NLRB takes steps toward ushering in student-athlete employment model

The National Labor Relations Board Los Angeles Region’s complaint against USC, the Pac-12 and the NCAA marks the latest step in a slow-moving march toward athletes being designated as employees of their schools, conferences or the NCAA.

While the complaint was anticipated, it is no less consequential. And the stakes couldn’t be higher for college athletics, whose entire enterprise appears to be inching toward a revolutionary makeover.

“It’s another step in the inevitable conclusion that certain college athletes are employees,” Mit Winter, a college sports attorney at Kennyhertz Perry in Kansas City, told On3 on Thursday. “Whether it’s the Johnson (v. NCAA) case, this NLRB proceeding, or another case, college athletes are going to eventually be deemed employees.”

Mori Rubin, the NLRB Region 31-Los Angeles Regional Director, issued the 11-page complaint Thursday against the three respondents as joint employers of Trojans football and men’s and women’s basketball players. The complaint reflects NLRB General Counsel Jennifer Abruzzo‘s decision to litigate the case. 

“The conduct of USC, the Pac-12 Conference, and the NCAA, as joint employers, deprives their players of their statutory right to organize and to join together to improve their working and playing conditions if they wish to do so,” Abruzzo said Thursday in a statement.

USC, the Pac-12 and NCAA have until June 1 to respond. There will be a hearing with an NLRB Administrative Law Judge on Nov. 7 in Los Angeles. 

As Winter noted, this complaint is especially significant because it’s alleging a joint employer theory, which means that a decision in the NLRB’s favor would be applicable to college athletes at both private and public schools.

‘Change is coming’

The complaint coincides with an increasing number of industry leaders and veteran employment and sports lawyers saying that an employment model is a virtual inevitability.

Tom McMillen, the former U.S. Congressman and current CEO of LEAD1 Association, recently told On3 that college athletics is on an “inexorable road” toward athletes being designated as employees. During the recent LEAD1 spring meetings, Sarah Wake, who advises universities on athletic compliance issues in her role as an attorney at McGuireWoods, said: “I think there is no stopping the [employment] train.” And Jon Israel, partner and co-chair of the sports and entertainment group at Foley & Lardner, LLP, added, “I don’t know if there’s a path to stopping it other than some legislation.”

The NCAA, meantime, is pursuing that legislative lifeline, appealing to Congress for a federal NIL bill, at least some antitrust protection and to help prevent student-athletes from being designated as employees of their schools, their conferences or the NCAA. The association’s public messaging on the issue has at times assumed a paternalistic tone, sources said, with NCAA President Charlie Baker recently saying, “I don’t think you’ll find very many student-athletes who want to be employees … I think student-athletes want to be student-athletes. And it’s up to us to figure out how to make that work for them in a variety of environments and in circumstances that are different.”

But this complaint, specifically, highlights the “need for the NCAA and other college sports leaders to start working on a new model for college sports,” Winter said. “Change is coming. And instead of trying to avoid that change via a federal law that maintains the status quo, resources should be put into building a model that provides certainty for all parties involved: schools, conferences, governing bodies and, most importantly, the athletes.”

Impact would be ‘negative’ for majority of D-I athletes

A new college sports model may be on the horizon. Full employee status ultimately could lead athletes to unionize, collectively bargain for university-provided benefits and perhaps receive a share of the revenue generated by athletic departments. That scenario, sources said, could create a seminal test of the power of Title IX, the federal law that bars discrimination on the basis of sex for any educational program or activity receiving federal financial assistance.

In the meantime, numerous battles are being waged on several related fronts. Among the most consequential: The plaintiffs in Johnson v. NCAA, former Villanova football player Trey Johnson and other Division I athletes, are asking that athletes be deemed employees subject to the Fair Labor Standards Act. And the antitrust lawsuit House v. NCAA seeks financial rewards for athletes denied NIL pay dating to 2016 as well as revenue-sharing from television deals.

“Somewhere along the line – the NLRB, the California court in the House case, the Johnson case – somewhere on the line, you’re going to see this happen,” McMillen said.

As for potential ramifications of an employment model, McMillen said, “You can see a lot of sports going down to a club level. It would be a diminishment of opportunity. I can’t say the present model, where your softball team is flying to California to play games, that model probably wouldn’t be sustainable under those kinds of circumstances. It would have to go club, very local. In that respect, that would be a diminishment of opportunities for certain kids.”

Julie Roe Lach, the Horizon League commissioner, told On3 last year that the model would be a net negative for athletes.

“People assume that if we moved to that model, whatever is bargained for would be in addition to what student-athletes currently receive from a scholarship standpoint,” she said. “As I’ve talked with many, that’s not the case.  … The impact would be, I believe, really negative on the majority of Division I student-athletes because they probably would have less than they have now.”

‘Fear-mongering about Title IX’

There are contrasting views.

Wake, who is also an attorney, does not believe that an employee model would doom Olympic sports, forcing them to be eliminated or reduced to the club level. Additionally, she noted that designating someone an employee does not mean that they all need to be treated the same.

It warrants creative thinking, she added, such as perhaps rethinking how scholarships are handed out. Instead of awarding scholarships, would schools give athletes money that equates to the amount of a scholarship?

“I don’t like the doomsday of ‘This is going to make all of our Olympic sports go away, [or] all the women’s sports are going to go away,'” Wake said. “That’s when I hear a lot of fear-mongering about Title IX and it sends me into a stratosphere of rage.”

When asked specifically about Title IX concerns if athletes are deemed employees, Wake said, “I’m 100% positive – like, I’d bet my shoe collection on it, right – Title IX applies to employees. Period. Full stop. End of story … You just can’t eradicate women’s sports and have that like not be a problem.”

But there are other concerns related to Title IX.

“Do we have to pay the men the same as the women? If you’re a school that receives federal financial assistance …,” Wake said, “then, yeah, you’re going to have to be a little bit careful to treat the men and the women differently under Title IX.”

For now, that complex Title IX issue looms on the distant horizon. But sources say industry stakeholders need to feel a sense of urgency today. The NLRB complaint underscores why universities and athletic departments need to be proactive and start preparing now for how they will confront what many see as a virtual inevitability.

Israel, previously assistant general counsel at the NBA, said a world in which student-athletes earn employee status will be an ecosystem replete with lawsuits and legislatures fighting for changes. But, he added, universities need to be thinking now about what they are doing on the ground, with their student-athletes overall and the programs they are developing specifically to position themselves as a facilitator to solve their problems.

“Before somebody,” he said, “brings the hammer.”