NLRB’s decision on college athletes’ unions raises more questions than answers

Will the students have to pay state and federal taxes? Will they be eligible for workers’ compensation? Would teams increase the number of walk-ons to use them as a contingency workforce in case of a strike? Would schools give its athletes college credit for playing football?
Mar 28, 2014

 

CHICAGO — A day after Northwestern University football players on scholarships were deemed employees of the school in a regional decision by the National Labor Relations Board, labor attorneys said the possible ramifications of the decision are endless.

“The NLRB decision raises more questions than it can answer and the unintended consequences of the decision will be significant,” said Bradford Livingston, a labor and employment attorney at Chicago law firm Seyfarth Shaw.

Will the students have to pay state and federal taxes? Will they be eligible for workers’ compensation? Would teams increase the number of walk-ons to use them as a contingency workforce in case of a strike? Would schools give its athletes college credit for playing football?

“I think it’s unlikely anything would happen immediately,” said Amy C. McCormick, a professor emeritus at Michigan State University College of Law who specializes in tax law.

Northwestern said it will appeal the ruling issued by Peter Sung Ohr, the regional director of the NLRB, to its Washington, D.C. headquarters. The case eventually could be resolved in the federal court system.

Ohr’s ruling was made in the context of an effort to unionize the football team, which can only happen if the players are declared employees of the school. If his decision is upheld, it could be used by state and federal agencies as a legal foundation to further their status as employees. For example, the IRS could make the players pay income taxes on the value of their scholarship. At Northwestern, the athletic scholarships are worth as much as $76,000 per academic year.

In his decision, Ohr wrote that players’ scholarships are “compensation for the athletic services they perform for the employer throughout the calendar year.”

McCormick said that under the Internal Revenue Service code, scholarships are exempt from being taxed unless they are issued as compensation for services. However, she said, the IRS does not consider athletic scholarships as income. In order to do so, McCormick said the agency would have to change its position or Congress would have to change the law.

Eldon L. Ham, a sports attorney and adjunct professor at the Illinois Institute of Technology Chicago-Kent College of Law, said many more schools are likely to follow the path to unionization. The question then would become whether athletes in right-to-work states would join a union. If they don’t, he said, it could get very confusing if some schools go on strike and others don’t.

“What would it mean for the rest of the conference that depends on them for the schedule?” Ham said.

Robert Bruno, a professor of labor and employment relations at the University of Illinois at Chicago, said the decision will be good for labor in the long run because people who don’t traditional think of themselves as employees will begin to do so.

“It’s something extraordinary that these athletes thought of themselves as workers,” Bruno said, adding that people don’t think that when they are stepping into an arena they are entering a workplace.

Others wonder what the decision might mean for the labor board. Some attorneys argue that the NLRB stretched the definition of “employees” to include college football players. The players, they argue, won’t benefit from collective bargaining with a university that has to follow NCAA rules.

The movement at Northwestern was orchestrated by the College Athletes Players Association, backed by the United Steelworkers.

CAPA said it would seek to negotiate over health and safety issues and does not intend to push for “pay-for-play” wages, which are not allowed under regulations issued by the NCAA.

Among its demands, CAPA is seeking financial coverage for former players with sports-related medical expenses, independent concussion experts to be placed on the sidelines during games and the creation of an educational trust fund to help former players graduate.

It also wants players to receive compensation for commercial sponsorships, which it says is consistent with “evolving” NCAA regulations.

Ramogi Huma, president and founder of CAPA, said college athletes should have the same protections as other Americans.

“Some people have said that they don’t think college athletes are employees. The point is this: employee statue doesn’t hinge on believes, but on the law,” Huma said. “The question has been answered.”

 

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