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Another March Madness: What Yesterday’s Decision Really Means For Student Athletes

Posted in Class Actions, Highlight, Labor Law & NRLB, Litigation

Late yesterday, Twitter lit up with news that collegiate student athletes are really “employees”.  But beyond the headline, my colleague Jarad Lucan explains what REALLY happened in plain English. Suffice to say, even though it’s March Madness, you might not want to bet on that result just yet.

Many of you may remember a few weeks ago when I joyously reported on an advice memorandum issued by the NLRB’s Office of the General Counsel that was favorable to an employer.

Well, that was February. Welcome to March Madness.

 In a decision that calls for one of Dick Vitale’s signature “Are you serious?!” sound bites, the NLRB’s Regional Director in Chicago determined that the grant-in-aid scholarship football players at Northwestern University are employees of the University.

According to the Regional Director, these football players generate tens of millions of dollars per year for the University (approximately $235 million in nine year period between 2003 and 2012). In return, the receive “compensation” from the University in the form of scholarships.

That the scholarships are a transfer of economic value is evident from the fact that the Employer pays for players’ tuition, fees, room, board, and books for up to five years. Indeed the monetary value of these scholarships totals 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.

Now, I know what some of you are thinking, well that’s great for those football players, but they are getting an education for free in return for the scholarship. After all they are “student-athletes,” right?

Not according to the Regional Director.

Based on the evidence presented, the Regional Director stated that the grant-in-aid scholarship football players are not “primarily students.”

Can you imagine that? In reaching that conclusion, the Regional Director distinguished the football players from graduate students who according to the NLRB’s 2004 Brown University case were not employees of the University.

Also important to the Regional Director’s decision was the fact that the grant-in-aid football players are subject to the control of the University. The players signed “tender” agreements upon acceptance of a scholarship that sets the duration and conditions under which their “compensation” will be provided to them. They are subjected to rigorous practice, travel and competition schedules and are limited (by NCAA and University rules) in their ability to make their own living arrangements, apply for outside employment, drive personal vehicles, travel off campus, post items on the internet, or speak to the media.

In that regard, the Regional Director determined that walk-on players were not employees because they are not tied to the same restrictions as scholarship players. They are students who simply love football.

It is too early to determine what impact of this decision will have on employers in the future. Arguably, the case was decided based on the specific set of facts presented (i.e., a University football program that generates millions of dollars and places highly restrictive conditions on its players). Also, it may not have much applicability outside of the private university and college setting (other than being one of the most fascinating decisions rendered in a long time).

But perhaps more importantly, this is certainly not going to be the last word on this issue. The University has until April 9, 2014 to seek review of this decision with the NLRB in Washington, D.C.  And Northwestern still has various other options (i.e., stop giving scholarships as the Ivy League schools did, agree they are employees and bargain hard, possible lockout).

And even if the University does seek review, the grant-in-aid scholarship football players will still have an opportunity to vote on whether they would like to be represented by the College Athletes Players Associations (CAPA) for purposes of dealing with the University concerning grievance, labor disputes, wages, rates of pay, hours of employment, and conditions of work.

So, despite the stories you read yesterday, the Regional Director’s decision is not the last word on this.  It’s just the opening (or, as the NCAA would say, the “first”) round.