NLRB Judge Finds That College Football Players Are Employees Of Their University

By:  Dan Handman
Hirschfeld Kraemer LLP
Santa Monica, CA

The California Workplace Advisor – Hirschfeld Kraemer LLP
Yesterday, an administrative judge at the National Labor Relations Board (NLRB) found that student athletes on Northwestern University’s football team who receive a scholarship are employees of the university and therefore eligible to form a union. The decision, while not the decision of the full NLRB, is a major departure from NLRB precedent and one very fraught with consequences for universities and other employers in educational fields. The central issue was whether student athletes met the definition of employees. Because the National Labor Relations Act does not define the term “employee” (it actually defines “employees” as a term which “includes employees”), the NLRB focused on two common law factors: (1) whether the football players are paid by the university in exchange for providing services; and (2) whether they are subject to the “control” of the university.   To a certain degree, college football players are controlled by the university – they have set schedules, they are required to attend meetings and practices, and they are subject to a code of conduct – so, ultimately, the decision turned on whether the football players are paid by the university and if so, whether they provide services. On those two issues, the judge found that the football players provide “valuable services” for the university because the football team generates significant revenues for the university from ticket sales, television contracts, and merchandise sales. It also relied on the fact that the football team attracts alumni donations and college applicants – something which the judge found to be an “immeasurable positive impact.”

The larger issue was whether the student athletes are compensated for their “services.” On this, the judge found that the scholarship provided by the university was compensation for services. In particular, student athletes at Northwestern are provided grant in aid totaling $61,000 per year for tuition, room and board, and books, but they do not actually receive any compensation – it is provided directly to the university. They do not pay taxes on this “compensation,” nor are withholdings taken from those amounts. Nevertheless, the NLRB focused on the fact that the student athletes sign a “tender” which allows a scholarship to be canceled if a student athlete voluntarily leaves the football team or violates the university’s code of conduct.   The judge found that this tender was an employment contract and that the scholarships received are compensation.

This decision is not final. It will almost certainly be appealed to the full NLRB (which is composed of 5 members, 3 of whom have experience representing unions) and thereafter will be reviewed by either the Seventh Circuit Court of Appeals or the D.C. Circuit. Although most experts expected this decision and expect the NLRB to uphold it, few think it will survive scrutiny by a court.

Nevertheless, the decision puts universities in a very difficult spot. While this judge’s decision has no precedential effect outside of Northwestern University and in many respects it contradicts the NLRB’s 2004 decision which found that graduate teaching assistants at Brown University were not employees. This judge distinguished the Brown University decision, finding that unlike the teaching assistants, student athletes on a scholarship are not “primarily students.” But, how is a university supposed to make decision about whether a student who receives some benefit is “primarily” a student or not? The judge here provided no guidance.

And it goes without saying that this decision is yet another in a trend of very union-friendly decisions by the Obama NLRB. Most employment lawyers expect that the Brown University decision will be the next domino to fall and, in fact, when the NLRB hears the appeal of this decision it would not be surprising if the NLRB overruled or at least undermined the Brown University decision.

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Upcoming Webinar: “The NLRB Comes to Campus: An Update on Union Activity at U.S. Institutions of Higher Education”

The Employment Law Alliance invites you to attend our free March 19 webinar, “The NLRB Comes to Campus: An Update on Union Activity at U.S. Institutions of Higher Education.”

Description

The NLRB is posed to revisit many issues affecting U.S. colleges and universities in ways that will have lasting impact on union activity on campus. Thus, all institutions of higher education should be aware of recent and pending developments in order to stay abreast of these issues.  Join us as a panel of experts from across the U.S. discusses recent union organizing efforts as well as the NLRB’s recent activities on campus. They will provide a national perspective and timely updates in the following key areas:

  • The National Labor Relations Board (“NLRB”) is revisiting Yeshiva. Learn how this landmark Supreme Court decision, which classifies faculty as members of management, is being reviewed.  This and other recent NLRB activities will be discussed.
  • Student-athletes? Graduate students? The evolving definition of employees covered by the National Labor Relations Act (“NLRA”).
  • Religious or state institution?  Employer “once removed”?  Learn about the increasing uncertainty of exemption from the NLRA and the NLRB’s use of joint employer status to assert coverage.
  • Contingent faculty? An update on adjunct organizing efforts around the country.

