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House workforce committee holds hearing on union organizing of student-athletes

May 9th, 2014  |  Lisa Milam

By Lisa Milam-Perez, J.D.

The House Education and the Workforce Committee held a hearing on Thursday, May 8 to explore the “troubling” consequences of a National Labor Relations Board (NLRB) regional director’s ruling that student-athletes are statutory employees under Section 2(3) of the National Labor Relations Act (NLRA) for collective bargaining purposes. Committee members heard testimony from higher education officials, labor law and antitrust attorneys, and a former student-athlete, all of whom pondered the implications of student-athlete unionization on both college athletics and college athletes. Absent from the hearing was testimony representing organized labor’s perspective on the ongoing controversy.

In March, an NLRB regional director in Chicago ruled that “grant-in-aid” scholarship players on Northwestern University’s football team were employees within the meaning of the NLRA, opening the door for the athletes to join the College Athletes Players Association (CAPA), a Steelworkers-backed union. According to Rep. John Kline (R-Minn), who heads up the House labor committee, the decision “represents a radical departure from longstanding federal labor policies.” The NLRB has agreed to take up Northwestern’s challenge to the regional director’s ruling. While the Northwestern players voted as scheduled in a representation election in late April, the ballots were impounded pending a resolution on their employment status by the Board.

Too many “tough questions.” In opening statements, Kline contended there were “tough questions” to be resolved before students and university administrators should be forced to face off at the bargaining table. “What issues would a union representing college athletes raise? Would a union negotiate over the number and length of practices? Perhaps the union would seek to bargain over the number of games. If management and the union are at an impasse, would players go on strike? Would student athletes on strike attend class and have access to financial aid? How would student athletes provide financial support to the union? Would dues be deducted from scholarships before being disbursed to students? Or are students expected to pay out of pocket?”

Not a sports franchise. “Baylor University is emphatically not a professional sports franchise,” said Ken Starr, President and Chancellor of the private, Christian institution. According to Starr, the decision marked “a fundamental paradigm shift with respect to the relationship between universities and their student-athletes.” The regional director’s approach to simply compare the time spent on academics to the time spent on athletics, applying “a rigidly wooden test drawn from the common law,” fails to recognize the players’ primary status as students — “an irreducible condition precedent to the entire relationship between the university and its student-athletes,” he noted — and instead relies on factors that “range widely both by student… and by institution.”

The decision, if affirmed by the Board, would “likely leave in its wake years of litigation with respect to the appropriate scope of bargaining” and also would beg questions as to the appropriateness of the bargaining unit, Starr said. Members of a team who have no grants-in-aid “could be subjected to the full panoply of rules negotiated by the exclusive bargaining representative” even while the union would owe no fair representation duty to those adversely affected by the outcome of negotiations. Also problematic, in his view, is the lack of a community of interest between the majority of team members and the handful of star athletes who realistically aspire to a future in professional sports and have an economic interest in the use of their images (an ongoing point of contention among the student-athletes).

The “complex legal questions” posed by a decision that student-athletes are employees “will likely take years to sort out,” according to Starr, and “a number of unintended consequences will likewise arise.” Because college athletics is not a profit center for the vast majority of colleges and universities, the decision could cut sharply into the financial and academic support that schools could provide their student-athletes, he said. Moreover, it would breed “uncertainty and instability across the higher education landscape,” Starr urged. The fact that the decision would apply only to private institutions, and implicitly exclude state schools, would create structurally significant disparities between various colleges and universities that compete with one another in intercollegiate athletics.

“Profound and unworkable.” As Seyfarth Shaw’s Bradford L. Livingston testified, the NLRB traditionally has distinguished between “individuals engaged in a commercial relationship and those that — while arguably falling into the most literal definition of ‘employee’ under Section 2(3) — nevertheless fall outside the Act’s reach due to the innately non-commercial nature of the educational relationship at issue.” Such was the case here, in his view, and the consequences of a contrary finding would be “profound and unworkable.”

And while it’s true that intercollegiate sports bring in big money for some universities, Livingston argued that “[r]evenue generation should not be determinative of the NLRA’s application to any particular student-athletes.” Many college teams generate little revenue but have significant costs. Paradoxically, those student-athletes would have even more reason to unionize, Livingston speculated, because they face the prospect that their programs could be cancelled — a concern not faced by athletes in revenue-generating sports. “Under the NLRA, the economics or profitability of the employer should be irrelevant.”

Livingston echoed concerns about the inherent conflicts presented by the limited jurisdictional reach of an NLRB finding that student-athletes are statutory employees. “[B]ecause most major college football programs are part of public institutions, the NLRB has statutory jurisdiction over only 17 of the roughly 120 colleges and universities that play major college football,” he noted. “In asserting jurisdiction, the NLRB’s rules would apply to these teams in ways inapplicable to more than eighty-five percent of their intercollegiate competitors. And those remaining 100 or so public institutions are subject to, where such laws exist, a variety of conflicting state statutes as to whether or not their public universities’ student-athletes could organize and, if so, over what subjects they could bargain collectively. The resulting patchwork of laws, differing collective bargaining agreements, and uneven terms governing student athletes would be unworkable,” Livingston testified.

