NLRB General Counsel Rules that Student Athletes are Employees under NLR Act.
From D1 Ticker:
National Labor Relations Board General Counsel Abruzzo sent a memo to field offices that states student-athletes are employees under the National Labor Relations Act. Abruzzo: “My intent in issuing this memo is to help educate the public, especially Players at Academic Institutions, colleges and universities, athletic conferences, and the NCAA, about the legal position that I will be taking regarding employee status and misclassification in appropriate cases. [...] In sum, it is my position that the scholarship football players at issue in Northwestern University, and similarly situated Players at Academic Institutions, are employees under the Act. I fully expect that this memo will notify the public, especially Players at Academic Institutions, colleges and universities, athletic conferences, and the NCAA, that I will be taking that legal position in future investigations and litigation under the Act. In addition, it notifies them that I will also consider pursuing a misclassification violation.” (link);
Heitner Legal's namesake points out Aburzzo "emphasizes Justice Kavanaugh's suggestion that 1 mechanism for colleges and students to resolve difficult Qs regarding compensation is by engaging in collective bargaining," and "adds college athletes have engaged in collective action at unprecedented levels including on racial justice issues, which "directly concerns terms and conditions of employment, and is protected concerted activity." (link)
[Ed-Seth: UAUM's double-post]:
The General Counsel of the National Labor Relations Board (who is in charge of unions and the like) issued a memo today stating that she will now take the position that "student-athletes" at universities are employees, and thus, entitled to the protection and benefits of employment laws.
While the NLRB does not have clear jurisdiction over public universities, this is a MAJOR step. She concluded with
In sum, it is my position that the scholarship football players at issue in Northwestern University, and similarly situated Players at Academic Institutions, are employees under the Act. I fully expect that this memo will notify the public, especially Players at Academic Institutions, colleges and universities, athletic conferences, and the NCAA, that I will be taking that legal position in future investigations and litigation under the Act. In addition, it notifies them that I will also consider pursuing a misclassification violation.
As with NIL rights not resulting in the immediate death of college sports, I predict that this too will not kill college sports. If an athletic department had to pay minimum wage and the like, it will likely lead to many athletic departments cutting back on school sponsored sports. Football, basketball, and hockey at Michigan will be just fine and I would still watch other Michigan sports if they were just club level.
Thoughts, questions?
September 29th, 2021 at 10:57 AM ^
Will the scholarship value be considered taxable income for players if they’re employees? I would be pissed if I was now an employee and had to pay income tax on $200k.
When my employer sponsored some of my grad school I had to pay income tax on that.
September 29th, 2021 at 11:08 AM ^
Yeah, that's one area where I think we'll see some discrepancy both at the federal and state levels. An employer sponsoring grad school is a financial benefit from your employer given to you but applies to another entity; I'm honestly not sure if the same rules apply when the benefit is given and received by the same institution even as an employee, especially if the money is used for a qualified educational expense such as tuition, room and board, books, etc. My guess is it wouldn't but any stipend on top of those expenses would, which is consistent with how students who are paid living expenses from a scholarship would be, for example.
September 29th, 2021 at 1:54 PM ^
Forget the academic side of things for a moment. There is a considerable cost of training athletes including coaching, facilities, nutrition, etc. etc. separate and apart from the academic component. Several years ago there was a website that pegged these numbers at over $200,000 per athlete in the SEC. The numbers for B1G schools can't be far behind.
Would these benefits be considered taxable if athletes are considered employees? My gut feeling is that they would.
September 29th, 2021 at 2:20 PM ^
My gut would be that none of those are taxable because they bring a benefit to the employer. It's like if your company provided a leadership training. You personally benefit but so does your company and the individual doesn't have to pay taxes on the benefit. College sports training is just an extreme example.
Room and board is probably the most borderline issue, as there are certainly rulings that say you must pay taxes on employer supplied housing. Not sure if there's an example from the grad student situation that would apply and make those expenses tax exempt.
September 29th, 2021 at 2:55 PM ^
Coaching, facilities, etc. would not be taxable. Meals might be.
September 29th, 2021 at 3:11 PM ^
That's called per employee overhead, a cost of doing business. It's like how an employer pays for employee training, health insurance, support employees, office space, tech licenses, etc. That's not income to an employee.
September 29th, 2021 at 5:32 PM ^
Would fall under fringe benefit just like getting a take home car in my opinion and yes that is taxable. So I guess ohio state and the SEC had it right after all football is the job and these athletes are truly playing school.
September 29th, 2021 at 11:09 AM ^
+1 for that insight.
If athletes are now employees then compensation is taxable. The only way around the taxation issue is to say that tuition is a benefit as opposed to compensation. Some private universities give the children of professors either reduced or free tuition as a benefit so it may pass muster if categorized that way.
September 29th, 2021 at 11:17 AM ^
Not sure about that - academic scholarships aren’t taxable (are they?), so I’m not entirely sure that an athletic one should be. I suppose it would depend on whether academic scholarship recipients are deemed ‘employees’ too.
Graduate teaching assistants (or whatever they’re called now) are also considered employees, right? I don’t believe their scholarships are taxable, so I’m not sure why an athlete’s scholarship would have to be taxed.
September 29th, 2021 at 12:14 PM ^
Re taxation of athletic scholarships, how are the other student employees of the University treated? If you are an academic scholarship student working as a University employee in a dorm or for an academic department, etc., is the scholarship money taxed? It seems that scholarships awarded to recruit a good athlete or a good student should be treated the same by the tax authorities.
September 29th, 2021 at 2:57 PM ^
Appears that:
Your scholarship may or may not be taxable. Generally speaking, a scholarship or fellowship is tax free if you are a degree candidate and the award is used to pay for tuition and required fees, books, supplies and equipment, however there are some scholarship and fellowship opportunities that are not tax exempt. Any amount used to pay for room and board or a stipend for living expenses is taxable. There are also a variety of coordination restrictions that are intended to ensure that you don’t double-dip when taking advantage of the Education Tax Benefits.
Relevant IRS Publications
Relevant IRS Publications include:
- IRS Publication 970: Tax Benefits for Education
- IRS Publication 17: Your Federal Income Tax
- IRS Notification March 2021: Emergency aid granted to students due to COVID is not taxable
September 29th, 2021 at 10:23 PM ^
They are now defined as employees--the cost of education being waived may now be considered part of their compensation package as an employee--they are no longer being defined as anything but employees per the NLRB from the looks of it. I get free tuition as an employee of the University and my spouse and children get 50% free---and yes I have had to report it as income. I believe it only has to be claimed if your taxable income is above a certain threshold--this may save the student athletes dependent on how much of their other benefits get defined as income. Fair disclosure, I am no accountant--which why I have a licensed and insured representative complete our federal taxes each year--I have no interest in trying to wrestle with the federal tax code or the consequences if I do not interpret something correctly.
September 29th, 2021 at 2:16 PM ^
I don’t think they have to get taxed on it. I know a few people who work at schools to get free grad school there as a benefit and they are not getting taxed on it
September 29th, 2021 at 2:23 PM ^
The difference is that most universities that offer this benefit do so as a reimbursement. The employee (student) pays for their courses up front and then, upon course completion meeting minimum grade requirements, are reimbursed by the university for which they work. So, the employee is paying for the class with income that has already been taxed and the university is simply reimbursing them once the class is completed. Not sure this could be taxed.
September 29th, 2021 at 5:15 PM ^
Maybe you know what you're talking about in some cases, but this is not what universities do with e.g. graduate students who get free tuition. They just waive tuition. Not taxable.
September 30th, 2021 at 10:36 AM ^
I was referring to AK47's specific example of employees at universities getting a tuition reimbursement benefit. I was not speaking to grad students getting a tuition waiver.
September 29th, 2021 at 10:59 AM ^
Would this only be applicable to private universities like Northwestern?
September 29th, 2021 at 11:09 AM ^
It would depend on their definition of ‘academic institutions’. I’m guessing it’ll be interpreted more broadly than just NW (or even private schools), but I haven’t read the memo so can’t say for sure.
