Student-athlete employment status memo poses comp, insurance questions

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    Reprints

    NLRB

    The years-long debate on student-athlete employment status took a major step forward last month with a new memorandum from the National Labor Relations Board indicating they should be viewed as employees, which has implications for colleges’ insurance and workers compensation coverage.

    Employment lawyers say the memorandum will likely result in increased litigation and organizing activity by athletes, along with broader protections for employee conduct.

    On Sept. 29, the NLRB General Counsel Jennifer Abruzzo issued a memo stating that, in her prosecutorial view, college athletes are statutory employees under the National Labor Relations Act, with rights and protections under federal labor laws.

    “What is likely to happen is universities who don’t recognize employment status could be charged with unfair labor practices,” said Jon Israel, partner at Foley & Lardner LLP in New York, and head of the firm’s sports and entertainment practice group.

    “General counsel took it a step further when she said that if a university doesn’t recognize that its Division I football players are employees and treat them as such, that in and of itself can have a chilling effect on players’ sense of protection about expressing themselves, collectively regarding issues like concussion protocols or social justice issues,” said Jack Merinar, member, Steptoe & Johnson PLLC in Bridgeport, West Virginia.

    The memorandum will also have implications for employment practices liability insurance, putting into play “all the elements we think about in a more traditional employment setting,” Mr. Merinar said.

    “Local discharge, discrimination, hostile environment harassment claims could become employment-related claims, and universities could find it necessary to approach their insurance strategy from that perspective,” he said.

    “That’s all with a giant caveat, that it depends on whether others follow in viewing athletes as employees.”

    There is no state or federal mandate ensuring employment status for student-athletes. The NLRB memorandum only sets an expectation for universities, that in the event a case is brought against them, in the eyes of the NLRB, student-athletes are employees and would be protected. What employment status will mean for universities’ insurance needs and risk profiles poses more questions than answers.

    “Every state’s going to have to grapple with it,” Mr. Israel said. “It depends on who’s calling them an employee and when, and there may be a federal law that does first, and if it does, what does that mean for workers comp insurance? Will it require a certain coverage or is it just an option? And cost is yet to be seen but would be increasing significantly given the risk of injury from the ‘work’ that they do.”

    There is also an earnings-related capacity to consider since workers compensation is tied to wages, Mr. Israel adds.

    “Will it be tied to scholarships? Wages? It’s going to be a whole new world, and it may vary from state to state,” he said.

    Historically, under NCAA policies, schools had some room to provide injury coverage for their top athletes. The memo, Mr. Merinar said, also raised questions on whether limitations on insurance programs that affect student-athletes could be subject to antitrust challenges.

    “There are so many levels to this,” Mr. Israel said, “On compensation, whether it be through scholarships or wages, that will impact taxes and benefits – disability insurance, state-mandated workers compensation, and how those coverages could potentially be implicated is yet to be seen, but the cost would probably be pretty significant.”