Citing too the NLRB’s recent Specialty Healthcare decision and the agency’s nod to smaller, separate bargaining units, Livingston asserted, “[w]ith separate offensive and defensive coordinators, position coaches, playbooks, and game plans, a college would face an uphill battle in meeting its burden of proving that the remainder of the football team share an overwhelming community of interests if a labor union seek to represent just the team’s offense or defense. Likewise, offensive linemen, defensive backs or quarterbacks each may share their own separate community of interests. And because unions petition for bargaining units where they believe they can win an NLRB election, these types of units are inevitable.”

In a footnote to his prepared testimony, Livingston pointed out the broader implications of student-athletes as employees — including their corresponding rights under Title VII, the FLSA, the ADA, ERISA, and state laws. Among the myriad legal issues that would arise under these other employment statutes: “[A]are student-athletes ‘on the clock’ and entitled to compensation if a coach requires attendance in class or at study halls? If a player is late for practice and as a penalty must spend time in an extra study hall session, is that time compensable? Under the Americans with Disabilities Act, could a player with a doctor’s note be excused from practice, but still expect to play in the game? During the break between the Spring and Fall semesters when athletes are no longer receiving their scholarships, are they entitled to unemployment compensation? Could the EEOC challenge a university’s scholarship offers and acceptances under a disparate impact analysis? Could the EEOC challenge a failing grade in a class under disparate treatment analysis? If they are considered employees, would student athletes’ scholarships be considered taxable income that is subject to withholding and income tax, and if so, would it make a college education unaffordable for many current scholarship recipients?”

A “price-fixing cartel.” Andy Schwarz, a partner at OSKR, LLC, and economist who specializes in antitrust economics, approached the issue from a different angle. Noting the panel’s focus on the “unintended consequences of unionizing college football,” he asserted that “the biggest threat to college sports from collective action is the current price-fixing cartel called the NCAA. By price-fixing, I am focused on how the 351 Schools in Division I stifle healthy economic competition through collusion to impose limits on all forms of athlete compensation.”

“College football is big business,” Schwarz said, noting that “individual [college] athletic departments regularly generate more revenue than almost all NHL and NBA teams.” Yet, he asserted, the NCAA deliberately coined the term “student-athlete” specifically “to dodge legal responsibilities for athlete safety and medical expenses. In time, that term has also served to disguise its economic collusion.” The NCAA “devotes millions to investigate suspicions of possible market compensation while denying it has any legal responsibility to protect the heads or bodies of its athletes,” Schwarz said.

He also noted that 40 to 45 percent of all college football players “come from families with low enough means that they receive Pell Grants” and that, in some cases, “athletes qualify for food stamps.” However, Schwarz continued, “[b]ecause most athletes do not go on to work in the NFL, the current system denies more than 95 percent of college football players access to the four best earnings years of their sports careers.”

“Something far more valuable.” Bernard M. Muir, Stanford University’s athletic director, acknowledged that “the vast majority of our student-athletes will not go on to earn a living in professional sports careers.” But, he noted, while Stanford student-athletes do not receive salaries, “they receive something far more valuable — and that is an academic experience of the very highest quality, funded in many cases by scholarship support, that rigorously prepares them for leadership and success in the world.” Muir asserted that Stanford’s student-athletes are, first and foremost, students, and the beneficiaries of a rigorous, top-notch academic program. A number of Stanford student-athletes have gone on to earn master’s degrees, he noted.

A means to an end. “I was not an employee… nor did I want to be one,” said Patrick C. Eilers, a former student-athlete at Notre Dame and currently managing director of Madison Dearborn Partners. “I also worry about the unintended consequences of being deemed an ‘employee’ and what unionization could bring to college athletics.”

Nonetheless, he observed that the players’ impetus to join a union was “a means to an end, a vehicle if you will, to implement improvements to our collegiate athletic system.” And he supported the underlying goals that prompted their drive to seek collective bargaining — including mandated four-year scholarships, health and insurance benefits, stipends, and transfer eligibility. “I believe there is little debate about the necessary logical improvements,” Eilers said. “I believe the debate today should instead be focused on seeking the most effective vehicle to cause the implementation of these improvements.”

“Units of production.” Rep. George Miller, the House labor committee’s senior Democrat, responded to the hearing testimony from his traditionally pro-labor vantage point. “By banding together and bargaining, these athletes can win the kinds of things union workers have demanded and won across the country, including a say about avoiding serious injury on the job, medical benefits and security if something does go wrong, meaningful input into how they balance their work — in this case football — with their academic needs and other responsibilities, and the respectful treatment and care they so richly deserve,” Miller said. “Our nation’s talented college athletes have become units of production that are over-scheduled and over-worked, left without safeguards for their health and safety, and encouraged to put their education on a backburner in favor of their success on the field.”

More harm than good. “There is no question the legitimate concerns of student athletes must be addressed, but doing so at the collective bargaining table will do more harm than good,” said Kline. “Instead of treating student athletes as something they are not,” he continued, “let’s help ensure the real challenges they face are resolved… We share the concerns of players that progress is too slow, but forming a union is not the answer.”