Northwestern Scholarship Athletes Make It Into the Red Zone

This past Wednesday, Peter S. Ohr, the National Labor Relations Board (NLRB) Regional Director in Chicago, ruled that all scholarship football players at Northwestern University who have not exhausted their college eligibility are “employees” under the National Labor Relations Act (NLRA).  Based on that determination, he scheduled an election to allow 85 players to determine whether they want the College Athletes Players Association (CAPA) to serve as their exclusive bargaining agent.  We originally highlighted this story in a blog entry dated January 31, after the players, with the assistance of CAPA and the financial backing of the United Steelworkers, originally filed their petition with the NLRB.

In determining that Northwestern's grant-in-aid scholarship players met the statutory definition for "employees," Ohr's 24-page decision concentrated on the pervasive 24/7 control that the team's coaching staff has over players' lives.  He outlined a detailed description of practice schedules, workout requirements and coaches' supervision, concluding:

[T]he coaches have control over nearly every aspect of the players’ private lives by virtue of the fact that there are many rules that they must follow under threat of discipline and/or the loss of a scholarship. The players have restrictions placed on them and/or have to obtain permission from the coaches before they can: (1) make their living arrangements; (2) apply for outside employment; (3) drive personal vehicles; (4) travel off campus; (5) post items on the Internet; (6) speak to the media; (7) use alcohol and drugs; and (8) engage in gambling.  The fact that some of these rules are put in place to protect the players and the Employer from running afoul of NCAA rules does not detract from the amount of control the coaches exert over the players’ daily lives.

In Ohr's view, this level of control far exceeds the kind of control a school customarily has over a student. As part of his analysis, he distinguished the circumstances involving Northwestern's scholarship athletes from a set of graduate students at Brown University whose efforts at unionization were rebuffed by the NLRB in 2004.   In Brown University, 342 NLRB 483 (2004), the NLRB determined that graduate assistants were not “employees” after considering: (1) the status of graduate assistants as students; (2) the role of the graduate student assistantships in graduate education; (3) the graduate student assistants’ relationship with the faculty; and (4) the financial support they received to attend Brown.  Although Ohr found that statutory test to be inapplicable in connection with Northwestern's scholarship athletes -- because the players’ football-related duties were unrelated to their academic studies -- he reasoned that the outcome would not change even after applying Brown University's four factors.  Ultimately, in Ohr's view, “[I]t cannot be said the Employer’s scholarship players are ‘primarily students.’"

Although the NCAA was not a party to the proceeding, its chief legal officer responded to Ohr's decision as follows:

[T]he NCAA is disappointed that the NLRB Region 13 determined the Northwestern football team may vote to be considered university employees. We strongly disagree with the notion that student-athletes are employees.

We frequently hear from student-athletes, across all sports, that they participate to enhance their overall college experience and for the love of their sport, not to be paid.

Over the last three years, our member colleges and universities have worked to re-evaluate the current rules. While improvements need to be made, we do not need to completely throw away a system that has helped literally millions of students over the past decade alone attend college. We want student-athletes – 99 percent of whom will never make it to the professional leagues – focused on what matters most – finding success in the classroom, on the field and in life.

Ohr took great pains, in drafting his decision, to anticipate how his reasoning might be subject to attack on appeal and to preemptively address those issues.  If his decision is upheld, it could radically reshape the face of big-time college athletics -- at least at private universities.  The NLRB's ruling does not apply to public universities.  Scholarship athletes at those institutions are governed by state law and 24 states, many of them located in the South, have right-to-work legislation.
 
Ohr's decision will certainly be subject to an appeal to the NLRB in Washington, D.C. Northwestern University has until April 9, 2014 to request a review.  Additionally, the University said "it will continue to explore all of its legal options in regard to this issue."  Although the NCAA and Northwestern contend that unionization and collective bargaining are not the appropriate methods to address the concerns raised by student athletes, if I were the President of Duke, Notre Dame or Stanford, I might begin to gameplan what the future might look like across the bargaining table from my star quarterback and his offensive linemen. Seventeen private universities at the Division I level field college football programs like Northwestern University.

