Private Sector Student Athletes Allowed To Organize: Can It Happen In The Illinois Public Sector?

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Private Sector Student Athletes Allowed To Organize: Can It Happen In The Illinois Public Sector?

March 2014

A Regional Director for the National Labor Relations Board (“NLRB”) recently issued a decision that approved a collective unit of Northwestern University student football players. See Northwestern Univ., Case 13-RC-121359 (Mar. 26, 2014). Although the decision is non-precedential and applies only to one private sector educational institution, questions have arisen whether the same legal theories could be applied to student athletes who attend Illinois public universities. That outcome is not as farfetched as one might think.

In Northwestern Univ., the College Athletes Players Association filed a petition with the NLRB, seeking to represent a group of approximately 85 Northwestern football players who receive scholarships. This “grant-in-aid” totals approximately $61,000 per student athlete per year. The money, however, does not pass through the student’s hands. Instead, the money is directly applied to the student’s tuition, fees and books. Sometimes, certain upperclassmen scholarship-recipients who elect to live off campus receive a monthly stipend of $1,200 to $1,600 to cover their living expenses. Under NCAA regulations, a university is prohibited from offering a student-athlete any other form of compensation beyond this “grant-in-aid.” Students are told that these scholarships are available only as long as they play football for the University, and will not be forfeited due to injury or reduction on the player depth chart. Approximately 27 student-players (so-called “walk ons”) do not receive scholarships.

Based on these and other facts, the NLRB’s Regional Director concluded that the football player scholarship recipients are indeed “employees” within the meaning of the National Labor Relations Act. In doing so, the Regional Director found that there was a “bargained-for” exchange of money for football services. In exchange for the scholarship money paid on behalf of students, the University receives the following benefits:

the Employer’s players perform valuable services for their Employer. Monetarily, the Employer’s football program generated revenues of approximately $235 million during the nine year period 2003-2012 through its participation in the NCAA Division I and Big Ten Conference that were generated through ticket sales, television contracts, merchandise sales and licensing agreements. The Employer was able to utilize this economic benefit provided by the services of its football team in any manner it chose. Less quantifiable but also of great benefit to the Employer is the immeasurable positive impact to Northwestern’s reputation a winning football team may have on alumni giving and increase in number of applicants for enrollment at the University.

. . .it is clear that the scholarships the players receive is compensation for the athletic services they perform for the Employer throughout the calendar year, but especially during the regular season and postseason. That the scholarships are a transfer of economic value is evident from the fact that the Employer pays for the players’ tuition, fees, room, board, and books for up to five years. . . .

Equally important, the type of compensation that is provided to the players is set forth in a “tender” that they are required to sign before the beginning of each period of the scholarship. This “tender” serves as an employment contract and also gives the players detailed information concerning the duration and conditions under which the compensation will be provided to them. . . .

Decision at p.14.

The NLRB rejected several legal arguments raised by Northwestern University in opposition to the proposed bargaining unit. Among other things, the NLRB discounted the claim that the student football players were “temporary employees.” The Regional Director noted that the NLRB will not find an employee to be “temporary” simply because his or her employment will terminate on a date certain. Based on this principle, the Regional Director concluded that the football players tenure on the football team for four years (or possibly five if they are “redshirt” players) is sufficient to defeat the notion that they are “temporary.”

The Regional Director also rejected the argument that a bargaining unit limited to scholarship-recipients is “inappropriate” within the meaning of the National Labor Relations Act. In doing so, the Regional Director disagreed that there was an “overwhelming” community of interest between the scholarship recipients and the approximately 27 “walk ons.” The mere fact that scholarship-recipients receive up to a “quarter of a million dollars in scholarship if they stop playing football for the Employer” is enough of a difference to justify separating the scholarship-recipients from the “walk-ons.”

Not surprisingly, Northwestern University has an opportunity to appeal the Regional Director’s decision to the full NLRB in Washington, D.C. Such an appeal may take months (or even years) to resolve. If Northwestern eventually loses, it can seek review of the NLRB’s bargaining unit decision by refusing to bargain with the Union, thereby drawing an unfair labor practice charge that can be reviewed by the federal appeals court.

The Regional Director’s decision does not have an immediate impact on Illinois public universities and colleges, which are subject to the jurisdiction of the Illinois Educational Labor Relations Board and the Illinois Educational Labor Relations Act. On the other hand, the legal theories used by the Regional Director could very well be applied one day to Illinois public student-athletes who receive scholarships and other alleged monetary compensation from their college or university. While Section 2(b) of the IELRA excludes “students” from the definition of an “educational employee,” Illinois courts have previously limited the term to exclude those university students who also perform “side jobs” for a university, such as teaching and research. For example, the First District Appellate Court in Graduate Employees Organization v. Ill. Educ. Labor Relations Bd., 315 Ill. App. 3d 278 (1st Dist. 2000) adopted the so-called “significant connection” test as a way to determine whether a student’s “job” is sufficiently connected to his or her studies so as to render the student really an “educational employee” with bargaining rights. The Illinois General Assembly subsequently amended the IELRA to allow teaching assistants to organize, who “primarily perform[ ] duties that involve the delivery and support of instruction.” 115 ILCS 5/2(b).

Based on the willingness shown by Illinois courts and the General Assembly to narrowly construe the term “student,” the editors can envision a factual scenario involving public student-athletes who claim that their “scholarships” are really an “economic exchange,” whereby the students receive monetary compensation in exchange for playing a particular sport for a public university or college.

While these legal theories ultimately will have to be litigated before the full NLRB and federal courts, the editors question the practical difficulties of forming a bargaining unit that includes only a select portion of a particular sporting team. As explained above, the proposed Northwestern University bargaining unit excludes non-scholarship “walk-ons.” The Regional Director’s decision therefore creates a rather odd unit configuration, where bargaining unit football players play alongside non-bargaining unit personnel. Which raises a host of thorny bargaining questions:
  • When a first-string bargaining unit player is benched in favor of a second-string non-bargaining unit “walk-on,” does the employer have to bargain over the use of the non-bargaining unit player? In other words, is this an “outsourcing” or “subcontracting” situation, the decision or effects of which must first be bargained before the decision is implemented?
  • When a bargaining unit player is suspended for several games due to an alleged violation of team rules, will the bargaining unit player have an opportunity to appeal his or her suspension under a “just cause” standard via a grievance-arbitration procedure? During investigatory interviews leading up to such a suspension, would players then have Weingarten rights to union representation? Would non-bargaining unit “walk-ons” have the same opportunities and rights?
  • During negotiations for a first contract, can the bargaining unit players strike the employer by refusing to play in a particular game, including a bowl game? If so, can the employer hire replacement student-players to substitute for the striking players?
  • At some point during a season, can the employer unilaterally decide to reduce the overall number of bargaining-unit scholarship players due to a perceived “surplus?” Or, would this effectively be a “layoff,” the decision or effects of which must first be bargained? Or, can the Union bargain for a layoff clause that requires the “layoff” of non-bargaining unit “walk-ons” prior to scholarship-recipients?
Assuming bargaining unit players would have greater rights under the NLRA than non-bargaining unit “walk-ons,” the editors question how the morale inside the locker room will be affected. Needless to say, unions often resist such “two-tiered” employee benefit systems in order to avoid morale problems. Yet, the Union in Northwestern University appears to have embraced such a system in order to gain a foot-hold in college athletics.

In the wake of the Regional Director’s decision, Illinois public universities and colleges that offer scholarships to student athletes may wish to consult legal counsel about their potential exposure to union organizing drives among student athletes.
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