On March 26, 2014, an administrative judge at the National Labor Relations Board (“NLRB“) rendered its decision in the Northwestern University v College Athletes Players Association (CAPA) case. The NLRB ruled in favor of the Petitioners finding that players receiving scholarships from the University (the employer) are employees under section 2(3) of the National Labor Relations Act (“NLRA“) and thus they are eligible to form a union.
In the facts of this case, the Petitioners were football players who received grant-in-aid scholarships from Northwestern University. The Petitioners contended that they were employees under the NLRA. Northwestern University is a private, non-profit, non-sectarian, coeducational teaching university settled in Illinois. The University is part of an intercollegiate athletic program and a member of the National Collegiate Athletic Association (“NCAA”), which is responsible for formulating and enforcing rules governing intercollegiate sports for participating colleges. The Employer’s football team is comprised of about 112 players of which there are 85 players who received a scholarships totaling $61,000 each academic year, that pays for their tuition, fees, room, board, and books. During the first two years of college, the players were required to live in dorms and were given meal cards. After the first two years, the players could elect to live off campus and would receive a monthly stipend between $1,200 and $1,600 to cover their living expenses. The NCAA rules prohibit employers from proving the players with additional funds. However, the employer may give its players additional funds through the “student assistance fund”, which was set up to cover expenses such as “health insurance, dress clothes required to be worn by the team while traveling to games, the cost of traveling home for a family member’s funeral, and fees for graduate school admittance tests and tutoring.” The players did not have federal taxes (such as the federal insurance contribution tax) withheld from the stipend they received and did not receive a W-2 tax form from their employer. The University offered four-year scholarships to its players. Both parties were required to sign a contract called the “tender” laying out the conditions of the offer and the circumstances that could lead to the cancellation of the scholarship (such as: violation of the University’s code of conduct or a player voluntarily leaving the team).
In deciding whether players could be considered employees under the NLRA, the administrative judge looked at the common law definition which defines an employee as “a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment.” The board concluded that the “scholarship is clearly tied to the player’s performance of athletic services as evidenced by the fact that scholarships can be immediately canceled if the player voluntarily withdraws from the team or abuses team rules” and that the tender “serves as an employment contract.” The board found evidence that the coaches controlled almost every aspect of the players’ lives. Coaches impose on players a very strict schedule regarding trainings an their football duties. They also control the players’ private lives “by virtue of the fact that there are many rules that they must follow under threat of discipline and/or the loss of a scholarship. Therefore the NLRB concluded that grant-in-aid scholarship football players: i) perform services for the benefit of the employer for which they receive compensation; and ii) are subject to the employer’s control in the performance of their duties as football players. This NLRB decision may be appealed.