Recent NLRB Memorandum Argues that Certain College and University Student-Athletes Qualify as Employees and Should be Afforded Statutory Protections

The debate on whether college or university athletes should be considered as employees isn’t a new one, especially in light of coaches like Alabama’s Nick Saban receiving almost a $10 million salary. In fact, college coaches dominate lists of highest paid public employees in most states.

The conversation on the disparity between coach pay, revenue generated by the NCAA and higher education institutions from sports, and student-athletes seeking compensation for their participation is evolving. In July 2021, the NCAA adopted a new name, image and likeness (NIL) policy, by which student-athletes can be compensated for the use of their NIL. In addition, a recent memorandum by the National Labor Relations Board (NLRB) general counsel redefined the term “employee” as it applies to student-athletes. In the September 2021 nine-page memorandum, general counsel Jennifer A. Abruzzo takes the position that student-athletes are misclassified. The memorandum opens the door for students to be considered employees of a private university or college and have the option to unionize and participate in collective bargaining under the NLRB.

The purpose of the memorandum is to put private universities and colleges on notice of  NLRB’s pro-labor policy. NLRB doesn’t have jurisdiction over wages and compensation and cannot compel colleges and universities to pay student-athletes. The memorandum is not considered binding precedent, but Abruzzo’s reasoning indicates NLRB’s position should the right case appear before the board.

The Reasoning Behind the Memorandum

Abruzzo’s reasoning focuses on several key points, including misclassifying the term “student-athlete,” redefining the term “employee” in the context of an athlete, and the increasing social and racial justice activism occurring on campuses.

First, the memo argues colleges’ and universities’ use of the term “student-athlete” is an inherent  misclassification. This label prevents the athlete at a college or university from pursuing protection under federal law. Instead, Abruzzo calls on institutions to classify athletes as “players at academic institutions.”

In her second point, Abruzzo defines the term employee in the context of an athlete playing a sport at a college or university. “Players at Academic Institutions perform services for institutions in return for compensation and are subject to their control. Thus, the broad language of Section 2(3) of the Act, the policies underlying the NLRA, Board law, and the common law fully support the conclusion that certain Players at Academic Institutions are statutory employees, who have the right to act collectively to improve their terms and conditions of employment,” Abruzza asserts in her memorandum.

For example, a basketball player who plays on behalf of his or her private university and the NCAA performs a service by playing on the team and receives compensation in the form of a scholarship. The coach and staff dictate practices and general working conditions for the athlete.

Lastly, the memorandum also addresses the recent activism by students on campus. In the last few years, there has been an increase in participation in advocating for social and racial justice issues. She specifically highlights the Black Lives Matter movement and states that athletes who participate in such activism to improve working conditions should be protected from retaliation.

Precedent that supports NLRB’s recent memorandum

Abruzzo’s current memorandum essentially picks up where a 2017 memorandum left off. The NLRB, in GC 17-01, stated that Division 1 scholarship football players who competed in the NCAA at private colleges are employees, but declined to intervene. The memo was rescinded by the Trump administration, and the current Abruzzo memorandum reinstates the point that the football players at issue satisfy the definition of employee under Section 2(3) and the common-law agency test, in which an employee is “a person who performs services for another and is subject to the other’s control or right to control.”

In the June 2021 Supreme Court decision in NCAA vs. Alston, the Court unanimously upheld that a cap on education-related benefits for athletes violated antitrust laws. In his concurring opinion, Justice Brett Kavanaugh stated that college athletes “collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing.” Given this context, Kavanaugh suggests collective bargaining could be a solution to provide college athletes a fairer share of the revenue their institutions generate. This decision also indicates that the court is moving toward legislation that benefits the athlete playing for a private institution or college.

In addition, Abruzzo notes that players at academic institutions can now be compensated for the use of their NIL, similar to professional athletes.

What are the practical implications of the memorandum for public universities and colleges?

As it stands, the NLRB memorandum impacts only private universities and doesn’t apply to athletes in public universities. For example, in Michigan, where there isn’t a Division 1 private school, the public universities are subject to the jurisdiction of the MIchigan Employment Relations Commission rather than the NLRB.

There is a potential caveat since Abruzzo indicated that she might pursue a joint employer theory of liability to apply to public universities as well. She concedes that the current memorandum puts athletes at public universities out of reach, but if (potentially) an NLRB-covered entity is involved in the conditions or terms of employment, the joint employer liability theory might extend to these institutions. The current memorandum certainly opens the door to that possibility. Abruzzo explicitly states, “I will consider pursuing charges against an athletic conference or association even if some member schools are state institutions.”

