A full review of the National Labor Relations Board’s decision in NCAA v. Northwestern

Published 03 September 2015 By: John Wolohan

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In March 2014, the Regional Director for the National Labor Relations Board (Board) in Chicago held that Northwestern University football players who receive grant-in-aid scholarship are “employees” within the meaning of Section 2(3) of the National Labor Relations Act (the Act). As a result, the players would be entitled to choose whether or not to be represented for the purposes of collective-bargaining. For a full review of the Regional Director’s decision see here.1

Northwestern University appealed the decision to the full Board in Washington D.C., arguing that the Board should decline jurisdiction over the case in order to leave the reform of college sports to the NCAA and college administrators. On 17 August, the Panel reached their Decision.2 A review and analysis follows.

 

Facts

As a member of both the National Collegiate Athletic Association (the NCAA) and The Big Ten Conference (Big Ten), Northwestern University athletes competes at the highest level in the NCAA Division I Football Bowl Subdivision (FBS). There are currently around 129 schools compete at that FBS level (Please note that at the time of the original Board hearing there were only 125 schools). Of the schools that compete at this highest level, there are only 17 other private collegesor universities like Northwestern. In the Big Ten Conference, Northwestern is the only private school of the 14 colleges or universities.3

As members of the NCAA and Big Ten, Northwestern University and all of the athletes who compete for the school agree to compete under the regulatory constraints imposed by the NCAA and Big Ten. “For example, NCAA bylaws dictate the maximum number of grant-in-aid scholarships a school can award, … set minimum academic requirements (including eligibility rules that players been rolled as students, carry a full class load, and maintain a certain minimum grade point average (GPA)).4 The NCAA also regulate the terms and content of the scholarship that a player receives.5 In particular, that the athlete’s scholarship award and renewal is subject to the player’s compliance with the policies and regulations of Northwestern University, the NCAA’s and Big Ten.

Each academic year, there are generally 100 or so athletes on the Northwestern University football team. Based on NCAA rules, 85 of the students on the team receive athletic scholarships. The value of a single scholarship, which cover tuition, fees, room, board, and books, isabout $61,000 per year.6 In return for their scholarships, the athletes are required to devote substantial hours to football activities. If they failed to meet the obligations of the team, the student can, and will, lose their scholarship.

In looking at the impact of the football team on Northwestern’s athletic department, The Board found that school earned around $30 million in revenue during the 2012–2013 academic year from the football program. In addition, the Board found that the football program cost the school around $22million in expenses, for a yearly profit of $8million.7 Looking at the program over a 10-year period, the Board found that the generated over $70 million profit for the university.8 Northwestern in turn used the profits generated from football to subsidize the rest of the Department of Athletics. In addition, even though the football program generated excess revenue, the department as a whole operated at a loss.9

In 2014, a group from the College Athletes Players Association (CAPA), a labor organization, attempted to represent a group of Northwestern University scholarship football players. In particular, CAPA claimed that those football players who receive grant-in-aid scholarships from the Northwestern are "employees" within the meaning of Section2(3) under the National Labor Relations Act (the Act) and are therefore entitled to choose whether or not to be represented for the purposes of collective-bargaining. Northwestern, on the other hand, claims that football players receiving scholarships are not employees under the Act and therefore have no right to be represented by a labor union. The Regional Director for the National Labor Relations Board (NLRB) in Chicago agreed with the union and held that those football players who receive grant-in-aid scholarship were employees and entitled to choose whether or not to be represented for the purposes of collective-bargaining.

Northwestern University appealed the decision to the full National Labor Relations Board (NLRB), arguing that the Board should exercise its discretion to decline jurisdiction over college football or college athletics generally because it would not effectuate the purposes of the Act to assert jurisdiction over such activities. The Board, agreeing that the case raised important issues concerning the scope and application of Section 2(3), granted Northwestern University’s request for review.

 

Full Board Decision

The main question on appeal was whether scholarship athletes, and in particular Northwestern University football players, are employees under the National Labor Relations Act. If the Board were to rule that they were not employees, than the Board would lack authority to direct an election or certify a representative. If however, the Board were to uphold the Regional Director’s finding that the scholarship athletes were statutory employees, the athletes would receive all the rights guaranteed by the Act to employees.

On August 17, 2015, the Board surprised a lot of people when it refused to answer the question of whether college athletes are employees. Instead, the Board passed the issue onto Congress by ruling that, after careful consideration of the record and arguments, it had determined “that, even if the scholarship players were statutory employees (which, again, is an issue we do not decide), it would not effectuate the policies of the Act to assert jurisdiction.10 In other words, the Board refused to decide the case because it believed that it was an issue better left to Congress, the Courts or college sport administrators.

