On March 26, 2014, Region 13 of the National Labor Relations Board (NLRB) issued a decision and direction of election in Northwestern University (No. 13-RC-121359, (N.L.R.B.) (Mar. 26, 2014)).

The Regional Director's decision:

(Nw. Univ., No. 13-RC-121359, (N.L.R.B.) (Mar. 26, 2014).)

For more information on this decision, see Legal Update, Scholarship Players for College Football Team are Employees under the NLRA: NLRB Region 13.

Northwestern has publicly stated that it intends to request review of the Regional Director's decision by the full panel (Board) in charge of the NLRB's judicial and union election processes. The election is reportedly scheduled for April 25, 2014.

Practical Law asked former Board member Brian Hayes, a shareholder at Ogletree Deakins Nash Smoak & Stewart P.C., to discuss the decision's implications. Brian co-chairs Ogletree's Traditional Labor Practice Group. He served as a Senate-confirmed member of the National Labor Relations Board from 2010 through 2012.

The decision is groundbreaking because it is the first time an agency of the federal government has taken the position that scholarship athletes are legally "employees" of the institution they attend and that the scholarships they receive are essentially "wages." While the NLRB has no decisional authority over other state or federal work-related statutes, the central finding raises a host of questions. For example:

The decision certainly opens the door to these and many other questions.

The decision may have far broader applications. Stripped of non-essential facts, the decision finds that where an athlete "performs services" for the school, receives "compensation" and is subject to control by the school, the athlete is an employee. The same logic would seemingly apply to scholarship athletes in non-revenue sports, as well as recipients of non-athletic scholarships for the school's debate team, marching band, orchestra and the like. The factual distinctions between football and these pursuits appear legally immaterial.

In attempting to distinguish the otherwise controlling Board decision in Brown University (342 N.L.R.B. 483 (2004)), which holds that graduate assistants are not employees, the Regional Director makes the most controversial finding in the entire decision. Because of the time devoted to football, he concludes that Northwestern scholarship football players are not "primarily students," but paid workers. That conclusion may not only be very troubling, even insulting, to many, but it also raises the question of whether a simplistic analysis of time spent is sufficient to determine whether or not, as a matter of law, one is primarily a student. Moreover, if the Board affirms the decision and adopts these criteria, then what would be the precise measure? What number of hours devoted to non-academic pursuits makes one no longer "primarily" a student?

While the answers to these questions are pending, it may be premature for private colleges and universities to react to the Regional Director's analysis, such as by changing how they award and treat scholarships or how they frame their relationships with students to whom they award scholarships. However, university counsel may be well-advised to note these matters as horizon issues and evaluate potential sensitivities if scholarship students were found to be their employees.

Because there are opportunities for appeal and likely a time-consuming process ahead, the immediate impact is limited. However, the longer-term impact may be substantial.

As a procedural matter, Northwestern has the right to seek review of the Regional Director's decision with the full Board in Washington until April 9th. The Board has the option to grant or deny any request for review and to eventually affirm, reverse or modify the Regional Director's decision. In some instances, where review is granted, the Board may delay the election ordered by the Regional Director until after the Board issues a full ruling. More often, the Board allows the election to go forward and impounds the ballots pending its final decision.

The Regional Director's decision did not fix an election date, but has specified that the date will be set in a subsequently issued notice of election. News outlets are reporting that the election is scheduled for April 25, but copies of the notice of election have not been published.

If the Board upholds the result reached by the Regional Director and the election eventually results in a win by the petitioning labor union, Northwestern will then either begin bargaining with the union or engage in a "technical refusal to bargain" to test the Board decision in the federal appellate courts. This process could take a couple of years or more to complete. Absent a decision by Northwestern along the way to begin bargaining, the commencement of any collective bargaining would not begin until the completion of the multi-year process.

For further information on NLRB election procedures, see Analysis and Companion Flowchart of NLRB Union Representation Process.

It would come as little surprise for the Board to grant Northwestern's request for review. However, that does not mean that the Board would reverse the result reached by the Regional Director. In fact, it seems quite likely the current Board majority would affirm the result reached by the Regional Director.

By granting review, however, it would give the Board the opportunity to delineate its reasoning for concluding that the athletes in question are statutory employees. It seems very unlikely that the Board would pass on the opportunity to set out its own views in a highly publicized case of first impression and merely rely on the reasoning of one of its Regional Directors. Moreover, unlike the Regional Director, who is bound by existing Board precedent, the Board has the authority to overrule its own existing precedent.

As mentioned before, the Board's existing decision in Brown is closely related to many of the issues in this case. The Regional Director was required to follow Brown, however, a Board majority could find this case a vehicle for overturning Brown.

In 2012, a Board majority granted review in cases concerning graduate student assistants at New York University and Polytechnic Institute of New York University (N.Y. Univ., No. 02-RC-023481, (N.L.R.B.) (June 22, 2012) and No. Polytechnic Inst. of N.Y. Univ., 29-RC-012054, (N.L.R.B.) (June 22, 2012)). The Board invited amici briefs for the express purpose of aiding the Board in reconsidering Brown. While the membership of the Board has changed since then, most observers believe there is very likely a current majority in favor of reconsidering and likely reversing Brown.

Extending the NLRA's coverage to include scholarship athletes and/or reversing Brown to cover graduate assistants would be in line with the Board's decisional trajectory over the last few years. During that time, the Board majority has issued a number of decisions involving individuals ranging from tug boat mates to community orchestra musicians to electrical utility dispatchers. In each of these and other instances, the Board has broadened the coverage of the NLRA to include those individuals. (Brusco Tug & Barge, Inc., 359 N.L.R.B. slip op. 43, (Dec. 14, 2012), Lancaster Symphony Orchestra, 357 N.L.R.B. slip op. 152, (Dec. 27, 2011) and Entergy Miss., Inc., 357 N.L.R.B. slip op. 178, (Dec. 30, 2011).)

Recently, the Board has telegraphed its interest in further expanding the NLRA's coverage by soliciting amici briefs in cases involving the exclusion of employees at religiously affiliated colleges and institutions and in cases involving the managerial exclusion of many college faculty members under the Supreme Court's Yeshiva University decision (444 U.S. 672 (1980)). This interest likely portends further jurisdictional expansion by the Board in the college and university space.

If the Board expands the NLRA's coverage through these cases, counsel at private universities and colleges should expect an uptick in union organizing and NLRB litigation.

For more information on these Board decisions and requests for briefs, see Legal Updates: