Athletes at private colleges and universities (together, Academic Institutions) receiving athletic scholarships meet the definition of employee under the National Labor Relations Act (NLRA or the Act), according to GC 21-08, a memorandum issued by General Counsel Jennifer Abruzzo of the National Labor Relations Board (NLRB or the Board) on September 29, 2021 (the Memorandum). This recent announcement comes on the heels of increased legal pressure challenging the traditional notions of amateur status in collegiate sports. While the Board has yet to assert jurisdiction over these athletes,1 Academic Institutions should be prepared for the forthcoming litigation and tread carefully.

How Did We Get Here?

The general counsel's position in the Memorandum does not come out of left field. Past attempts to treat athletes at Academic Institutions as employees under Section 2(3) of the Act foreshadowed the need for the Board to ultimately take a position on this ever-present issue. For example, in 2015, the Board declined to extend jurisdiction over Northwestern University football players receiving scholarships when the issue was brought to the Board through a representation petition. In 2017, a general counsel memorandum, GC 17-01, discussed the statutory rights of university faculty and/or students under the Act, including Division I scholarship football players at private universities and colleges, concluding they are employees under the NLRA.2 Furthermore, as the Memorandum highlights, more recent legal developments bolster the position taken by the general counsel in the Memorandum. The most notable recent challenge to the notion of amateur status in collegiate sports is the unanimous Supreme Court decision in NCAA v. Alston, holding that the NCAA rules limiting indirect, education-related compensation for college athletes, like academic tutoring or paid post-eligibility internships, violated anti-trust law. NCAA v. Alston, No. 20-512 (2021). Notably, the Court in Alston stopped short of permitting direct payments to college athletes for playing on a team. However, in a concurring opinion, Justice Kavanaugh went so far as to suggest Academic Institutions and students should resolve the question of compensation through collective bargaining. Finally, in recent years, athletes at Academic Institutions have resorted to activism on their own behalf and demonstrated an inclination to collectively improving their conditions by negotiating for themselves to obtain lucrative business deals when the name, image, and likeness rules were suspended by the NCAA and demanding other fair treatment from their Academic Institutions and the NCAA.

So, Does That Make Them Employees?

The NLRA defines "employee" broadly under Section 2(3) of the Act, with a few enumerated exceptions. The general counsel finds support for her position in the Memorandum that college athletes are employees from previous Board decisions, such as Boston Medical Center Corp., 330 NLRB No. 30 (1999), and Columbia University, 364 NLRB No. 90 (2016). In both cases, the Board supported an expansive interpretation of the term "employee" under the Act to include university employees, collegiate athletes, and students. Setting aside the Board precedent, the general counsel opines in the Memorandum that common law agency rules governing employer-employee relationships, such as performance of services, right of control, and consideration through compensation, also necessitate this finding. Specifically, these athletes perform services for Academic Institutions by playing their respective sports and generating millions of dollars for both the Academic Institution and the NCAA. Athletes are also subject to Academic Institutions' and the NCAA's control by those entities' enforcement of specific educational requirements in order to maintain the athletes' status on the team, and by overseeing the athletes' "work on the field and various facets of [their] daily lives…" Athletes are also paid through the Academic Institutions indirectly, as described above, including through payment of their tuition, books, room, board, and stipends for additional expenses, which is a "strong[] indicat[ion] of employee status."

What Are the Current Implications for Academic Institutions?

As an administrative agency with a quasi-judicial body, only the Board can ultimately decide which individuals or groups are protected under the Act as employees. General counsel memoranda are treated as instructions to the Board's regions on how to enforce the Act, by informing them of the Board's overall position in future investigations and litigation. In other words, the Board has not yet ruled on this issue, but the Memorandum is a harbinger of what is to come when Board regions start to submit relevant cases on this issue for decision. Assuming the Board makes determinations that are consistent with the general counsel's views in the Memorandum, athletes at Academic Institutions, as employees, would be afforded rights under Section 7 of the Act, meaning they could engage in protected concerted activity to speak out about, or address, their terms and conditions of employment. This status would also give the athletes the right to self-organize, regardless of whether they are in a certified bargaining unit.

Because the Memorandum is not the final say, it is unlikely that every Academic Institution with varsity athletic teams will have to engage in collective bargaining negotiations in the near future, and it may even take months or years for the right case to work its way through the system. Nevertheless, Academic Institutions should be cognizant of what may come. The general counsel is prepared to vigorously enforce her position by charging Academic Institutions with violations under the Act should they fail to respect their athletes' Section 7 rights. Academic Institutions should be prepared to handle potential elections triggered by these new collective bargaining rights, and should preemptively determine their positions on what are likely to be the main points of contention brought up by athletes who wish to address their terms and conditions of employment: direct compensation; subsidization of tuition, room and board, and other academic costs; scheduling and hours "worked" by the athletes; and, as a reflection of the current times, health and safety issues. As in other industries, industry standards and the positions of other Academic Institutions will have significant effects on what is reasonable in this regard. Early preparation will help the Academic Institutions' representatives enter the conversations with athletes informed.

Academic Institutions should also anticipate increased litigation on the issue. For example, the Regions will start to charge private Academic Institutions with violations of Section 8(a)(1) of the Act3 when they use the term "student athletes," because this alleged misclassification "lead[s] them to believe that they do not have statutory protections." In fact, the general counsel is eager for a challenge. In the Memorandum, the general counsel is asking for a test case to bring to the Board by having the Regions submit each applicable case. Academic Institutions can avoid being the test case by reviewing internal decisions before a claim of retaliation for protected concerted activity can arise. For example, do not penalize players for complaining about the distribution of playing time to their coach without considering the potential ramifications. And, since litigation over this issue is inevitable, Academic Institutions should start to prepare their defense regarding why their athletes should not be considered employees under the general counsel's theory and, more importantly, the Act.

This Memorandum is the latest threat to an already unstable system of collegiate athletics. Academic Institutions should familiarize themselves with federal and state labor laws and stay abreast of forthcoming legislation at the federal and state levels. Academic Institutions with questions about this Memorandum should feel free to contact the authors of this article or any other member of Venable's Labor and Employment Group.