For those institutions that fall within the scope of the memorandum, there will be more of an impetus to form unions. It is unlikely this development will occur immediately, but Abruzzo’s memorandum clearly sets up the possibility.

The underpinnings of the memorandum certainly challenge the current model employed by private universities and colleges as well as NCAA policy on compensation. If one college or basketball program started paying their athletes, what impact would this have on competition overall? Would the public universities feel the need to follow suit?

The NLRB position seems to embrace a pro-labor stance. The landscape of the student-athlete appears to be evolving, and clearly the colleges and universities – both private and public – need to be attuned to these changes.

If you have any questions, please contact Ryan Kauffman.

Fraser Trebilcock Attorney Ryan Kauffman

Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters and representing higher education institutions. You can contact him at or 517.377.0881.

Corporate Transparency Act Imposes Significant New Reporting Requirements on Businesses

Congress recently passed the Corporate Transparency Act (“CTA”), which requires certain business entities to report the “beneficial ownership” of an entity to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FINCEN”).

The CTA is intended to deter activity such as money laundering, financing terrorism, and tax fraud, among other things. Failure to disclose the necessary information may subject businesses to significant civil and criminal penalties.

FINCEN is charged with developing regulations to implement the CTA by January 1, 2022. It released an advance notice of proposed rulemaking on April 5, 2021.

What Businesses Does the CTA Apply to?

The CTA applies to a “reporting company,” which under the statute includes a corporation, limited liability company, or other “similar entity” formed by filing with a secretary of state (or similar office under the law of a state) or formed under the law of a foreign country and registered to do business in the United States. We anticipate that the regulations developed by FINCEN will further clarify what “similar entity” means.

Several types of entities are exempt from reporting requirements, including government entities, as well as certain financial institutions, certain nonprofits, and publicly traded companies. Entities that (i) employ 20 or more full-time employees in the United States; (ii) filed a federal income tax return showing more than $5 million in gross receipts or sales; and (iii) have an operating presence at a physical office within the United States are also exempt.

An “exempt grandfathered entity” is one that: (i) was formed over one year prior to January 1, 2021; (ii) has not engaged in active business; (iii) is not owned, directly or indirectly, by a foreign person; (iv) has not, in the preceding 12-month period, experienced a change in ownership or sent or received funds in an amount greater than $1,000; and (v) does not otherwise hold any type of assets.

Who is a Beneficial Owner or Applicant?

Under the CTA, a “beneficial owner” is an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, (i) exercises substantial control over a corporation or limited liability company; (ii) owns 25% or more of the equity interests of a corporation or limited liability company; or (iii) receives substantial economic benefits from the assets of a corporation or limited liability company.

A reporting company must submit a report to FINCEN that discloses the full legal name, date of birth, address, and a unique identifying number from an acceptable identification document or a FINCEN identifier of any beneficial owner.

Reporting companies must also disclose similar information for any “applicant.” An “applicant” includes an individual who: (i) files an application to form a corporation, LLC, or other similar entity under state or Indian Tribe law; or (ii) registers or files an application to register a corporation, LLC, or other similar entity formed under the laws of a foreign country to do business in the United States by filing a document with the secretary of state or similar office under state or Indian Tribe law.

When Must Reporting Occur?

A reporting company that is formed or registered after the effective date of the regulations must submit a report to FINCEN with the beneficial ownership information related to the reporting company at the time it is formed or registered. A reporting company that was formed or registered before the effective date of the regulations must submit a report to FinCEN no later than two years after the effective date of the regulations. To the extent that there are changes in reported beneficial ownership information, a reporting company must submit an updated report to FINCEN by no later than one year after the date of the change.

What are the Penalties for Failing to Comply?

It is unlawful for any person to willfully provide, or attempt to provide, false or fraudulent beneficial ownership information to FINCEN, or willfully fail to report complete or updated beneficial ownership information to FINCEN. Violations are subject to civil penalties of not more than $500 for each day that the violation continues, and criminal penalties of imprisonment of up to two years and fines of up to $10,000.

There is a safe harbor rule that protects individuals from liability if they voluntarily follow procedures and submit a report with correct information within 90 days. The safe harbor is inapplicable to individuals who submit a report with knowledge that it contains incorrect information in an effort to evade reporting requirements.