September 29th, 2021 at 12:25 PM ^
The National Labor Relations Act only applies directly to non-public employers and employees. Thus the NLRB General Counsel’s new interpretation only applies directly to non-public institutions’ student athletes. However, many States, including Michigan, have labor management statutes which parallel the NLRA and do govern public institutions and their employees. Often the State laws are interpreted in tandem with NLRA legal doctrines, but not always.
September 29th, 2021 at 2:58 PM ^
Good to know and +1 to you
September 29th, 2021 at 11:14 AM ^
More foolishness.
September 29th, 2021 at 12:59 PM ^
So, this comment will not be allowed to sit by the likes of me, and I have to ask - what do you find foolish about people whose duties are arguably heftier than some of the employees of their own institutions being classified as employees and being treated as such? I think this makes the relationship even more equitable and that's a huge positive, in my rarely humble opinion. Your answer cannot be some claptrap about amateurism, student-athlete, scholarship equates to compensation, blah blah bullshit conventional thinking nonsense. I will await your answer.
September 29th, 2021 at 1:15 PM ^
Let me have a go:
1. The executive branch should not make a determination to expand their own jurisdiction simply because efforts to address the issue in Congress have failed. It sets horrible precedent for the balance of power and how laws are made.
2. It would apply to all students who work hard to maintain their scholarships. Performance arts, band, high academic achievement all require additional work outside of normal school time. The extra work they put in is to keep a scholly and advance their career chances after school (just like athletes). They should all be employees under this reasoning. (And students who have to work beyond 40 hours a week to get grades at a tough school might have an argument for being paid for their school work.)
3. Title IX is going to have to be revised. That was actually a law that was passed through the checks and balances system.
4. It creates additional tax complications for students that will hurt them (and enrich the government).
There is a noble sentiment that players should be paid their "fair share" and that the schools exploit them. I think NIL was a step in the right direction. These discussions and reforms should continue. But, this is short-sighted and potentially harmful way to do it.
We should seek out policy goals through thoughtful process that considers the long-term ramifications to the system, the students, etc.
September 29th, 2021 at 2:43 PM ^
Agree. I’m just not sure what this does to help student athletes. They are already covered with health insurance, scholarships, room/board etc. I suppose this could potentially allow them to contribute to a retirement plan and any state pension. So will the schools be required to pay them minimum wage? I guess if people think this actually helps, then go for it. It does seem like it will hurt non-revenue people with scholarships. I dunno, it just seems like more mud in the water here. I assume any athletes getting NIL money still have to establish an LLC and pay taxes as an independent contractor correct? That will go well.
September 29th, 2021 at 5:20 PM ^
1. The executive branch should not make a determination to expand their own jurisdiction simply because efforts to address the issue in Congress have failed. It sets horrible precedent for the balance of power and how laws are made.
They're not expanding their jurisdiction. The determination whether players are employees has always been their jurisdiction. They are just finally getting it right.
2. It would apply to all students who work hard to maintain their scholarships. Performance arts, band, high academic achievement all require additional work outside of normal school time. The extra work they put in is to keep a scholly and advance their career chances after school (just like athletes). They should all be employees under this reasoning. (And students who have to work beyond 40 hours a week to get grades at a tough school might have an argument for being paid for their school work.)
To give just a few examples of obviously relevant differences, nobody regulates how much time non-athletes spend on their activities, tells them when to show up where outside of regular class times, or tells them what to wear.
3. Title IX is going to have to be revised. That was actually a law that was passed through the checks and balances system.
Why? How?
4. It creates additional tax complications for students that will hurt them (and enrich the government).
Since I assume you have never refused your salary on the grounds that it subjects you to taxation, this very silly point need not be addressed.
September 29th, 2021 at 5:42 PM ^
They're not expanding their jurisdiction. The determination whether players are employees has always been their jurisdiction. They are just finally getting it right.
As employees, the NLRB now has jurisdiction over them and collective bargaining. It expands their own power. Nothing in the deinfition of "employee" nor what players get from schools has changed.
