By Brian C. Mahoney and Michelle K. Piasecki, of Harris Beach PLLC
After recent decisions by the U.S. Supreme Court and National Labor Relations Board (NLRB) declined to address whether college athletes are employees of their respective colleges and universities, the issue of pay for play appeared all but dead in the water. That is, until the NLRB General Counsel issued a memorandum on January 31, 2017 reversing course on the NLRB’s previous decision in Northwestern University. The General Counsel’s memorandum, which affirmatively recognizes scholarship football players at Division I Football Bowl Subdivision (FBS) private sector colleges and universities as employees under the National Labor Relations Act, will likely reinvigorate the debate regarding pay for play in college athletics.
As you may recall, on January 28, 2014, representatives for the College Athletes Players Association (CAPA) walked into the NLRB office in downtown Chicago and filed a petition to unionize the Northwestern University football team. In support of its argument that football players were employees of Northwestern, CAPA’s petition cited the millions of dollars in revenue generated by the Northwestern football team each year, the amount of time football players dedicated to participating in their sport, and the influence the coaching staff and the school exerted over the players. On March 26, 2014, in what was viewed as a groundbreaking decision, the regional director for the NLRB granted CAPA’s petition, ruling that football players on scholarship at Northwestern were employees of the university. Northwestern ultimately appealed the regional director’s decision to the full NLRB panel and, upon review in Northwestern University, the NLRB declined to assert jurisdiction over the case on the basis that its decision “would not promote stability in labor relations” given the unique nature of college football, wherein there exists a “symbiotic relationship” between the teams, conferences, and the NCAA, making it all but impossible to assert jurisdiction over only one team. Further, the NLRB noted that the majority of teams competing in Division I FBS football were public institutions and therefore exempt from NLRB jurisdiction.
Despite CAPA’s successful efforts to garner recognition for Northwestern’s football players as employees, the anticipated movement towards pay for play never materialized as CAPA’s hard fought victory was dampened when the football players at Northwestern voted not to unionize and no other athletes from private schools stepped forward to take up the issue. The pay for play movement took another hit when the Supreme Court refused to hear the O’Bannon antitrust case to address whether college athletes are entitled to compensation for their participating in college athletics. College athletes were hoping that the Supreme Court would consider the case and uphold a lower court’s ruling that men’s basketball and football players were entitled to monetary awards up to $5,000 per year. Instead, the Supreme Court’s decision meant that the Ninth Circuit Court of Appeals’ prior ruling remained intact. In that ruling, the Ninth Circuit held that the NCAA violated antitrust laws in limiting the amount of scholarship funds men’s college basketball and football players could receive, but that schools need not provide compensation beyond a college athlete’s full cost of attendance.
However, just when the fervor surrounding this issue seemed to die down, the NLRB—in light of a recent decision in Columbia University determining that an employment relationship can exist under the NLRA between a college or university and its students—decided to review its earlier decision in Northwestern University. The memorandum’s justification for concluding that scholarship football players at private colleges and universities are employees under the NLRA mirror the previous finding included in the Ninth Circuit Court of Appeals O’Bannon decision and the regional director’s ruling in the Northwestern case. Namely, football players meet the definition of an “employee” because they perform services for, and subject to the control of, their school in return for compensation in the form of an athletic scholarship. Similar to the regional director’s decision, the memorandum cited the millions of dollars generated by Division I FBS programs and the immeasurable positive impact such revenue has in boosting the school’s reputation, alumni donations, and student applications. Further, the memorandum noted that the NCAA and colleges and universities control nearly every facet of a football player’s day, including practice and competition hours, scholarship and academic eligibility, limits on compensation and other gifts and benefits, drug testing, and punishment for failing to adhere to NCAA or team standards. While the General Counsel’s memorandum made clear that its interpretation applied solely to Division I FBS scholarship football players, it left open the door for athletes in other sports to pursue similar recognition. Specifically, the memorandum stated that it would only conclusively determine the status of other student-athletes upon a full regional investigation such as the one that occurred in Northwestern University.
In the near term, the NLRB General Counsel’s memorandum will have limited application in the since there are only 17 Division I FBS private schools—Boston College, Rice, Stanford, Duke, Vanderbilt, Syracuse, Miami, Notre Dame, Southern Cal, Wake Forest, Tulane, Texas Christian, Tulsa, Baylor, Southern Methodist, and Brigham Young. However, it could have significant implications going forward as current and former student-athletes continue to wage a legal battle for recognition of certain athletes as employees. In fact, recent court decisions indicate that judges across the country are more inclined to decide in favor of recognizing student-athletes participating in high-earning revenue sports as employees. In addition to the Ninth Circuit’s decision in O’Bannon, earlier this year, a judge from the 7th U.S. Circuit Court of Appeals—in a decision that rejected claims by two former members of the University of Pennsylvania’s track and field team that their athletic pursuits amounted to full-time jobs under the Fair Labor Standards Act—noted in his concurring opinion that the court decided against the athletes in the Penn case because they “did not receive athletic scholarships and participated in a non-revenue sport.” For the court to rule in favor of the plaintiffs then, taking the argument to its logical conclusion would mean that “college musicians, actors, journalists, and debaters” could likewise argue that they were university “employees.” In contrast, the judge emphasized that the court might look differently upon athletes participating in revenue sports, such as men’s basketball and football since “[t]hose sports involve billions of dollars of revenue for colleges and universities.”
In the coming months, current and former student-athletes are likely to cite to the NLRB General Counsel’s decision as an indication that they should be afforded status as employees and compensated for their athletic pursuits. As a result, whether the NLRB intended to reignite the debate or not, the door that appeared to be shut on the issue of pay for play for student-athletes has been thrust wide open.