In a decision that could forever change collegiate sports as we know it, the Regional Director for Region 13 of the National Labor Relations Board today found that the football players at Northwestern University are "employees" under the National Labor Relations Act ("the Act"). As a result, the Regional Director directed an election be conducted in Northwestern University, NLRB Case No. 13-RC-121359 to determine whether "all football players receiving football grant-in-aid scholarship and not having exhausted their playing eligibility" at Northwestern want to be represented by a union.

Under NLRB procedure, Northwestern had the "burden to justify denying its scholarship football players employee status." The Board defines an "employee" under the Act as "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." Northwestern argued that its football players are not "employees" because they are more akin to the graduate students in Brown University, 342 NLRB 483 (2004), whom the Board found not to be "employees" under the Act. In the alternative, Northwestern argued that the football players are temporary employees who are not eligible for collective bargaining. The Regional Director disagreed on both accounts.

The Benefits to Northwestern for which Scholarship Players Receive Compensation

The Regional Director noted that Northwestern’s football program generated approximately $235 million in revenues between 2003 and 2012 through ticket sales, television contracts, merchandise sales, and licensing agreements. In exchange, the scholarship players receive tuition, fees, room, board, and books for up to five years, which can total

as much as $76,000 per calendar year and results in each player receiving total compensation in excess of one quarter of a million dollars throughout the four or five years they perform football duties for the Employer. While it is true that the players do not receive a paycheck in the traditional sense, they nevertheless receive a substantial economic benefit for playing football.

Also of particular importance to the Regional Director’s decision is the fact that scholarship players are required to sign a "tender," which serves as an employment contract providing players with detailed information concerning the duration and conditions under which the compensation will be provided to them.

Northwestern’s Control Over the Scholarship Players

The Regional Director found that Northwestern’s coaches have "strict and exacting control" over the football players throughout the entire year. The players spend 50 to 60 hours per week during training camp and 40 to 50 hours per week during the regular season engaging in football-related activities as specified by the coaches. Moreover, the football coaches maintain control over players by monitoring their adherence to NCAA and team rules and disciplining them for any violations:

If a player arrives late to practice, they must attend one hour of study hall on consecutive days for each minute they were tardy. The players must also run laps for violating minor team rules. And in instances where a player repeatedly misses practices and/or games, he may be deemed to have voluntarily withdrawn from the team and will lose his scholarship. In the same way, a player who violates a more egregious rule stands to lose his scholarship or be suspended from participating in games.

In addition, the coaches control "nearly every aspect of the players’ private lives" such as living arrangements, outside employment, personal vehicles, travel off campus, post items on the Internet, speaking to the media, use of alcohol and drugs, and engaging in gambling.

Brown University Deemed Not Applicable

In Brown University, the Board found that the graduate students were not "employees" under the Act because the overall relationship between the graduate assistants and their university was primarily an educational one, rather than an economic one. In Northwestern University, the Regional Director found that the scholarship players are not "primarily students":

The players spend 50 to 60 hours per week on their football duties during a one-month training camp prior to the start of the academic year and an additional 40 to 50 hours per week on those duties during the three to four month football season. Not only is this more hours than many undisputed full-time employees work at their jobs, it is also many more hours than the players spend on their studies.

In addition, unlike the graduate assistants, the football players do not receive any academic credit for their athletic duties, nor do those duties constitute a core element of their educational degree requirements. Moreover, Northwestern’s academic faculty do not oversee the athletic duties that the players perform. According to the Regional Director,

This critical distinction certainly lessens any concern that imposing collective bargaining would have a "deleterious impact on overall educational decisions" by the Employers’ academic faculty.

Finally, the Regional Director found that the scholarship players’ compensation is not financial aid because the football players are required to perform athletic services to receive their scholarships, whereas the graduate assistants’ compensation in Brown University was not tied to the quality of their work.

The Scholarship Players Are Not Temporary Employees

Under Board law, employees employed for a set duration or have no substantial expectancy of continued employment are generally excluded from voting during a union election as temporaries. The Regional Director rejected Northwestern’s alternative argument that its football players, who generally remain on the team for four to five years, are temporary employees because the Board has never applied the term "temporary" to employees whose employment, albeit of a finite duration, might last from three to seven or more years.

What Does This Decision Mean?

First, the Regional Director’s ruling is not a final decision as Northwestern can appeal it to the Board by April 9, 2014. As such, there is the possibility that the Board could reverse the Regional Director’s decision. However, if the Board agrees, Northwestern cannot directly appeal the Board’s decision. Instead, it would have to let the union election proceed, and if the union wins, refuse to bargain with the union and challenge the Board’s decision in an unfair labor practice proceeding, which could take years to resolve.  

Second, while this decision only applies to private universities as the Act does not govern public universities, it could still indirectly affect public institutions in states that allow its public employees to engage in collective bargaining. This decision could be the basis for a state to determine that football players (and potentially other student athletes) at its public universities are employees and thus able to organize under state law.

Finally, the effects of this decision, however, go beyond unionizing as this decision could lead to a determination that student athletes of both public and private universities are employees under the Fair Labor Standards Act (the "FLSA"). If student-athletes are found to be "employees" under the FLSA, they could be entitled to back wages, which could open a university up to either a class or collective action on behalf of a group of unpaid student-athletes. Moreover, if some universities are required to pay their student-athletes minimum wage, how does that affect their student-athletes’ eligibility under the NCAA’s rules? As a result, how will the NCAA address this in its eligibility rules, and what effect would that have on the NCAA’s athletic structure? 

Moreover, student-athletes could become subject to state unemployment insurance laws. The institution (public or private) could be liable for years’ worth of unpaid contributions. If a student-athlete is cut from his school’s football team and was being paid wages, the student-athlete arguably would be eligible to receive unemployment benefits. More importantly, however, is the question of whether such employee/athletes would be eligible for workers’ compensation benefits. In a sport as violent and injury-filled as college football, it is foreseeable that workers’ compensation awards would be granted on a regular basis, which could become quite costly for a university.

Please follow our blog, Labor Relations Today, our Twitter feed (@LRToday), and our Flipboard magazine for further developments and analysis.