To give just a few examples of obviously relevant differences, nobody regulates how much time non-athletes spend on their activities, tells them when to show up where outside of regular class times, or tells them what to wear.
That is untrue. Other activities require practice at scheduled times. There are also codes of conduct and written expectations for them. The differences are not material.
Why? How?
As employees, they will be entitled to a salary. Try to pay football players the same as female soccer players and see how that works.
Since I assume you have never refused your salary on the grounds that it subjects you to taxation, this very silly point need not be addressed.
Your not addressing my point. People often struggle when they get expensive things (win cars, house, etc.) because a large tax bill becomes due. As employees, a scholarship would be taxable without question. Kids going to EMU might have to find tens of thousands to pay the taxes for that benefit. Kids going to ND would have to find a ton of money to pay for that benefit.
How old are you?
September 29th, 2021 at 5:28 PM ^
The NLRB General Counsel is an independent appointee of the President, separate from the National Labor Relations Board, and is authorized by the NLRA statute to apply the statue by determining questions of representation and prosecuting unfair labor charges. The GC necessarily interprets the NLRA, including the definition of an “employee” [29 USC §152(3)] covered by the NLRA. The statutory definition does not exclude students in any way, while containing a number of other exclusions, such as farm workers, domestic workers, workers employed by a parent or spouse, supervisors, managers and independent contractors. The NLRA General Counsel, the NLRB, and the federal courts have frequently re-interpreted the definition of employee over the years. Today’s announcement by the GC of her interpretation is not a change in the way the country has evolved its administration of the NLRA since its enactment in 1935.
September 29th, 2021 at 8:31 PM ^
frequently re-interpreted the definition..i.s not a change in the way the country has evolved its administration of the NLRA
Not a change in the way things have evolved to be "re-interpreted"?
Wow.
Is that how you FEEL?
That's what this is based on, right, feelings of progress?
September 30th, 2021 at 7:40 AM ^
And this, ladies and gentlemen, is how you know you've won an argument: when your opponent, having previously issued logical point-by-point rebuttals, now resorts to ad hominem attacks and irrelevant slogans in a vain attempt to discredit you rather than engage your argument.
September 29th, 2021 at 11:15 AM ^
Pour one out for all the sad people in fruit colored blazers. Your world is slowly coming to an end.
September 29th, 2021 at 11:27 AM ^
And, while we’re at it, lets toast the student athletes who are finally getting recognized as income earning employees of their schools while attending them as students.
September 29th, 2021 at 11:21 AM ^
Hope y'all are ready for striking players at conference title games, bowl games, and the CFP.
September 29th, 2021 at 11:35 AM ^
Hell yeah, all power to the players!
September 29th, 2021 at 11:42 AM ^
Is this supposed to scare us?
They’re already sitting out bowl games. And the Jake Butt story shows it’s the right call.
September 29th, 2021 at 8:43 PM ^
No, and I welcome it.
September 29th, 2021 at 12:42 PM ^
Oh my...
will our bread and circus stop?
Pay the players!
September 29th, 2021 at 11:21 AM ^
Great. So now that can be fired for underperformance, since (mostly) States are "at-will".
September 29th, 2021 at 11:30 AM ^
This is not great.
They have never been employees. Congress tried to pass a law to make them employees, but that didn't work.
So, the executive branch unilaterally decided to consider them employees and under their jurisdiction.
Regardless of whether you agree or not, this is not how government should work.
September 29th, 2021 at 11:36 AM ^
Your political views are well known, but not relevant. Northwestern players brought a suit to the NLRB against NU for this specific reason. Apparently, they won.
September 29th, 2021 at 12:16 PM ^
I didn't share my political views. They are irrelevant and ever evolving.
This is about how the government is supposed to function. It doesn't matter if you agree or disagree with their decision.
September 29th, 2021 at 5:14 PM ^
The legislative branch enacts laws; the judicial branch interprets the laws; and the executive branch enforces the laws.
It's clear that the NLRB (executive branch) is intending to enforce the law based on the recent interpretation announced by the Supreme Court. Basic civics. So, what's your problem?
