NCAA Business Model Faces NLRB’s Joint Employer Rule Threat
The prospect of college athletes gaining recognition as employees became scarier for the NCAA last Thursday when the National Labor Relations Board (NLRB) issued its final rule on when a business is a joint employer under the National Labor Relations Act (NLRA).
The new test, which goes into effect Dec. 26, will make it easier for a worker to claim a business owes them for their work—and could have downstream effects for the NCAA and college conferences as the NLRB ponders whether USC athletes deserve employee designation.
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A joint employer shares responsibility for employment with another employer or employers. All of them must bargain with a worker and their union, and all can be deemed jointly liable if one commits an unfair labor practice or engages in other unlawful acts.
Under the new test, so long as a business has the capacity to control a worker’s essential terms and conditions of employment (hiring, wages, work hours, discipline, supervision, firing, etc.), the business can be deemed a joint employer—even if its control is indirect and even if the business doesn’t use that control. Under the current and now expiring test, a joint employer must directly and immediately control employment.
The development poses significant ramifications for franchisors and franchisees. Their workers will become more able to assert they have two employers, a franchisor and franchisee, even if only one decides work schedules, pay and hours.
Unions will likely gain more influence under the new test. Each joint employer will need to bargain with a union, which might play one employer off the other.
Joint employment might seem far afield from college sports, given that college athletes aren’t recognized as employees.
That could change, however, through litigation or NLRB petitions, with colleges deemed athletes’ primary employers. The NCAA and conferences could then be deemed joint employers of possibly hundreds of thousands of athletes.
Like franchisors, the NCAA and conferences arguably share control of athletes, since their rules restrict how athletes “work” at a college. This is true of hours and travel, and whether athletes comply with academic, eligibility, disciplinary and drug rules. A college, like a franchisee, can also run afoul of NCAA and conference rules in how it supervises athletes.
Under a three-headed employer model, colleges, conferences and the NCAA would be obligated to negotiate employment with athletes, who might be represented by a union or multiple unions (such as by sport, school or conference, or combinations thereof).
This complicated possibility isn’t a hypothetical.
Next month, Administrative Law Judge Eleanor Laws will preside over an NLRB hearing in which the University of Southern California, the Pac-12 and NCAA are portrayed as joint employers of Trojans football players, men’s basketball players and women’s basketball players.
Laws won’t use the new joint employer standard—it can only be applied to cases filed after Dec. 26. Also, the loser of her decision can appeal to the NLRB in Washington, D.C., and then appeal to a federal appellate court. Realistically, a final resolution might not emerge until the latter half of the 2020s.
But the stakes are enormous.
Should USC athletes who play one of those sports be deemed employees, they could join a union, or their teams could join different unions. Either way, USC would need to bargain wages, hours and other employment conditions, including shares of revenue from TV broadcasts and other licensing. So, too, would the joint employers—i.e., the NCAA and the Pac-12, or the Big Ten when USC joins it next year.
Then the domino effect would start, and the chain reaction would be swift.
First, other USC athletes could, and probably would, claim they’re employees, given they work similar schedules. Then athletes at private colleges, near and far, would make the same claim and point out their schools have similar sports profiles as USC.
Athletes at public universities would be in a different legal category, because state labor laws determine if they’re employees. But even if they aren’t employees of their college, their conference and the NCAA, both of which are private entities and thus governed by the NLRA, could be under joint employment. Those athletes could then join unions.
As employers of many thousands of college athletes, the NCAA might have to share revenue from the annual basketball tournament that generates more than $1 billion, along with other revenue-generating activities.
Keep in mind, once athletes are deemed employees, it’s game over for NCAA rules touting amateurism and the student-athlete. The NCAA, conferences and colleges would have a legal obligation to bargain with their new employees, and each would be liable for monetary damages and injunctive relief if any refuse.
The new joint employer rule could also provide athletes a second bite at the apple.
If USC, the Pac-12 and NCAA are ultimately deemed not to be employers, the ruling would be based on an expired test for joint employment. Don’t be surprised if athletes or those on athletes’ behalf bring the same arguments after the new joint employer rule goes into effect. Dartmouth men’s basketball players, who contend their college is their employer, show that athletes are willing to challenge their schools.
The prospect of the NCAA as a joint employer isn’t limited to NLRA controversies.
In Johnson v. NCAA, colleges and the NCAA are depicted as joint employers of Division I college athletes under the Fair Labor Standards Act (FLSA). The FLSA guarantees minimum wage and overtime pay. The athletes argue that if work-study classmates, some of whom are similarly on scholarship, are paid to work at athletic events, the athletes laboring in those games ought to be paid as well. The FLSA has its own test for joint employment, and it is more permissive than the one for the NLRA.
The times are changing in college sports, and unless the NCAA proactively changes rules, it will likely watch the legal system impose changes.
