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Student Athletes Face Hurdles to Becoming Employees

Nov. 4, 2021, 8:00 AM

The Office of the General Counsel (OGC) of the National Labor Relations Board (NLRB) issued a memorandum Sept. 29 recommending a prosecutorial stance by the board toward any college asserting its athletes do not have the standing of an employee by virtue of “student-athlete” status.

In essence this guidance memo, which does not have the binding or determinative effect of a NLRB ruling, reinstates a prior position taken by the OGC that scholarship football players at private NCAA Division I Football Subdivision Schools (FBS) are employees under the National Labor Relations Act (NLRA).

Further examination shows not only the limitations of this memo, but also the complications in regulating such position.

Interestingly the OGC memo notes as key support for its position two recent developments which are not connected with labor law. The first is the U.S. Supreme Court’s ruling in its Alston v. NCAA decision, which struck down limitations for educational benefits for FBS football players and Division I men’s and women’s basketball players.

The Alston legal challenge on behalf of college athletes (which term is used here as the OGC memo takes issue with reference to “student-athletes” as suppressive of their employment rights) was grounded in antitrust law and evaluation of whether the then-current NCAA restriction was a reasonable restraint of trade. While the Alston ruling is meaningful, its practical effect granted no new compensation or employment rights since additional benefits are tied to education.

Name, Image, and Likeness

The OGC memo also makes note of the NCAA’s recent implementation of an interim rule suspending its restriction on college athletes receiving compensation from third parties for use of their name, image, and likeness (NIL). This decision of the NCAA was directly linked to the effective date of legislation and executive orders in several states, which granted protections to college athletes to profit from their publicity rights as of July 1, 2021.

NIL rights are a function of intellectual property law and have no specific relation to standing as an employee. In fact, as the state NIL laws currently in effect and NCAA policy do not provide for universities themselves to compensate college athletes for their NIL rights or athletic performance, there is still no structure providing for payments by schools beyond cost of attendance and the expansion of educational benefits provided by Alston.

Not Binding on Public Universities

The scope of the NLRA covers most private employers and thus brings them under the purview of the NLRB. Government employees are not covered under the NLRA.

This exclusion is material in the world of college sports, as the majority of Division I FBS institutions are public universities. As a result, not only is the position asserted by the OGC without binding effect on public institutions, but any formal ruling by the NLRB would not have legal effect on a majority of the high-profile athletic programs.

Johnson v. NCAA

Some have observed that legal momentum for a new status of college athletes as employees is supported by a Pennsylvania federal court ruling Aug. 25 in Johnson v. NCAA. The court denied a motion to dismiss by the university defendants, allowing the athletes to continue a lawsuit seeking compensation under the FLSA and state wage claims for their engagement in interscholastic athletic activity.

As a key factor in its ruling, the court found the limited record of the case did not establish the reliance of the university defendants on certain Department of Labor guidance. The court also said that participation in interscholastic activities conducted for the benefit of students in the educational program does not result in an employer-employee relationship.

As this case proceeds to the discovery phase, the university defendants will have the opportunity to gather and present evidence to support such reliance.

It is worth noting that each of the named plaintiffs in the Johnson case would be excluded from the scope of college athletes addressed in the 2017 NLRB general counsel memo. The Johnson plaintiffs include a football player at a Football Championship Subdivision (FCS) institution, a baseball player, two tennis players, a soccer player, and a member of a swimming and diving team.

The contrast in these two groups highlight the difficulty in identifying an appropriate collective bargaining group even if other hurdles to employment status are overcome.

Multi-Layered Complexities, Many Questions

These developments show the multi-layered complexities in any structure at play with college athletes as employees. And others remain.

If college athletes are at-will employees, will poor performance on the field in multiple games result in termination of athletic scholarship? Will a regime of both union and non-union players emerge since their status at public universities is determined by the state in which the university is located? With the inevitable revocation of tax-exempt standing on the athletic grant-in-aid due to its conversion to wages, what will be the ripple effect on the tax treatment on other athletic-related activities (which previously could have entitled donors to tax write-offs)?

As with many concerns in college athletics, tugging the thread on one issue often shows incomplete consideration of others. It would be extremely premature to view these latest developments as having the global effect on employment status as may appear at first glance.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Tyrone P. Thomas is a member and co-chair of Mintz’s Sports & Entertainment Practice focused on legal issues pertaining to intercollegiate athletics and professional sports. He advises on issues involving college athletics programs, including the NCAA infractions process, conference and head coaching contracts, FERPA, and Title IX participation requirements. He also serves as chair of the firm’s diversity committee.

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