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NLRB declines jurisdiction over Northwestern football players

August 17th, 2015  |  Lisa Milam

By Lisa Milam-Perez, J.D.

In an eagerly anticipated decision, the National Labor Relations Board has declined to assert jurisdiction in a representation case involving Northwestern University football players who receive grant-in-aid scholarships. The unanimous Board concluded that to do so would not effectuate the policies of the National Labor Relations Act. Even assuming—but expressly not deciding—that college players were statutory employees under Section 2(3) of the Act, to exercise jurisdiction over the players would not “promote stability in labor relations.” Thus, the Board dismissed a representation petition filed by the College Athletes Players Association (Northwestern University, August 17, 2015).

Northwestern University officials no doubt breathed a sigh of relief following today’s decision. Whether the ruling offers equal comfort to other educational institutions remains unclear, however. The Board was careful to note that its holding was “narrowly focused” to apply only to the players covered by the petition in this particular case and that it “does not preclude reconsideration of this issue in the future.” It ignored pleas from Northwestern and its supporting amici that it explicitly rule out the prospect of a contrary holding when faced with petitions from other scholarship-funded student athletes, noting, among other factors, the lack of express direction from Congress either way on the jurisdictional question before it.

Student athletes. Northwestern is a member of the NCAA, which formulates and enforces rules governing intercollegiate sports for participating colleges. The university is also a member of the Big Ten Conference, and its college athletes—including its 112 or so members of the football team, 85 of whom receive football grant-in-aid scholarships—compete primarily against the other schools within the conference.

The football team generated approximately $235 million for the university between 2003 and 2012. Scholarship players receive a monthly stipend of $1,200 to $1,600 to cover their living expenses and, under current NCAA regulations, the university is prohibited from offering them additional compensation for playing football, except for certain specific expenses. In exchange, the student athletes make a substantial time commitment to their sport—50 to 60 hours per week during training camp, and 40-50 hours during the football season. When the season is over, they participate in winter workouts as well as other workouts that transition to spring football. The university also imposes specific rules upon its student athletes, as detailed in a student-athlete handbook.

A lightning-rod decision. A group of Northwestern football players petitioned the NLRB for representation by the CAPA. In March 2014, the NLRB Regional Director ruled the players were statutory employees under the Act and directed a representation election to be held. Because they perform football-related services for the university under a contract for hire in return for compensation, and they are subject to the university’s year-round, strict and exacting control, the players fell squarely within the NLRA’s broad definition of “employee,” the Regional Director concluded.

The decision quickly drew fire, including rebuke from House Workforce Committee Republicans, who promptly staged a hearing on the matter. The representation election would proceed as scheduled, but the ballots were impounded as the Board granted the university’s request for review.

A “symbiotic relationship.” Key to the Board’s decision here was “the nature and structure” of NCAA Decision I college football. Of the 125 or so teams in the NCAA’s Football Bowl Subdivision (FBS), 108 are state-run colleges and universities, and thus outside the reach of NLRB jurisdiction. Indeed, Northwestern is the only private university within the Big Ten, so the Board can’t assert jurisdiction over the school’s main competitors. As such, the case at hand is unprecedented, the Board pointed out, “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.”

Given, too, that the respective conferences and the NCAA itself exert considerable control over individual college teams, “asserting jurisdiction over a single team would not promote stability in labor relations across the league,” the Board reasoned. The “symbiotic relationship among the various teams, the conferences, and the NCAA” means that “labor issues directly involving only an individual team and its players would also affect the NCAA, the Big Ten, and the other member institutions.” As such, “it would be difficult to imagine any degree of stability in labor relations if we were to assert jurisdiction in this single-team case.”

Also, although the Board saw myriad ways in which the student athletes were analogous to their professional counterparts, who do bargain collectively as part of a single league, the absence of a cohesive, college-football-wide structure that fell within the NLRB’s domain rendered the situation unworkable, in the Board’s view.

Changing terms and conditions. An additional consideration weighed against asserting jurisdiction, in the Board’s view: College players’ terms and conditions “have changed markedly in recent years,” the Board observed, citing too the calls for additional reforms in collegiate athletics in general. As just one example, the NCAA is now allowing member institutions to offer guaranteed 4-year free rides, rather than simply 1-year renewable scholarships—no doubt a substantial improvement for the players’ security, reducing “the likelihood that scholarship players who become unable to play will lose their educational funding, and possibly their educational opportunity.”

But is it an answer to the question whether individuals should be entitled under the NLRA to bargain collectively to say that their terms and conditions are improving anyhow, without the benefit of bargaining? It hardly seems an argument that would hold sway before this Board were it made by an employer—or an industry—seeking to fend off union organizing. But again, policy considerations controlled here, not the statutory factors that inform “employee” bargaining rights. And the Board cautioned that “subsequent changes in the treatment of scholarship players,” presumably unfavorable changes, they mean, “could outweigh the considerations that motivate our decision today.”

