By Turner Smith.
The National Labor Relations Board (“NLRB”) has again directly challenged the NCAA’s notions of amateurism. It leveled the latest attack on September 29, 2021. Jennifer A. Abruzzo, the NLRB’s General Counsel, issued a memorandum which emphatically declared that “scholarship football players at private colleges and universities, or other similarly situated Players at Academic Institutions, are employees under the [National Labor Relations] Act.” Abruzzo then took aim at the term “student-athletes,” arguing that the term is a misclassification that “lead[s] [athletes] to believe that they do not have statutory protections [in] violation of . . . the Act.”
The NCAA wasted no time in issuing a pointed response to the memo. Though brief, the September 30, 2021 statement asserted that “college athletes are students who compete against other students, not employees who compete against other employees.” In light of the NCAA’s opposition to this latest erosion of its power, we are left once again wondering where student-athletes stand.
The NLRB’s Inconsistent History with the “Student-Athlete” Employment Question
Abruzzo’s memo was not the first one from the NLRB to recognize student-athletes as employees. In fact, Abruzzo’s memo specifically reinstated a January 31, 2017 memo issued by former General Counsel Richard Griffin. Griffin similarly argued that “football players at NCAA Division I Football Bowl Subdivision (“FBS”) private colleges and universities are employees under the NLRA.”
Griffin’s memo was short-lived. His successor as General Counsel, Peter Robb, rescinded it in a December 1, 2017 memo of his own. The issue was not reraised by the NLRB until Abruzzo’s statement.
NCAA v. Alston and the Changing Legal Landscape of College Athletics
In the nearly four years between Griffin and Abruzzo’s memos, the legal landscape of college athletics shifted dramatically. Most notably, in NCAA v. Alston, in an unanimous decision, the Supreme Court held that antitrust laws prohibited the NCAA from “disallowing members from providing athletes with unlimited, in-kind educational benefits.”
The writing on the wall became even clearer with Justice Brett Kavanaugh’s blistering concurrence. He argued that the Court’s decision “mark[ed] an important and overdue course correction.” Justice Kavanaugh went still further, stating that his concurrence was meant to “underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.” In a full-throated rebuke of the appeal of amateurism as a defense to antitrust claims, he asserted that “[t]he NCAA’s business model would be flatly illegal in almost any other industry in America. All of the restaurants in a region cannot come together to cut cooks’ wages on the theory that ‘customers prefer’ to eat food from low-paid cooks . . . . Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate.”
Though Alston did not address name, image, and likeness (“NIL”) issues, the decision had an enormous chilling effect on any further resistance by the NCAA. In the face of state laws authorizing student-athletes to profit off of their NIL (including Arizona Senate Bill 1296), the NCAA adopted an interim NIL policy on June 30, 2021. They agreed to allow “college athletes to benefit from name, image, and likeness opportunities, no matter where their school is located.” Thus, in the span of just nine days the NCAA lost two enormously significant battles; the war, however, is still being actively waged. Into that scene stepped Abruzzo and the NLRB.
Understanding the NLRB Memo
The ultimate question over which the war continues to wage, of course, is whether to pay student-athletes. That debate hinges, in large part, over whether student-athletes are employees under the National Labor Relations Act (“NLRA” or the “Act”). The NLRA provides an array of benefits to employees, typically referred to as Section 7 benefits (for the section of the Act in which they are found). Namely, employees gain the right to organize and join a union, to participate in concerted activities, and to collectively bargain.
The NLRB “is an independent federal agency created to enforce the National Labor Relations Act” and the protections for employees therein. As General Counsel, Abruzzo is tasked with the “investigation and prosecution of unfair labor practice cases and [with]the general supervision of the NLRB field offices in the processing of cases.” Like a District Attorney, Abruzzo has the authority to set the prosecutorial agenda for those under her supervision. Her recent memo was an exercise of that authority, in which she notified the NLRB and its field offices, as well as the public at large, that she intends to prosecute misclassifications of student-athletes as non-employees. In pertinent part, Abruzzo clarified: “It is my position that [] scholarship football players . . . and similarly situated Players at Academic Institutions are employees under the Act. I fully expect that this memo will notify the public, especially Players at Academic Institutions, colleges and universities, athletic conferences, and the NCAA, that I will be taking that legal position in future investigations and litigation under the Act. In addition, it notifies them that I will also consider pursuing a misclassification violation.”
Abruzzo reached her conclusion by first noting that Section 2(3) of the NLRA, which defines “employee,” defines the term in extremely broad fashion. It enumerates a few exceptions, none of which apply to scholarship football players in the NCAA. She then pointed out that an application “of common-law agency rules governing the employer-employee relationship” clearly required the conclusion that such athletes are properly classified as employees. Under the common law, “an employee includes a person who performs services for another and is subject to the other’s control or right of control,” with “consideration, i.e., payment, [being] strongly indicative of employee status.” Student-athletes, according to Abruzzo, perform services for their universities in return for compensation (in the form of scholarship and stipends) and are subject to the universitys’, and indeed the NCAA’s, control.
The memo is a significant victory for college athletes seeking employment classification. However, it is important to understand what the memo does not do. First, the memo is not legally binding in any significant fashion. Until an unfair labor complaint is filed with the NLRB, or a team, conference, or grouping of players attempts to unionize, things will remain much the same. In fact, former NLRB chair Wilma Liebman estimated that it could be months or years before the right case arises and the NLRB is able to give legal effect to the spirit of the memo.
There is another notable limitation to the reach of Abruzzo’s memo: it likely applies only to scholarship football players and other “similarly situated Players” at private universities, leaving players at Arizona State University and the University of Arizona unprotected. The NLRA applies only to “certain private sector labor and management practices.” However, tucked away in the last footnote of the memo, Abruzzo seemingly left open the door for potential enforcement against public universities. She announced that she would “consider pursuing a joint employer theory of liability . . . over the NCAA and an athletic conference” and that it may be appropriate “to find joint employer status with certain member institutions, even if some of the member schools are state institutions.”
Where the NLRB Memo Leaves Us
Until a dispute arises, Abruzzo’s memo, in practice, changes little. It places the NCAA and its member institutions on notice that an aggressive stance will be taken against them. Yet it is evident that policies such as that set forth by Abruzzo are subject to easy change. Universities, conferences, and the NCAA are thus left, for the time being, in a state of limbo. The Pac-12 generally, and ASU specifically, have yet to issue a statement on the NLRB memo and seem to be awaiting further clarity. The question desperately calls for new legislation and instruction by Congress.
In the meantime, the NCAA should begin planning for the future in earnest— a future that will likely hold a drastically different dynamic in college athletics, and a significantly less powerful NCAA.
