.”  Northwestern, 362 NLRB at *4.

[2] With regard to the Board’s reasons for declining to assert jurisdiction in Northwestern, the Board stated:

In such a situation, asserting jurisdiction in this case would not promote stability in labor relations.  Because most FBS teams are created by state institutions, they may be subject to state labor laws governing public employees.  Some states, of course, permit collective bargaining by public employees, but others limit or prohibit such bargaining.  At least two states—which, between them, operate three universities that are members of the Big Ten—specify by statute that scholarship athletes at state schools are not employees.  Under these circumstances, there is an inherent asymmetry of the labor relations regulatory regimes applicable to individual teams.  In other contexts, the Board’s assertion of jurisdiction helps promote uniformity and stability, but in this case, asserting jurisdiction would not have that effect because the Board cannot regulate most FBS teams.  Accordingly, asserting jurisdiction would not promote stability in labor relations.

Id. at *5 (citations omitted).

[3] Section 2(2) of the National Labor Relations Act (“NLRA”) reads:

(2) The term “employer” includes any person acting as an agent of an employer, directly or indirectly, but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway Labor Act [45 U.S.C. § 151 et seq.], as amended from time to time, or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization.

29 U.S.C.A. § 152(2)(2).

[4] The common law master-servant relationship, relied on by the Board here, “exists when a servant performs services for another, under the other’s control or right of control, and in return for payment.”  NYU, 332 NLRB 1205, 1206 (2000).

[5] The Board held that “student assistants who have a common-law employment relationship with their university are statutory employees under the Act” and:

(1)  that all of the petitioned-for student assistant classifications consist of statutory employees; (2) that the petitioned-for bargaining unit (comprising graduate students, terminal Master’s degree students, and undergraduate students) is an appropriate unit; and (3) that none of the petitioned-for classifications consists of temporary employees who may not be included in the unit.  Accordingly, we reverse the decision of the Regional Director and remand the proceedings to the Regional Director for further appropriate action.

Columbia, 364 NLRB at *2.

[6] Walter Byers, former NCAA president and constructionist of the modern “student-athlete” moniker, when asked whether college athletes should be afforded employee status, stated:

The colleges are scared to death at the prospect of having their athletes identified as employees and therefore subject to workman’s comp.  I had our law firm do major research on this issue.  Our law firm, they rely on the old amateur rule to say look: these are students first and athletes second. These are student-athletes and they are working at their professional training as a student and therefore not subject to workman’s comp.

SCHOOLED: THE PRICE OF COLLEGE SPORTS (Makuhari Media 2013); Benjamin J. Block, Walter Byers: Was He Responsible for the ‘Pay To Play’ Controversy That Exists in College Sports Today?, ISPORTS TIMES (Oct. 16, 2013, 12:09 AM), http://www.isportstimes.com/ articles/9152/20131016/walter-byers-responsible-pay-play-controversy-exists.htm.

[7] “Only 17 of [FBS’s roughly 125 member schools]—including Northwestern—are private colleges or universities, and Northwestern is the only private school in the 14-member Big Ten.”  Northwestern, 362 NLRB at *2.