Section 14(c)(1) no basis. The university and several other amici encouraged the Board to decline jurisdiction over college football as a whole, based on NLRA Section 14(c)(1), which allows the agency to “decline to assert jurisdiction over any labor dispute involving any class or category of employers” where the Board concludes that “the effect of such labor dispute on commerce is not sufficiently substantial to warrant the exercise of jurisdiction.” However, the Board already asserts jurisdiction over private colleges and universities, it pointed out, and it was undisputed that Northwestern was a statutory employer. “In any event, we are unwilling to find that a labor dispute involving an FBS football team would not have a ‘sufficiently substantial’ effect on commerce to warrant declining to assert jurisdiction.”

With this, the Board “rejects what it spent seven pages explaining as the basis for the decision,” said Richard Gerakitis, a partner in the Atlanta office of Troutman Sanders and member of Employment Law Daily’s Editorial Advisory Board. Gerakitis saw no reason why the Board wouldn’t use Section 14(c)(1) as a basis for declining the case here. “If there’s no jurisdiction because processing a petition for an election (a) would not promote stability in labor relations and (b) where only 17 of [125] of those (FBS) schools…are private colleges or universities, it would seem just as reasonable to conclude that the Board would decline jurisdiction under Sec. 14(c)(1),” he argued.

Of limited scope. Emphasizing that the case before it involved “novel and unique circumstances,” the Board stressed that the football players did not fit the analytical framework used in cases involving other students or athletes—most notably, graduate student assistants, for whom collective bargaining rights have been a contentious matter at the NLRB over the years, but also “student janitors and cafeteria workers whose employee status the Board has considered in other cases.”

And, looking beyond the university setting, the Board stressed that while other industries might well be composed of some employers who were subject to Board jurisdiction and other employers who fall beyond the agency’s reach, this rationale should bring little solace outside the realm of intercollegiate athletics. “Other industries,” the Board said, “are not characterized by the degree of interrelationship present among and between teams in a sports league.”

“Generally, there is very little to rely upon precedentially from this decision,” said Gerakitis. “there is no real guidance on what factors could tip the balance towards recognizing jurisdiction if this issue arises again.”

A former Board member weighs in. Today’s decision was “statesmanlike,” according to Brian Hayes, an Ogletree Deakins Shareholder and himself a former Board member. Hayes said that when he reads NLRB decisions, he often thinks to himself, “How would I have decided this?” In this case, he told Employment Law Daily, he would have ruled the same way.

“The Board avoided for now the underlying issue—the employment status of college athletes—yet it managed to forge a consensus on the more fundamental premise that exercising jurisdiction in this case wouldn’t further the Act’s statutory purpose,” Hayes said, applauding the Board members for crafting a rare unanimous decision. “Far too often during the past few years, the Board hasn’t considered, ‘What’s the best policy here?’ and has failed to engage in the kind of give and take necessary to reach a consensus,” he lamented.

True, the Board technically “left the door open” for other college athletes, Hayes said, “but from a policy perspective, the door is shut.” The NLRB conceded that, unlike professional sports, where collective bargaining takes place on a league-wide basis, that’s unfeasible at the college level, particularly given the number of public universities in play. Thus, while the NLRB has suggested that under the right circumstances, it might well exercise jurisdiction over grant-in-aid players, that substantial restriction narrows the Board’s potential playing field considerably.

“If you read into it—the scenario in which the Board suggests it might consider exercising jurisdiction—it would have to be within a structure that simply doesn’t exist. The only possible place I can think of is the Ivy League,” which is comprised solely of private institutions, Hayes pondered. But even there, he notes, from a policy standpoint, granting bargaining rights to one narrow subset of the collegiate athletics universe would hardly serve to effectuate the purposes of the Act.

Nor was there much to apply here to other subsets of workers within the university ranks, as the Board took care not to disturb its precedent regarding the status of graduate students under the Act. “I suspect that the decision was consciously drafted in a way that would ensure a unanimous decision,” Hayes surmised. “So they avoided the Brown University question [regarding the employment status, and thus bargaining rights, of graduate student assistants] altogether.”

“The singular thing that’s happened in this case is that it’s brought the question of the employment status of college athletes into the public forum,” Hayes said. Indeed, that question has also found its way to the federal courts in recent years, which have been called upon to grapple with the issue in the wage-hour and antitrust contexts as well. Will today’s Board decision have persuasive authority in those judicial arenas?

Hayes was doubtful we’d see much of a “spillover” effect. For one, the definition of “employee” under the NLRA is distinct from that set forth in the Fair Labor Standards Act and other statutes. And of course, the Board didn’t resolve the question based on statutory construction anyhow, he notes; rather, the decision turned on matters of federal labor policy—making its holding even further removed from those settings.