The Hollow Men of the NLRB


NLRBlogoT.S. Eliot’s remarkable 1925 poem, “The Hollow Men,” ends with these oft-quoted lines: “This is the way the world ends—Not with a bang, but a whimper.“ Those words capture, in a far less grand context, this week’s decision by the National Labor Relations Board involving the efforts of some Northwestern University varsity football players to organize athletes on scholarship as “statutory employees” protected by the National Labor Relations Act.

Last year, a regional NLRB ruling took the side of the players, a decision that, as I wrote here at the time, was on the shakiest of grounds. There is no reason to rehash those legal arguments, because no one wanted a decision on the merits this week. The key task now is to explore the political forces behind the decision.

NLRB rulings are normally split sharply along party lines. In this case, however, the Board issued a unanimous decision that “it would not effectuate the policies of the Act to assert jurisdiction in this case … even if we assume, without deciding, that the grant-in-aid scholarship players are employees within the meaning of Section 2(3)” of the Act. Their reasoning: because it is clear that the definition of an “employer” under Section 2(2) excludes any state (including any state-run university), any ensuing regulations would apply to teams like Northwestern but not to their public university counterparts, upsetting the competitive balance in college sports. And so it is that a widely heralded decision that gave rise to both great hopes and fears has ended with a jurisdictional whimper.

Why? The best explanation lies in the fact that even Democratic members of the Board are not willing to move rapidly in areas where they are likely to be overturned by Congress. For them, the prudent approach is to turn the case aside before reaching the merits, which could easily have consequences down the road. On the Republican side, why pick a fight if the issue that is bypassed today is not likely to come back in the future? In this regard, both sides are buying time (perhaps a long time) to avoid making a tough decision — which is why the Board also says that its ruling applies only to this case, leaving open the question of whether it will reverse field on another day.

It won’t happen. The key point is the caveat that exempts state employers from the NLRB jurisdiction. That decision was made out respect (1930s style) for the difference in federal-state relations. The situation is quite different from that of the Fair Labor Standards Act of 1938, which regulates minimum wage and overtime regulations. In 1974, Congress extended the FLSA to cover state employees, with the predictable onslaught of litigation over federal efforts to rein in state employers.

Normally, the NLRB is gung-ho to exercise its jurisdiction, and, like most bureaucratic agencies, is not averse to making decisions that allow it to expand its influence over the private economy. They could have taken that course in this case by affirming along party lines the decision of the Regional Director that found that, after all these years, student-athletes on scholarship were indeed employees. But it could only do so for the minority of NCAA Division I universities that, like Northwestern, are private. If that decision was allowed to stand, the immediate consequence would be a competitive imbalance in Division I sports that would massively reduce the appeal of the game to its fan base. It is for that reason that the Board assumed that “asserting jurisdiction in this case would not serve to promote stability in labor relations.”

Suppose it had done otherwise. The Board is, as it acknowledges, essentially clueless as to how to apply its “analytical framework” to these “unique and novel circumstances.” Worse still, the political fallout would lead sports fans everywhere to pressure Congress to restore the status quo ante, placing college athletics once again outside the purview of the Board. At that point, all bets would be off, because it is always difficult to predict what form congressional fixes will take. They could try a narrow approach, which would be fraught with technical difficulties. Or they could tie the effort to a bigger partisan push. Republicans might use the occasion to overturn the NLRB rule calling for quickie elections, which went into effect this past April. Democrats could demand as a quid pro quo the replacement of those elections with a card check authorization system that they have long pushed under the stillborn Employee Free Choice Act.

Then there are the practical consequences for this particular case. The CNN headline states the matter thusly: “Northwestern football players lose bid to start union.” Wrong. What happened was that some Northwestern players, all graduated by now, launched a bid to have a vote by all the eligible “employees” to see whether they wanted to form a union. But who says that the few players that wanted the union would have been able to prevail when other athletes could easily have grasped that it was a bad deal for them? Would they really want to undermine established practices? To have minimum wage law protections? Or have their “salaries” subject to Social Security and income taxes? It turns out that being classified as an employee carries with it implications in virtually every area of the law, leaving the full implications of the change too numerous to anticipate.

On balance, therefore, the proposed election would present a real risk that the union would get slapped in the face by being voted down, or, worse, that the union would be approved in a setting where none of the voting members are still around. As a result, it seems highly likely that calmer heads in the labor movement will not want to take this issue one step further. And indeed, one of the nice features of this decision to abstain is that no one can appeal the outcome to a federal court, which would have been done if the NLRB had made a decision on the merits. Sometimes being a hollow man is really just a prudent way to dodge a bullet. Now everyone can cut their losses and run — with a whimper, not a bang.

Published in Economics, General, Law
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