And, BTW, how many Executive Orders did Trump (and prior presidents) issue glossing the law in such a way as to promote their agenda? For better or worse, that's the American way.
September 29th, 2021 at 11:45 PM ^
For worse. The scope of Executive power has expanded yearly for decades. Republicans and Democrats alike. It's bad. Always bad.
It's the one thing our government was set up to stop... consolidation of power with one branch or person.
But, idiots encourage it when their own party is in power.
September 29th, 2021 at 5:34 PM ^
The GC, the Board, and the federal courts have been reinterpreting the NLRA definition of “Employee” since the NLRA was enacted in 1935. The statute excludes several categories of workers, but not students or student athletes. This latest reinterpretation is the way the law has evolved since its inception.
September 29th, 2021 at 11:45 AM ^
The more interesting development is that if/when this applies to public institutions like UM, that would make football players government employees, subject to laws such as salary disclosure.
September 29th, 2021 at 11:45 AM ^
Do NRA protections apply in employment contract contexts? I'm guessing that, down the road, scholarship athletes may be seen as contract employees, and I wouldn't be surprised if those future employment offers just so happen to include certain waivers of certain rights in exchange for remuneration. The NCAA is so irrelevant....
September 29th, 2021 at 12:16 PM ^
Without major changes from the Feds on Title IX about how a college athlete - employee relationship would work this would be an absolute circus within 5 seconds of being enacted.
Why? Here are you two choices at this point: Give every single athlete on your campus (to the best of your ability) the same compensation: scholarship, board, cost of living, personal value, etc. By doing so, you would be depriving any and all athletes the right to make fair market value for their services and an attorney would have a field day with that.
Door two: Year by year, calculate the fair market value of each athlete on campus using a variety of data points and pay accordingly. When the 7th string backup QB is making more than the captain of the women's rowing team, defend in Federal Court possible Title IX violations and how you are "anti-women".
That's the reality without the federal government seeking out major changes to Title IX. I know people would rather bitch about the greedy NCAA/colleges but I do not see a scenario in the present time that gives them any option on this issue.
September 29th, 2021 at 3:02 PM ^
What part of Title IX requires all employees to have exactly the same compensation?
I actually think this makes Title IX less meaningful for college athletics. The argument for "exact same number of men's and women's scholarships" is that such scholarships are educational opportunities. If they are instead compensation for work performed, well, there is no law that requires universities to employ the exact same number of men and women.
September 29th, 2021 at 3:54 PM ^
That's just it - It doesn't. The whole issue is really going to be a Wild West sort of expedition because I am not aware of a major Title IX issue ever going in front of a US Appellate Court or the Supreme Court in terms of athlete compensation. Therefore, it is hard to gauge any hypothetical case brought forward because there is literally no precedent.
To break it down a bit further, Title IX says specifically there cannot be an discrimination on the basis of sex for any federally funded activity or education activity. Therefore, only my alma mater and couple others do not take federal funding so they cannot wiggle around this (not Michigan).
Short of policy change, there were would be two main issues that would need to be litigated for any resolution:
1) As you said, if the players are considered employees, does a college sporting event no longer meet the criteria of a "federally funded activity"?
2) Assuming the colleges want to go the employee route, are male athletes (hypothetically, on average) getting paid more than female athletes meet the standard of "discrimination" under Title IX, assuming that a court were to rule "yes, still a federally funded activity" to my first question?
You might find some colleges that would be willing to litigate number one. Number two? Good luck. Women's rights groups would flip out instantly.
To summarize, what you are saying *might* be accurate but it should be settled by the legislative branch and passed by the executive, otherwise I will stand by my original statement that trying to figure out this issue through the court system would be a 3 ring circus.
September 29th, 2021 at 5:23 PM ^
If only universities employed lawyers who could advise them on legal issues...
September 29th, 2021 at 6:22 PM ^
To #2, Juwan Howard makes more than Kim Barnes Arico - and this is almost universally true at other public universities with major athletics. If this hasn't triggered a successful Title IX suit, what would be the case for Cade making more than a bench player on the field hockey team being a Title IX issue?