We previously reported that the National Labor Relations Board (NLRB) heard a complaint earlier this year against the NCAA, the University of Southern California, and the Pac-12 Conference for failing to classify student athletes as employees under the National Labor Relations Act (NLRA). The NLRB did not file this complaint without warning. The NLRB's former General Counsel, Jennifer Abruzzo (GC Abruzzo), issued a memorandum in 2021 officially setting her office's position that certain student athletes at private colleges and universities are employees protected under the NLRA. But without a current General Counsel and only two remaining Board Members the NLRB's initiative to recognize college athletes as employees under the NLRA is in limbo.
Quick Refresh on the USC Case
The NLRB's complaint against the NCAA, the University of Southern California (USC), and the Pac-12 Conference alleges all three institutions are joint employers that have been committing an unfair labor practice by misclassifying USC's football players and basketball players as "amateurs" and "student athletes" rather than as employees under the NLRA (the USC Case). The NLRB bases its joint employer argument on the allegations that both the NCAA and Pac-12 impose certain common rules and standards on USC's student athletes such that each exercises a degree of control over the terms and conditions of those student athletes. The NLRB then argues that the football players and basketball players are employees because they:
- receive wages in the form of scholarships that are controlled by the NCAA, Pac-12, and USC
- receive benefits through health and injury insurance mandated for USC by the NCAA
- are subject to strict hours of "work" set by the NCAA's rules for practice, games, and travel
- are "hired" onto the team pursuant to the NCAA and Pac-12's initial eligibility determinations and
- are disciplined and discharged for violations of USC, NCAA, and/or Pac 12 policies, such as drug impairment
USC, NCAA, and the Pac-12 all argue that there is no joint employer relationship because the NCAA and Pac-12 do not have "substantial direct and immediate control" over the USC student athletes. They also argue that the student athletes are not employees because:
- scholarships are not wages, and any NIL payments received by the students are not paid by USC, NCAA, or Pac-12
- they do not receive fringe benefits from the NCAA
- their practices and games are scheduled and controlled by their coaches, not by the NCAA or Pac-12
- USC alone decides if a student athlete can be admitted into the university
- Neither the NCAA or Pac-12 disciplines student athletes on any USC team
- the NCAA and Pac-12 do not assign USC student athletes to do specific tasks
What's Next for the USC Case Under the New Presidential Administration?
In April 2024, the NLRB held an evidentiary hearing on the merits of the case. Typically, the NLRB issues a written decision on the merits of the case following the hearing at which point either party can appeal the decision to the Board. However, with President Trump's removal of GC Abruzzo, without naming a successor, and his termination of Board Member Wilcox leaving only two Board Members, short of the quorum it needs to adjudicate even routine cases, many if not most of the previous Administrations agenda is paused. Should President Trump hire a new general counsel, they would have the power to withdraw the USC Case before a written decision is even rendered, which would end the NLRB's case. President Trump's appointment for NLRB general counsel during his first term issued a memorandum declaring his view that student athletes are not employees under the NLRA, so there is reason to believe that the NLRB would revert to this viewpoint under this second Trump administration..
If the future NLRB general counsel does not withdraw the unfair labor practice charges in the USC Case or if there is a delay in selecting a new General Counsel and nominating additional Board Members, it could be litigated for many years. The appellate process within the NLRB's administrative procedures is lengthy, and the parties will have the right to appeal to the federal circuit courts to challenge the Board's decision, whichever way it comes out. Given the recent SCOTUS decision in Loper Bright Enterprises v. Raimondo, federal circuit court judges are not constrained to defer to the NLRB's decision and could reverse it.
Potential Implications for Universities
As has been well publicized in another case that was on a distinct procedural track at the NLRB, Dartmouth basketball players, not the General Counsel, argued they are employees under the NLRA (Dartmouth Case) and convinced the Regional Director of Region 1 to order an election that Dartmouth immediately appealed to the Board. While awaiting a decision, the NLRB conducted a union election and the players voted to unionize. The players then demanded to bargain, but Dartmouth refused, which prompted unfair labor practice charges for failing to bargain. Before the NLRB Board could even render a final determination as to whether the Dartmouth basketball players are employees under the NLRA, the Dartmouth basketball players withdrew their petition to be represented by a union and their related unfair labor practices charges. Their withdrawal was likely in anticipation of President Trump's ability to flip the majority of the Board, making it far more likely that the Board would have reversed the Region 1 decision to classify the Dartmouth players as employees.
Regardless of the outcome of the USC Case, student athletes are increasing their unionization efforts. In December 2024, the class representatives in the NCAA v. House case sent a letter directly to the federal court judge overseeing that case, requesting that she endorse the right of student athletes to join a union. Although the judge lacks the power to "order" union representation in that case, this letter is significant because it was submitted by the class representatives in the case, who represent a very large number of former, current, and future student athletes.
The trend toward recognition of student athletes as employees is not limited to the NLRB. The widely reported case of NCAA v. Johnson will decide whether and the extent to which student athletes are employees under the Fair Labor Standards Act. There is no guarantee that the USC Case and the NCAA v. Johnson case will be decided consistently, and universities will have to grapple with a variety of potential outcomes in the coming year. To the extent they are not already doing so, universities should begin to gameplan the implications of student athletes as employees regarding timekeeping, workplace policies applicable to locker rooms and game travel, workers' compensation, and the myriad of other compliance requirements applicable to employees. Schools with larger athletic departments have begun to hire general managers to run those programs and meet these challenges. That's not to mention the labor relations obligations that would spring from a joint employer relationship with a university's respective athletic conference and NCAA, requiring coordinated collective bargaining and potential joint and several liability for any unfair labor practice charges.
The ramifications of classifying student athletes as employees, coupled with a joint employer relationship, are huge. Venable's Labor and Employment Group will continue to monitor these developments with great interest. Universities with questions on this topic should reach out to the authors of this article or any other member of Venable's Labor and Employment Group.