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NLRB General Counsel Says College Athletes Are Statutory ‘Employees’ in Memo with Broad Implications

October 01, 2021

National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memorandum stating that, in her prosecutorial view, college athletes are statutory employees under the National Labor Relations Act (NLRA)—affording them all rights and protections under federal labor laws. More broadly, the memorandum signals an expansive view by the agency of protected concerted activity, joint employer liability, and independent violations for misclassifying workers, which impact all employers and not just private colleges and universities. This memorandum will likely result in increased litigation and organizing activity involving athletes at academic institutions, both private and public, along with broader protections for employee conduct beyond that formerly protected by labor law.

General Counsel Abruzzo issued General Counsel Memorandum 21-08 on September 29 titled “Statutory Rights of Players at Academic Institutions (Student-Athletes) Under the National Labor Relations Act.” GC Memo 21-08 sets forth her position that certain college athletes are “employees” under Section 2(3) of the NLRA. This finding is significant to colleges and universities for several reasons. First, GC Memo 21-08 proscribes the use of the term “student-athlete,” concluding that the term is inherently coercive and misclassifying (i.e., naming) a college athlete as a “student-athlete” will be considered a standalone violation of the NLRA and subject to prosecution. Rather, GC Memo 21-08 permits calling college athletes “players at academic institutions.”

Second, by finding that players at academic institutions meet the definition of “employee” under both the NLRA and common-law agency test, GC Memo 21-08 extends Section 7 rights and protections to college athletes and opens the door for athletes to start or resume organizing efforts, labor protests, walkouts, strikes, and other protected concerted activity.

Third, GC Memo 21-08 extends NLRA protections to activities that are not directly related to the workplace or terms and conditions of employment. Indeed, while demanding adequate safety protocols is cited as one example of traditional protected concerted activity (PCA), GC Memo 21-08 also seeks to extend NLRA protections to actions related to general political stances, like racial justice issues, which have not consistently been considered PCA absent some nexus to issues occurring, or claimed to be occurring, in the actual workplace of the employees at issue.

Finally, GC Memo 21-08 declares that public institutions—which are outside of NLRB jurisdiction—may still be subject to the NLRB prosecution or organizing petitions through a joint employer theory of liability imposed on private, affiliated entities. In fact, Abruzzo explicitly states that, because the National Collegiate Athletic Association (NCAA) purportedly “exercises strict control” over players at academic institutions and conferences are “independent, private entit[ies], created by the member schools,” she “will consider pursuing charges against an athletic conference or association even if some member schools are state institutions.”

Even though GC Memo 21-08 focuses on colleges and universities, there are several themes that will likely have broader implications for all employers. Abruzzo has expressly announced that she will prosecute employers for misclassifying employees as contractors, rejecting the precedent and majority holding in Velox Express, 368 NLRB No. 61 (2019). Further, her view that NLRA protection extends to general political stances, linked to racial and social justice causes, will almost certainly apply universally to all employers. And, other “public” or non-NLRA-covered employers should be wary of becoming subject to NLRA obligations through connections with NLRA-covered entities.

NLRB’s Historical Approach to College Athletes

The issue of unionization in college athletics first reached the NLRB in Northwestern University, 362 NLRB 1350 (2015). In Northwestern University, the NLRB regional director in Region 13, Peter Sung Ohr (former Acting General Counsel and current Deputy General Counsel for the NLRB), determined that Northwestern University football players receiving grant-in-aid scholarships were employees under the NLRA and ordered an election covering that bargaining unit. On appeal, the full Board, including then-Member Harry Johnson (co-author of this LawFlash), declined to exercise jurisdiction over the Northwestern football players and dismissed the petition. In its decision, the Board cited the likely labor instability that would result from exercising jurisdiction over Northwestern, particularly given that the vast majority of NCAA institutions are public colleges and universities, over which the Board cannot assert jurisdiction. The Board also highlighted the uniqueness of college athletes, who did not fit squarely into any of the Board’s existing analytical frameworks, and the presumption that, based on varying state laws, bargaining either would not be permitted, or look markedly different, at public universities. Importantly, however, the Board in Northwestern University made clear that its decision did not address the “employee” status of scholarship athletes under the NLRA.