Can FSAs Survive Healthcare Reform?

Flexible Spending Accounts (FSAs) or Health FSAs have for years enabled employers to offer employees the opportunity to spend non-taxable compensation on eligible medical expenses.  FSAs could not only be used to pay for routine deductibles and co-insurance, but they also could buffer against unexpected health care costs. Now, Health Care Reform under the Affordable Care Act (ACA) has changed the way in which FSAs can be offered to employees.

First, for plan years beginning in 2013, the amount an employee can contribute to an FSA through salary reductions is capped at $2,500. Next, for plan years beginning in 2014, Health FSAs can only be offered through Section 125 Cafeteria Plans. Otherwise, the FSA would not be exempt from the ACA requirement that group health plans may not establish any annual limit on the dollar amount of benefits for any individual. Finally, the FSA itself must be structured to qualify as something called an “excepted benefit.” If the employer provides a Health FSA that does not qualify as an excepted benefit, the Health FSA is subject to the ACA’s market reform rules, including the requirement that non-grandfathered group health plans provide certain preventive care services without imposing any cost-sharing requirements for these services. Health HSA’s are considered group health plans under the ACA.

Excepted benefits include, among other things, accident-only coverage, disability income, certain limited scope dental and vision benefits, and certain long-term care benefits.  In order to qualify an FSA as an excepted benefit, an employer must make available group health plan coverage that is not limited to excepted benefits.  In other words, if it offers its employees the opportunity to elect group health coverage, an employer will have satisfied this part of the test.

In addition to the availability of group health coverage, the FSA must be structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the Health FSA for the year, or if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election.  Thus, for example, if an employee elects a Health FSA salary reduction of $2,500, the employer can match the employee’s contribution dollar for dollar up to a maximum of $2,500. If this were to happen, the employee would have $5,000 available in her or his FSA account for the plan year.

Health Care Reform has not eliminated the Health FSA. If an employer modifies plan documents as necessary and follows the rules summarized above, Health FSAs can continue to provide tax-free compensation to employees to pay for medical care expenses that are not covered by group health insurance.

Employer Ownership of Social Media Accounts

If you have a business with a social media footprint (and what business doesn’t, these days), ask yourself this question: "How confident are you that you own the social networking accounts through which you are building your customer base and brand recognition?"  If your answer is “confident,” you may want to think again.  A recent decision from a federal district court in Illinois shows that norms around ownership of business-related social media accounts are still evolving and remain murky at best.

In this case, Maremont v. Susan Fredman Design Group, Ltd., Jill Maremont was the director of marketing for a design firm, SFDG.  Maremont worked on social media campaigns for SFDG and established a blog that was hosted on SFDG’s website.  Maremont also created Twitter and Facebook accounts for herself, which she used for SFDG’s social media campaigns as well as for personal purposes. Often, Maremont would use her Twitter and Facebook accounts to post links to SFDG’s website and blog. At SFDG’s request, Maremont also created a Facebook page for the company, which Maremont accessed and administered through her own Facebook page.  Maremont kept all the log-in information for these social media accounts on a spreadsheet that she created on an SFDG-owned computer and saved on an SFDG-owned server.

Maremont was involved in a car accident that left her hospitalized.  While Maremont was on leave, employees at SFDG used the log-in information from her spreadsheet to access the social media accounts and continue SFDG’s social media campaigns.  SFDG was transparent about Maremont’s absence and even used Twitter to broadcast a blog entry explaining that a guest blogger would be filling in until her return.

Chagrined that SFDG was using her “personal” Twitter and Facebook accounts without her permission, Maremont filed suit against SFDG claiming violations of the Stored Communications Act (SCA).  The SCA is a federal law that prohibits unauthorized access to sites (like Facebook and Twitter) where electronic communications are stored.  SFDG argued that it had the right to access Maremont’s accounts and that it properly acquired and used the log-in information from Maremont’s spreadsheet.  However, the court found there were factual issues as to whether SFDG did, in fact, have sufficient authority to access the accounts and so ruled against SFDG on its motion for summary judgment.
 
