Client Alert: A Gift for NCAA Athletes? The NLRB Finds Merit for Employee-Athletes
Date: January 5, 2023
This decision was the first to echo NLRB General Counsel Jennifer Abruzzo’s September 2021 GC Memorandum stating that athletes perform services for academic institutions in exchange for compensation and, thus, are employees under the NLRA. Abruzzo’s memo concluded that athletes who are paid for their services were previously misclassified as “student-athletes” instead of employees and have the right to “act collectively to improve their terms and conditions of employment.” Although this was simply a memorandum and not a binding NLRB decision, the memo was a seismic shift in the NCAA landscape, and signaled the dismantling of the status quo in treating athletes as amateurs not entitled to pay or the ability to collectively bargain.
In response to a similar charge brought by Northwestern University football players in 2014 against Northwestern University alleging that players who received grant-in-aid scholarships should be classified as employees, the NLRB dismissed the petition, without deciding whether the athletes were statutory employees, finding that it did not have jurisdiction. The Board stated that deciding whether the athletes were employees would not promote labor stability because of the structure of the NCAA where most schools are state-run and the Board does not have jurisdiction over state-run institutions. The NCAA and individual conferences govern both state-run and privately-run schools. In this case, Northwestern University was the sole privately-run university in the Big Ten Conference. As a result, the Board held that asserting jurisdiction over a single, privately-run school would not promote stability in labor relations across the Big Ten Conference and NCAA.
In this current case, the NCPA brought the charge against the private institution, USC, as well as the NCAA and the PAC-12, to ensure the NLRB has jurisdiction, challenging not only the classification of athletes as employees at the institution level, but also at the conference and NCAA level. This could open up the possibility for players within a conference or the NCAA as a whole to unionize. In pursuing this charge, the NLRB decision has the potential to fully disrupt how the NCAA operates and how athletes are compensated.
The NCAA has long classified athletes as “student-athletes” and “amateurs” to restrict them from receiving compensation for their services. However, within the past two years, the NCAA has adopted provisions, and a majority of states have enacted laws, that allow athletes to capitalize on their Name, Image and Likeness (“NIL”). The Supreme Court last year also decided in Alston v. NCAA that the NCAA violated the Sherman Antitrust Act by limiting athlete compensation for academic-related costs, in a blow to the NCAA’s longstanding argument that amateurism is essential to its product. If athletes were to be classified as employees, they would be entitled to exercise rights protected by the National Labor Relations Act, including the right to compensation for the work they perform as athletes and the right to organize.
As this new category of employment arises, Whiteford, Taylor & Preston’s Labor & Employment and Sports Law practice groups have a keen eye on developments impacting the employers of employee-athletes and provide guidance to ensure compliance in this emerging arena.
Whiteford, Taylor & Preston also provides advice and counsel to universities, athletes and companies seeking NIL agreements in its Sports Law practice.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.