After the Northwestern University decision, then-NLRB General Counsel Richard Griffin issued General Counsel Memorandum 17-01 titled “General Counsel’s Report on the Statutory Rights of University Faculty and Students in the Unfair Labor Practice Context” on January 31, 2017, in which Griffin asserted his view that “scholarship football players at Northwestern and other Division I FBS private colleges and universities are employees under the NLRA because they perform services for their colleges and the NCAA, subject to their control, in return for compensation.” Accordingly, GC Memo 17-01 provided that all Division I Football Bowl Subdivision (FBS) scholarship football players at private institutions had NLRA Section 7 rights, meaning they had the right to engage in protected concerted activities, such as “advocat[ing] for greater protections against concussive head trauma and unsafe practice methods, reform[ing] NCAA rules so that football players can share in the profit derived from their talents, or self-organiz[ing], regardless of whether the Board ultimately certifies the bargaining unit.” GC Memo 17-01 limited its determination of employee status to Division I FBS scholarship football players at private institutions, noting that, “in the absence of a full investigation [the Board] cannot conclusively determine the employee status of other kinds of student-athletes in cases that may arise in the future.” Former NLRB General Counsel Peter Robb later rescinded GC Memo 17-01 on December 1, 2017, rendering it inoperative, until now.

NCAA v. Alston

On June 21, 2021, the US Supreme Court issued its unanimous decision in NCAA v. Alston (594 US _, 141 S. Ct. 2141 (2021)), holding that NCAA-imposed caps on education-related benefits for college athletes violated federal antitrust laws. Although Alston was an antitrust case and its holding focused only on the narrow issue of caps on education-related benefits, the decision had wide-ranging implications for the future of college athletics, including athletes’ employment status under the NLRA. In particular, Justice Brett Kavanaugh, in his concurring opinion, argued that college athletes “generate billions of dollars in revenues” for the NCAA and its member institutions every year “but the student-athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing.” Justice Kavanaugh then suggested that collective bargaining could be a solution: “Or colleges and student athletes could potentially engage in collective bargaining (or seek some other negotiated agreement) to provide student-athletes a fairer share of the revenues that they generate for their colleges, akin to how professional football and basketball players have negotiated for a share of league revenues.”

GC Memo 21-08

Abruzzo’s nine-page memorandum reinstates the portions of GC 17-01 pertaining to college athletes and firmly establishes her position that certain college players should be afforded all protections under the NLRA. More specifically, GC 17-01 concluded, and GC 21-08 reinstated, the theory that the type of scholarship football players at issue in Northwestern University satisfy both the broad Section 2(3) definition of employee and the common-law agency test, which defines an employee as a person “who perform[s] services for another and [is] subject to the other’s control or right to control.” In GC 21-08, Abruzzo further states that the expansive language of the NLRA, as well as the Board’s holdings in Boston Medical Center and Columbia University, support the notion that players at academic institutions are employees. A gray area remains regarding the status of players at academic institutions who participate in sports that are not similar to FBS football in terms of revenue, scholarships, and team rules in light of the above-referenced limitation in GC 17-01, which is adopted by GC 21-08.

As described above, Abruzzo views all references to college players as “student-athletes” as a purposeful misclassification under the NLRA and an independent violation of Section 8(a)(1), because the term purportedly misleads college players to believe that they lack statutory protections. GC Memo 21-08 declares that the General Counsel’s Office will pursue an independent violation of Section 8(a)(1) where any institution misclassifies players at academic institutions as student-athletes, holding institutions strictly liable for any violations.

Abruzzo also identifies several recent developments that purportedly support players at academic institutions’ employee status:

  • First, the Supreme Court’s unanimous ruling in Alston rejected the NCAA’s notion of amateurism in college athletics. Abruzzo highlights the court’s recognition that amateurism in college sports has transformed in recent decades and cites the decision as a likely precursor to additional changes in college athletics. As anticipated and discussed in detail in Morgan Lewis’s webinar series on the labor implications of the Alston decision, Abruzzo emphasizes Justice Kavanaugh’s concurring opinion, wherein he suggests that collective bargaining could be appropriate for college athletes.
  • Second, Abruzzo notes the NCAA’s suspension of name, image, and likeness (NIL) rules for players at academic institutions, which establish that players at academic institutions may now receive compensation for the use of their NIL, brings players at academic institutions more in line with professional athletes.
  • Third, Abruzzo points out that players at academic institutions have been engaging in collective action at “unprecedented levels” as of late, including the activism surrounding the murder of George Floyd, racial justice, and COVID-19 health and safety concerns.