Given the Maremont case and others like it, businesses should take affirmative steps to protect their rights with respect to business-related social media accounts.  Although companies with effective social media policies and proprietary information agreements with employees may still run into ownership issues around social media, they can likely be more “confident” of their ability to prevail should a dispute arise.

New Employer Rules Soften Start of Healthcare Reform

It is a work in progress.  There are so many moving parts to Healthcare Reform that implementing the Affordance Care Act (ACA) requires adjustments as theory meets reality.  In July 2013, the deadline for large employers to provide Minimum Essential Coverage (MEC) at affordable rates was pushed forward one year to 2015.  In February 2014, new rules gave mid-sized employers another year ― to 2016 ― to do so.  Recent guidance explains some of the ways these two types of employer can transition into compliance.

Large Employers

Large employers with at least 100 full-time employees (including full-time equivalents) still must offer affordable MEC in 2015.  However, plan years that begin in 2014 (with start dates that haven’t recently been changed) won’t have to comply until the plan year beginning in 2015. Thus, if a plan year begins in October, compliance is not required until the October 2015 plan year.  Also, the requirement that large employers offer minimum affordable coverage to all but 5%, or if greater 5, of their full-time employees (those who work at least 30 hours per week or the equivalent) has been changed. Now, for each calendar month in 2015 and any calendar month during the 2015 plan year that falls in 2016, the minimum participation rate has been reduced to 70%.  The transition rules even give additional time to employers to ensure that their plans provide dependent coverage provided they take steps to satisfy this coverage requirement during the 2015 plan year.

Mid-Sized Employers

Mid-sized employers ― that is, those with 50-99 full-time employees (including full-time equivalents) ― are still large employers who must provide affordable MEC to their full time employees. However, because mid-sized employers may find it more difficult to comply with the ACA, the new rules delay until 2016 the date on which they must offer minimum essential affordable coverage to their full-time employees.  Not so coincidentally, beginning in 2016 mid-sized employers will be eligible to obtain the coverage through the federal government’s online SHOP healthcare exchange, which was originally established to help small employers (fewer than 50 full time employees) find coverage.  The SHOP exchange is currently online at https://www.healthcare.gov/what-is-the-shop-marketplace/.

In order to qualify for this deferred start date, an employer must certify that (a) it employed on average between 50 and fewer than 100 full time employees (including full time equivalents) during 2014, (b) there were no reductions in the size of its workforce or the overall hours of service of its employees during the period February 9, 2014, to December 31, 2014 (except for bona fide business reasons),  and (c) the health coverage  it offered as of February 9, 2014, was not eliminated or materially reduced (certain limited exceptions also apply). If these conditions are met, compliance is not required until the 2016 plan year.

While these and other changes will allow them to ease into compliance, both large and mid-size employers should not become complacent. These relaxations of the ACA’s implementation schedule do not change the underlying requirements that could subject them to significant penalties for failure to comply.

Update on Social Media Legislation in Maine

Updating my previous post on this topic, the Judiciary Committee today reported L.D. 1194, An Act to Protect Social Media Privacy in School and the Workplace out of Committee with a recommendation that the bill be passed as amended.  The Judiciary Committee’s amendment replaces the bill with a resolve, under which the Judiciary Committee will continue to study issues regarding social media and personal e-mail privacy in the workplace and in schools. The resolve identifies several particular areas of study, including among others:

• Concerns of employees and applicants for employment about privacy rights associated with social media and personal e-mail accounts;
• Concerns of employers, both public and private, about social media and personal e-mail accounts of employees and applicants for employment with regard to workplace needs, protection of proprietary information, proposed heightened requirements associated with specific types of employment and compliance with state and federal laws concerning workplace safety and regulation of business-related representations;
• Laws and experiences in other states concerning social media and personal e-mail privacy; and
• The application of federal law and regulations concerning social media and personal e-mail privacy.

The resolve also directs the Judiciary Committee to meet up to four times for its study and to submit a report to the Legislature with findings and recommendations, including suggested legislation, no later than November 5, 2014.