In support of this decision, the Board found that although it had ruled on the employee status of graduate student assistants or student janitors and cafeteria workers, scholarship players do not fit into the same analytical framework that it had used in these other cases. For example, while “scholarship players are students who are also athletes receiving a scholarship to participate in what has traditionally been regarded as an extra curricular activity materially sets them apart from the Board’s student precedent.11 At the same time, the Board held that “scholarship players are unlike athletes in undisputedly professional leagues, given that the scholarship players are required to be enrolled full time as students and meet various academic requirements, and they are prohibited by NCAA regulations from … profiting from the use of their names or likenesses.12 In addition, the Board held that “even if scholarship players were regarded as analogous to players for professional sports teams who are considered employees for purposes of collective bargaining, such bargaining has never involved a bargaining unit consisting of a single team’s players, where the players for competing teams were unrepresented or entirely outside the Board’s jurisdiction.13 As a result, the Board held that given the absence of any controlling precedent, it was appropriate to exercise its discretion to decline to assert jurisdiction in this case, even assuming the Board is otherwise authorized to act.

In addition, the Board held that as in other sports leagues, the colleges and universities in the United States came together and created the NCAA in order to “set common rules and standards governing their competitions, including those applicable to FBS football.14 In creating the NCAA, the member schools also gave the NCAA power “to police and enforce the rules and regulations that govern eligibility, practice, and competition.15 Such arrangements, the Board held, are essential for the creation of level and fair competition that ensures the uniformity and integrity of individual games, and thus league competition as a whole. “There is thus a symbiotic relationship among the various teams, the conferences, and the NCAA.16 Therefore, the Board found that anything that changes or alters the relationship between an individual school and its’ student athletes, such as finding the athletes to be employees, would indirectly also impact the relationship between all college athletes in the Big Ten and NCAA member institutions.. Consequently, “it would be difficult to imagine any degree of stability in labor relations if we were to assert jurisdiction in this single-team case. Indeed, such an arrangement is seemingly unprecedented; all previous Board cases concerning professional sports involve league wide bargaining units.17

Finally, the Board ruled that the “nature of league sports and the NCAA’s oversight renders individual team bargaining problematic, the way that FBS football itself is structured and the nature of the colleges and universities involved strongly suggest that asserting jurisdiction in this case would not promote stability in labor relations.18 In support of this position the Board found that “despite the similarities between FBS football and professional sports leagues, FBS is also a markedly different type ofenterprise … [in that out of the] roughly 125 colleges and universities that participate in FBS football, all but 17 are state-run institutions.19 More importantly for the Board, “Northwestern is the only private school that is a member of the Big Ten.20 This is important because the Board does not have the authority to regulate public employees. Therefore, the Board reasoned, it would be unable to assert jurisdiction over the vast majority of FBS teams or Big Ten because they would not be controlled or covered under Section 2(2) of the Act. In such a situation, the Board held, asserting jurisdiction over a single school would not promote stability in labor relations. In addition, the Board found that in at least two states, Ohio and Michigan, which are home to three Big Ten universities, state statutes explicitly prohibit scholarship athletes at state schools from being classified as employees. Since the goal of labor relations is to create a uniform and fair employment system that helps promote uniformity and stability. Therefore, the Board held that since in this case it has no authority to regulate the vast majority of teams at the FBS level or even the BIG TEN, if it asserted jurisdiction it would be unable to achieve the desired effect - uniformity and stability in labor relations.21

 

Conclusion

The Board’s decision not to answer the most important question, i.e., whether scholarship athletes are employees, was disappointing for college athletes. In hindsight, the Board’s decision is probably really not that surprising. Previously, when faced with potentially ground breaking legal issues surrounding sports, the courts in the United States have a well-documented history of passing the ball to Congress. For example, in 1922 the United States Supreme Court in Federal Baseball Club of Baltimore v. National League22 held that “the business of providing public baseball games for profit between clubs of professional baseball players in a league and between clubs of rival leagues, although necessarily involving the constantly repeated traveling of the players from one State to another, provided for, controlled and disciplined by the organizations employing them, is not interstate commerce” and therefore exempt from Federal Antitrust law. This exemption is still law, even though the Supreme Court has acknowledged the error of the 1922 decision. Both times the Supreme Court has had the opportunity to correct their error, they claimed, just as the National Labor Relations Board in the Northwestern case, that it was Congress’ responsibility to change the status quo.  

In addition, as the Board noted, in the year and a half since the Northwestern players first sought to form a union, the NCAA has granted its five richest conferences substantial autonomy to pass rules that would allow them to give athletes more resources, which they promptly did, authorizing a few thousand dollars more in financial aid. The NCAA loosened meal restrictions, decided to allow FBS teams to award guaranteed 4-year scholarships, as opposed to 1-year renewable scholarships, thereby reducing the likelihood that scholarship players who become unable to play will lose their educational funding, and possibly their educational opportunity. The unusual delay by the Board, therefore, made it easier for the Board to endorse the status quo.23 In fact, Board’s decision came after a string of court victories against the NCAA by college athletes have actually succeeded in bringing about more modest rules changes. The Board, therefore bowed to the pressure of the college sports establishment, agreed that evolution of college sports was better than revolution.24

 

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Author

John Wolohan

John Wolohan

John Wolohan is an Attorney and Professor of Sports Law in the Syracuse University Sport Management program and an Adjunct Professor in the Syracuse University College of Law. In addition to being one of the lead editors of the book "Law for Recreation and Sport Managers" by Cotten and Wolohan, John has been teaching and working in the fields of doping, antitrust, gaming law, and sports media rights for over 25 years.

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