The Northwestern University decision shocked universities and colleges nationwide, as this was the first decision holding that college athletes are employees under the National Labor Relations Act.
On March 26, 2014, Peter Ohr, the National Labor Relations Board's (NLRB or "the Board") Regional Director for Chicago (the "RD"), held that scholarship players on Northwestern University's football team are "employees" under Section 2(3) of the National Labor Relations Act (the Act) and directed an immediate election to determine whether they are to be represented by the College Athletes Players Association (CAPA).
College Football Players as Employees
The main issue for the RD to decide was whether the football players were employees within the meaning of the Act. The RD relied on the common law definition, which states that "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."
The RD held that players perform valuable services for Northwestern. He cited the football team's approximately $235 million in generated revenues during 2003 to 2012 that were generated through ticket sales, television contracts, merchandise sales and licensing agreements. Additionally, the RD cited the immeasurable positive impact to Northwestern's reputation that a winning football team may have on alumni giving and an increase in the number of student applicants.
The RD held that the scholarships provided to the football players are compensation for their athletic services. He stated that scholarship players are sought out, recruited and granted scholarships based on their athletic ability. Northwestern paid for the players' tuition, fees, room, board and books for up to five years. The monetary value of the scholarship totaled as much as $76,000 annually. The RD held that "[t]he fact that [Northwestern] does not treat these scholarships or stipends as taxable income is not dispositive of whether it is compensation." The "tender" that players sign before beginning each period of the scholarship "serves as an employment contract" and details the duration and conditions under which the "compensation" will be provided to them.
The RD held that football players are under "strict and exacting control" by Northwestern throughout the entire year. Players devote 50 to 60 hours per week engaging in football-related activities during training camp and spend 40 to 50 hours per week on their football duties all the way to the end of the season. Players are subject to strict daily itineraries that include practices, meetings, film sessions, workouts and games. Players are restricted or have to obtain permission before they can:
- make their living arrangements,
- apply for outside employment,
- drive personal vehicles,
- travel off campus,
- post items on the Internet,
- speak to the media,
- use alcohol and drugs and
- engage in gambling.
Distinguishing Brown University
Northwestern contended that football players are not employees because they do not meet the statutory definition of "employee" articulated in Brown University, 342 NLRB 483 (2004). In that case, the Board found that graduate assistants were not employees after considering four factors: (1) the status of graduate assistants as students, (2) the role of the graduate student assistantships in graduate education, (3) the graduate student assistants' relationship with faculty and (4) the financial support graduate assistants receive to attend Brown University. The RD held this test inapplicable to the present case because players' football duties are unrelated to their academic studies unlike graduate assistants, whose teaching and research duties were "inextricably related" to their graduate degree requirements. However, the RD stated the analysis would not change even if the Brown University test applied.
The RD distinguished the players from the graduate assistants in Brown University, stating that while the players are required to spend time studying and completing their homework, "[I]t cannot be said that they are 'primary students' who 'spend only a limited number of hours performing their athletic duties.'" The players were also distinguishable from the graduate assistants in that the players' athletic duties are not a core element of their educational degree requirements. Unlike graduate assistants, players are supervised by football coaches who are not members of the academic faculty. Finally, the RD held that the "compensation" received by the players via their scholarships is pay for services performed, not financial aid like the graduate assistants received.
Northwestern Players Are Not Temporary Employees
Under Board law, temporary employees are not eligible to vote in union elections. Employees who are employed for one job only, or for a set duration, or who have no substantial expectancy of continued employment and are notified of this fact are excluded as temporary employees. The RD acknowledged that football players have "employment" that is of a finite duration since they are eligible for only four years or five years if they are a "redshirt" player. However, the RD said the fact that college players have "employment" of a finite duration is not dispositive and "given the substantial length of the players' employment it is clear that they cannot be found to be temporary employees. …"
Regional Director Holds Scholarship Football Players Are an Appropriate Bargaining Unit
Northwestern additionally maintained that the petitioned-for-unit is an arbitrary, fractured grouping that excludes walk-ons who share an overwhelming community of interest with the sought-after unit. The Board in Specialty Healthcare and Rehabilitation Center of Mobile held that a petitioned-for-unit is not an appropriate unit if it excludes employees who have an "overwhelming community of interest" with those employees that the union seeks to represent. Northwestern contended that walk-ons are subject to the same rules, attend the same football practices and workouts, and play in the same football games as scholarship players. The RD rejected this argument, holding that the fact that scholarship players receive "compensation" for their athletic services via the scholarship is a substantial difference between the two groups.
What This Means for Employers
The Northwestern University decision shocked universities and colleges nationwide, as this was the first decision holding that college athletes are employees under the Act. Quickly following the decision, Northwestern University announced that it would appeal the decision to the full National Labor Relations Board and explore all legal options. For-profit and nonprofit colleges should review their own relationships with their student athletes to determine potential risks and steps that can be taken to minimize students' being classified as employees under federal labor law. Public institutions, which are not subject to the National Labor Relations Act, should consider the impact of the decision as persuasive, albeit not binding, authority on state labor laws to which they may be subject.
There is a concern that this decision will be relied upon by plaintiffs' attorneys to bring minimum wage and overtime claims against colleges in an effort to obtain compensation for college athletes. While the Northwestern football players have indicated that they are not seeking any compensation for playing college football, we will continue to monitor future decisions in this contentious area of law.
For Further Information
If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.