Start Time (be sure to confirm your corresponding local time):

  • 3:00 – 4:30 p.m. US EDT
  • 2:00 – 3:30 p.m. US CDT
  • 1:00 – 2:30 p.m. US MDT
  • 12:00 – 1:30 p.m US PDT
  • 9:00 – 10:30 a.m. HAST

Speakers:

  • Anna Elento-Sneed, Alston Hunt Floyd & Ing, Honolulu, HI, Moderator,
  • Natasha Baker, Hirschfeld Kraemer, San Francisco, CA
  • Peter Jones, Bond Schoeneck & King, Syracuse, NY
  • Mark Mathison , Gray Plant Mooty, Minneapolis, MN
  • Joshua Salsburey, Sturgill, Turner, Barker & Moloney, Lexington, KY

To register, please click here.

  • If unsure when prompted for “Name of ELA law firm that invited you,” enter “Higher Education Council Report.”
  • If unsure when prompted for “Name of ELA lawyer at that firm you work with,” enter “All.”

Higher Education and Cloud Computing

By:  Ryan J. Aaron
Jackson Kelly
Charleston, WV

In recent years, higher education has become increasingly invested in cloud computing.   While cloud computing may offer significant cost savings, it also facilitates data sharing and accessibility and meets the on-demand data expectations of today’s faculty and students.  There is a tradeoff, however, for higher education institutions that are tasked with complying with numerous federal and state laws that impact the use and retention of electronically stored information per such regulations as FERPA, HIPAA, FOIA, and PCI, as well as export control laws and electronic discovery obligations.  In an era where news of cybersecurity lapses and data breaches has become commonplace, these legal requirements make reliance on third-party cloud computing service providers worthy of concern.  Those in higher education should consider revisiting their cloud computing contracts to ensure they have adequate safeguards in place in the event vendor data systems are breached.

Professionals in higher education may be well-informed of the legal requirements with which their institutions must comply, but are their vendors?  What happens when vendor data systems containing sensitive information are breached? These questions and related issues should be addressed in vendor contracts.  For instance, the following questions may warrant further consideration when revisiting those contracts:

  • Data ownership
    • Who owns the data?
    • What restrictions are placed on the vendor’s use of the stored data?
  • Security and privacy
    • What standard is the vendor bound to comply with in maintaining the security of institutional data?
    • Does that standard differ for proprietary, personal, or regulated data?
    • Is the data encrypted and, if so, during storage, transmission, or both?
    • What safeguards does the vendor utilize to restrict access to data?
    • Is the vendor obligated to perform routine audits of its standards and security measures?
    • What notification is the vendor required to provide if a data breach occurs, and to whom and by when is such notification required?
    • Does the vendor account for state privacy laws applicable to student personal information (e.g., Massachusetts 201 CMR 17.00 et seq.)?
  • Location of data storage
    • Where is the vendor organized as a commercial entity and where will the data be stored?
    • What representations does the vendor make concerning compliance with applicable foreign law, available support and bandwidth, downtime, and timeliness of operations as they relate to the maintenance and accessibility of data stored in foreign jurisdictions?
    • Is research data stored with the vendor and, if so, out of concern for expert control implications and potential contractual obligations, does the vendor contract prohibit the storage of such data outside of the U.S.?
    • Is the stored data accessible by faculty, staff, or students located outside of the U.S. and what restrictions are placed on such access when sought from a foreign jurisdiction?
  • Litigation
    • Is the vendor required to provide the necessary support, tools, and information to enable and facilitate the institution’s accessibility and examination of stored data for e-discovery purposes?
    • Does the vendor agree to, and have the capabilities to, implement a litigation hold issued by the institution concerning stored data?
    • Can the vendor undertake completing a forensically sound copy of stored data without disrupting cloud operational or production services?
    • Is the vendor obligated to indemnify the institution for third-party intellectual property infringement allegations (concerning the vendor’s technologies or practices) and data breaches or inadvertent data disclosures?

Certain measures, including those considered above, as well as a customized privacy and cyber insurance policy, can help to protect against institutional exposure that may result from a data breach.  If, after taking another look at your vendor contract, you find that provisions critical to your institution’s protection are missing, then you might review the contract’s amendment and/or termination provisions to permit you to pursue the necessary safeguards.