Although the NLRA does not apply to public sector employees, Abruzzo also signaled a willingness to pursue a joint employer theory of liability to cover public universities currently beyond the NLRA’s reach. Abruzzo emphasizes that the NCAA’s strict control over certain players at academic institutions, including eligibility standards and detailed recruitment rules, may render it appropriate for the Board to assert jurisdiction over the NCAA and athletic conferences—which Abruzzo observes are “independent, private entit[ies], created by the member schools”—and ultimately find joint employer status with both private and public member institutions. GC Memo 21-08 concludes by putting the NCAA and all conferences and member institutions on notice that the GC “will consider pursuing charges against an athletic conference or association even if some member schools are state institutions.” It remains to be seen whether or how any state agencies with jurisdiction over public universities will respond to these developments.

While Abruzzo does not address collective bargaining specifically, GC Memo 21-08 effectively opens the door for college athletes to organize via NLRB procedures. In addition to declaring that players at academic institutions are employees, Abruzzo explicitly states players at academic institutions should be protected by Section 7 when they act concertedly to address aspects of their terms and conditions of employment or to self-organize. It is also important to note that the majority-Democratic Board now includes David Prouty, former general counsel for the Major League Baseball Players Association, suggesting that the Board will be receptive to Abruzzo’s position on issues related to players at academic institutions.

Broader Implications for All Employers

Although, facially, GC Memo 21-08 applies only to the NCAA and its conferences and member institutions and types of athletes that would resemble the football players in Northwestern University, Abruzzo signaled several policy changes that will impact employers across all industries:

  • Misclassification is an independent violation: Abruzzo reiterated her position that, contrary to the majority’s holding in Velox Express, misclassifying employees is an independent violation of the NLRA and any cases involving such violations should be submitted to the Division of Advice. (See General Counsel Memorandum 21-04 (2021) and a more detailed discussion of the memorandum in Morgan Lewis’s LawFlash.) Adopting Chairperson Lauren McFerran’s theory asserted in her dissenting opinion in Velox Express, Abruzzo argues that the act of misclassifying employees, alone, is inherently coercive and “has a chilling effect on Section 7 activity.”
  • Expansion of Section 7’s scope: GC Memo 21-08 suggests that the General Counsel’s Office has adopted an expansive view of PCA, covering general political stances that do not pertain to employment at a particular workplace or an employee’s terms and conditions of employment. Specifically, Abruzzo asserts “activism concerning such racial justice issues, including openly supporting the Black Lives Matter movement, directly concerns terms and conditions of employment, and is protected concerted activity.” Further, Abruzzo concludes that conversations about workplace discrimination are “inherently concerted,” although this latter conclusion is unsurprising and comports with existing law.
  • The use of joint employer principles to extend NLRB jurisdiction: By stating that the General Counsel’s Office will rely on a joint employer theory of liability to assert de facto or effective jurisdiction over public institutions—which Abruzzo concedes are beyond the reach of the NLRA—GC Memo 21-08 serves as a warning that, where feasible, joint employer status may be used to impose liability on otherwise non-NLRA covered employers, as long as an NLRA-covered entity is involved in controlling or setting some terms or conditions of employment.

Recommendations for Universities and Employers

For all universities and colleges with sports teams, we strongly recommend contacting labor counsel to determine the impact of GC 21-08, and a mindful and responsive strategy given this development.

For other employers who use “independent contractor” or other nomenclature to refer to individuals who perform work, we recommend that the communications about that nomenclature be reviewed, and, if necessary, revised.

Contacts

If you have questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Chicago
Deborah Davidson
Ami Wynne

Dallas
Robert Sheeder

Los Angeles
Nicole Buffalano
Douglas Hart
Harry Johnson

Philadelphia
Joseph Ragaglia

San Francisco
Baird Fogel

Washington, DC
Daniel Bordoni
Jonathan Fritts
Philip Miscimarra