April 15, 2024

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The Sports Fanatics

Classifying college athletes as employees, NLRB memo sets stage for further NCAA destabilization

A memorandum sent Wednesday by the general counsel of the National Labor Relations Board has set the stage for college athletes to be paid directly by their institutions, thus becoming employees. The result of the memo could result in what the NCAA and its constituents have dreaded: the professionalization of college athletics.

The memo issued by Jennifer Abruzzo explained why college athletes are categorized as employees under the National Labor Relations Act. Though the memo was sent to regional directors and is not a legal ruling, it provides a path for players at private colleges and universities to be compensated as laborers.

Six years ago, Northwestern football players attempted to unionize but were told by the NLRB that such consideration was out of their jurisdiction. Abruzzo’s memo does not change that ruling.

However, it changes the the prospects of athletes who try to unionize at one of the 18 private institutions in NCAA’s Football Bowl Subdivision (FBS), the highest level of college football.  

“It definitely opens the door for college athletes to attempt collective bargaining,” said player advocate attorney Tim Nevius. “This helps lay out a roadmap for action by athletes to be recognized as employees and perhaps form a union.”

In this year of college athletics upheaval, which as a consequence is leading to the NCAA’s power diminishing, this is the latest blow against the amateurism model. In the memo, Abruzzo referred to the NCAA v. Alston decision; name, image and likeness rights; and “activism” by athletes providing momentum for her opinion.

“With all this stuff coming down, this very well could be evolution toward compensatory rights [paying players],” said Tom McMillen, a former U.S. Congressman and the head of Lead1, an organization that represents FBS athletic directors. “It’s the biggest issue in the country.”

On its face, the memo only impacts private institutions. The NLRB only has jurisdiction over private businesses. However, there is language within the memo that points the way for athletes at public institutions to benefit.

Abruzzo said nothing in the 2015 Northwestern decision precludes football players “or other similarly situated players” to be classified as employees under the NLRA. “Similarly situated players” could be interpreted as those outside football and men’s basketball — the two primary revenue generating sports.

She referred to a footnote to Sen. Chris Murphy’s “College Athlete Right to Organize Act” introduced in the U.S. Senate in May. If the bill became law, it would amend the NLRA definition of “employee” to include those attending public institutions.

Finally, Abruzzo appears to offer a side door for those desiring employee status to challenge the NCAA and the 10 FBS conferences.

Her last footnote in the nine-page memorandum: “It may be appropriate for the [NLRB] to assert jurisdiction over the NCAA and an athletic conference.” She also says she “will consider pursuing charges against an athletic conference or association even if some member schools are state institutions.”

“She’s sending a signal that employee classification could extend beyond just football players,” Nevius said.

And beyond private schools.

For now, the door seems open for a unionization effort to occur at least at one of those private colleges. If that happens, there would be a competitive imbalance the NCAA — or whatever is left of it — would have to sort through.

Competitive inequity has been the central issue in seemingly every major NCAA decision of late, ranging from cost of attendance to NIL to Alston.

Legal sources told CBS Sports the eventual effects of the memo might result in a deal struck to only pay football and basketball players. That move would conceivably be immune from a Title IX challenge. Under-represented female athletes would still have the “opportunity” to play and earn compensation.

Short of that, schools could continue to lean on Congress for a law that addresses the issue. That has been ongoing with NIL, but there has been no consensus on a federal bill that would supersede state-by-state legislation allowing benefits.

“Sometime in this school year, somewhere in the legal world or administrative level, a student-athlete will be declared an employee,” Notre Dame athletic director Jack Swarbrick said recently. “… Congress probably won’t be motivated to act in response to that. … We will once again be late to the game.”

In the ongoing Johnson vs. NCAA case, a Pennsylvania judge failed to dismiss a class action lawsuit by athletes seeking employment status. There are four total bills in Congress currently dealing with collective bargaining. If a state on its own were to allow collective bargaining for college athletes, that would create an imbalance like NIL. On July 1, the NCAA imposed minimal restrictions on NIL amid the passage of several varying state laws.

Collective bargaining in college athletics could conceivably mean players could negotiate both the time and length of practices. For example, the NFLPA has negotiated with owners that players average less than one fully-padded practice during weeks in the regular season.

Essentially, college athletics on the players’ side would become a market-drive economy. Taken to a not-so-far-off conclusion, recruiting could go away and be replaced by a draft or system where programs bid on the best players.

Wednesday’s memo suggests such a unionization move would be greeted favorably by the NLRB. The Northwestern unionization effort came during the labor-friendly administration of President Barack Obama. The Donald Trump, administration in general, did not back workers’ attempts to form unions and collectively bargain. Now with Democrats in power again under President Joe Biden, the compensation piece could be fast-tracked.

“Nothing is going to happen immediately,” said Jason Montgomery, a higher-education attorney at Husch Blackwell in Kansas City, Missouri. “But clearly, the political winds have blown back in the direction of the athlete.”

The NLRB decision in 2017 not to take up the Northwestern players’ cause did not answer the central question: Are college athletes are employees? At the time, the NLRB said allowing Northwestern players to form a union would not promote “stability” in labor relations.

Abruzzo on Wednesday explained that the college sports environment had changed considerably since those days in 2014-15. She said referring to players as “student-athletes” was a term “created to deprive those individuals of workplace protections.” She added that efforts to call them “student-athletes” would result in a violation of Section 8(a)(1) of the National Labor Relations Act.

That would tear down the foundation of the NCAA’s defense of the amateurism model. The association has leaned on the term “student-athlete” since the 1950s when it prevailed in a case of a deceased athlete whose widow was seeking worker’s compensation.

“That could be the beginning of the end of that term,” Nevius said. “That is significant not only from a legal standpoint but from a historic and symbolic standpoint. It’s the legal fiction behind how the NCAA has defended itself for 70 years now.”

She concluded: “Players at academic institutions perform services for their colleges and NCAA.” Referring to the Northwestern unionization, she restated the conclusion that “the NCAA controls the players’ terms and conditions of employment, including maximum number of practice and competition, scholarship eligibility [and] limits on compensation.”

It may be that colleges strike a separate compensation deal for football and basketball players. Those are the two revenue-producing sports.

If student-athletes turn into employees, schools could lose tax exempt status. That means schools would lose a large chunk of giving from donors. Experts say there would be little motivation for students to support fees in their tuition that go toward athletic programs. In 2019, 44% of all athletics department revenue was subsidized by institutional support and student fees.

Taken to the extreme, college athletics could become a for-profit business with the college athletes as employees. Minor sports could either go away because of the budget shortfall or be subsidized by boosters and/or private donations.

“This decision isn’t necessarily good news for student-athletes,” cautioned an AD from one of those private institutions. “Taxation, insurance, loss of Pell Grant [funds provided to students with extreme financial need] and employee discipline — including termination — come with an employer-employee relationship.”

At a time when the coach-player relationship is being scrutinized more than ever, that employer-employee relationship would essentially mean the coach is the boss of a workplace. Athletes could then be … fired.

“The evolution to employment rights is the most important issue facing college sports,” read a slide during a recent Lead1 presentation to its membership. “Be prepared.”