7 Questions Raised by the NLRB's Northwestern Decision

7 Questions Raised by the NLRB's Northwestern Decision Photo: Michael Barera, via Wikimedia Commons

News continues to swirl around the decision by a regional director of the National Labor Relations Board that Northwestern University’s scholarship football athletes are “employees” of the university who are entitled to organize collectively—i.e., unionize. A union election is scheduled to take place on April 25. In the meantime, Northwestern has filed a request for review of the regional director’s decision with the board in Washington, D.C., and the players’ union has filed its response. There’s a good deal of confusion about what the decision means, what it does not mean—in legal terms—and its possible ripple effects.

1. What exactly did the union win?

The National Labor Relations Act protects the rights of most private-sector employees to join together to improve their wages and working conditions. This includes the right to choose a labor organization as a representative, which their employer must recognize and bargain with in good faith regarding the employees’ terms and conditions of employment. The goal of such bargaining is a mutually agreeable collective bargaining agreement.

The groundbreaking aspect of the regional director’s decision was finding that the scholarship student athletes on the football team were in fact “employees” entitled to such rights. The regional director applied the common law definition of “employee” — i.e. one who (1) performs a service for another under a contract for hire, (2) subject to the other’s control or right of control, (3) in return for payment — and concluded that the Northwestern athletes met each of these conditions.

The decision found that Northwestern enjoyed football revenue of $235 million over the nine years between 2003 and 2012 that it could use in any manner it chose. It also spoke at length of the almost daily, hour-by-hour control the coaching staff has over almost every aspect of the players’ lives. And finally, the decision viewed the scholarships received by some athletes as payment for the athletic services being performed.

2. What happens next?

A union election is scheduled for April 25. The NLRB could decide to put off the election while it considers Northwestern’s request for review, but that is unlikely. What is more likely is that the vote will go ahead as scheduled, but the ballots will be impounded until the board rules on the request for review. If the board agrees with the regional director’s decision, then the ballots will be opened and counted.

If the majority of the ballots cast are for the union, then, the board will likely certify the union as the winner and Northwestern will be obligated to recognize and bargain with the union. However, Northwestern has the option to not honor the results by refusing to recognize the union, thereby committing an unfair labor practice in order to force an appellate court review of the NLRB’s ruling. Such an appeal could be filed either in the U.S. Court of Appeals for the Seventh Circuit (where Northwestern is located) or the D.C. Circuit (where the board is located), and the reviewing court would make the final determination on the issue, subject to a petition for certiorari accepted by the U.S. Supreme Court.

If, on the other hand, fewer than a majority of the ballots cast are for the union, then the board would certify the results—and that would end the matter as far as the election petition is concerned (although the board’s decision will still have precedential value for future cases).

3. What are Northwestern’s arguments for challenging the regional director’s decision?

Northwestern claims that the regional director relied heavily on the testimony of one football player, quarterback Kain Colter, who led the unionizing push (but ironically, as a senior, is not eligible to vote). Yet the regional director ignored the testimony of other players who supported Northwestern’s claims that academic success is the players’ primary pursuit. The school also argued, among other contentions, that the regional director should have followed an earlier board ruling that held graduate assistants who received a stipend for teaching and research work were students and not employees. Northwestern also challenged as irrational the regional director’s distinction between scholarship and walk-on football players (the latter are not considered employees), even though the walk-on players participate on the team alongside the scholarship players under the same terms and conditions.

4. What is the impact of this decision on college football and other sports?

The decision is not as directly applicable as one might think. The NLRB has jurisdiction over private universities, and there are only 17 such schools in Division I. Attempted unionization at one of the 100-plus public universities in Division I would be governed by the public sector employee relations laws of the state in which it is located. Some of those laws limit or do not even allow for public sector collective bargaining. Furthermore, given the decision’s reasoning, athletes in Division III or other sports also would likely not be considered employees—their athletic services generally do not generate large revenues, and the athletes are more akin to walk-ons (as defined by the regional director). On the other hand, the same reasoning would seem directly applicable to Division I basketball, where full scholarships and major revenues are involved.

5. How does the decision affect Title IX?

Title IX prohibits discrimination on the basis of sex in schools that receive federal funding in their athletics programs. If Northwestern ultimately either agreed (or was compelled) to negotiate with its football players and agreed to provide additional benefits or accommodations, it is conceivable that someone may claim that any resulting preferential treatment is a violation of Title IX. On the other hand, Northwestern could argue that if the players are employees and not students, then Title IX does not apply.

6. If the players are employees and the scholarships are regarded as pay, what other legal issues enter into the picture?

Taxation of scholarships was among the parade of horrors that Northwestern presented as potential consequences of the regional director’s decision. The university cited authority that bargained for compensation relating to employment services is taxable even when it takes the form of a scholarship or is for educational purposes. The union, on the other hand, cited authority that scholarships are not taxed unless they represent payment for services such as teaching, research and the like. Ultimately, this issue will be decided, if necessary, by the Internal Revenue Service and reviewing courts.

Similarly, the definition of an “employee” for workers’ compensation purposes is determined on a state-by-state basis. But once again, if a Division I scholarship athlete brought such a claim, the decision’s reasoning could cause re-examination of the issue by a state industrial commission or a court.

7. If the union is recognized, how can the players bargain for “pay” or a share of commercial revenues in light of NCAA rules prohibiting pay-for-play?

Unless the NCAA changes it rules, this is a huge roadblock. If Northwestern did accede to any such demand, it would risk being ejected from the NCAA, which would not be in anyone’s interests. For now, though, the union maintains that it is not looking for such results from collective bargaining. Rather, it claims to want to bargain over matters such as financial coverage for former players with sports-related medical expenses, independent concussion experts to be placed on the sidelines during games and the creation of an educational trust fund to help former players graduate.

It’s going to be interesting to see what happens. Stay tuned.

Irving M. Geslewitz is a principal in the labor and employment group at Chicago-based firm Much Shelist. He has extensive experience representing employers in employment and labor relations issues, and can be reached at igeslewitz@muchshelist.com.

LOAD MORE
Practice Area(s):