We Can Help

The foregoing is a summary of some of the important provisions of the CTA. The statute is lengthy and complex and there is much more to know. Businesses should consult with their attorney to understand their obligations under the CTA. For assistance, please contact Ed Castellani or your Fraser Trebilcock attorney.

Fraser Trebilcock Business Tax Attorney Edward J. CastellaniEdward J. Castellani is an attorney and CPA who represents clients involved with alcohol beverages as a manufacturer, wholesaler, or retailer. He leads the firm’s Business & Tax practice group, and may be contacted at or 517-377-0845.

Michigan Lawyers Weekly Feature: How to Run a Well-Documented, Defensible eDiscovery Process

This article by Fraser Trebilcock attorney Jean E. Kordenbrock first appeared on Michigan Lawyers Weekly‘s website. You can view the article by clicking here.

It is commonplace in almost every litigation matter today, but it still strikes fear in the minds of many lawyers: electronic discovery.

From collecting data to protecting it in a secure environment, the federal and Michigan rules require lawyers to competently gather the relevant information and defend the process used to collect it.

The reasons many lawyers distress over eDiscovery are twofold: (1) the process can be complex and (2) a flawed process can lead to serious, negative consequences — including adverse rulings and sanctions.

The good news is that, with greater understanding and careful planning, every litigator can handle eDiscovery.

Michigan eDiscovery rules

In 2015, the Federal Rules of Civil Procedure were updated to create a modern framework for addressing eDiscovery. In 2020, Michigan followed suit, with significant updates to its Michigan Court Rules.

Michigan Court Rule 2.401 sets forth, among other things, a number of processes and protocols related to eDiscovery that lawyers — and their clients — must adhere to.

For example, Rule 2.401(B) provides that one of the issues that should be addressed at an early scheduling conference is the “disclosure, discovery, preservation, and claims of privilege” of electronically stored information, or “ESI,” which Rule 2.310 defines as “electronically stored information, regardless of format, system, or properties.” ESI is included in the definition of “documents,” which attorneys have a duty to preserve.

Pursuant to Rule 2.401(J)(1), “where a case is reasonably like to include the discovery of ESI,” the parties may agree to, the court may order, or a party may file a motion requesting an “ESI Conference,” at which the parties must consider a host of ESI-related issues. These include but are not limited to:

  • Issues relating to the preservation of discoverable information, including adoption of a preservation plan for potentially relevant ESI
  • Identification of potentially relevant types, categories, and time frames of ESI
  • Identification of potentially relevant sources of ESI and whether the ESI is reasonably accessible
  • Disclosure of the manner in which ESI is maintained

The parties’ ESI discovery plan must be presented to the court within 14 days of the conference.

Failure to abide by these and other rules may result in sanctions.

Practical tips

Once a lawyer learns of an imminent or actual legal claim against a client, it is critical that eDiscovery becomes an immediate area of focus. The process of determining whether the appropriate steps were taken to identify ESI in litigation is evaluated using a standard of reasonableness.

The first step in the eDiscovery process involves the legal duty to preserve potentially relevant ESI. This includes the identification, preservation and collection of relevant information.

The identification of ESI begins with gaining an understanding of what current information policies and procedures the client currently has in place. To the extent the client has an information technology department in place, meeting with the relevant IT professionals can be a good way to gain a holistic understanding of the client’s past and current information governance practices.

Some of the questions that should be immediately addressed include:

  • What are the client’s document management systems?
  • What hardware and software applications are in use?
  • What is the current data management strategy?
  • How do employees save, retrieve and share documents?
  • What backup procedures are in place?

During the process of identifying ESI, it’s important to keep in mind the scope and breadth of the ways clients create, store and share information in 2021. Email, text messaging, instant message software such as Slack, chat functions in Zoom and Teams, social media applications, file servers, cloud-based applications, mobile devices … the list goes on. While not every source of ESI will contain relevant information, it is nonetheless incumbent upon the lawyer to identify all sources in order to make that determination.

Once sources are identified, a data map should be created, which is a comprehensive inventory of an organization’s data which could be potentially relevant to a legal investigation. A data map typically includes what types of data the company generates, uses and stores; where the data is stored; who is in charge of the data; and whether and when it should be archived or deleted.

Another important aspect of creating a defensible process is determining the key people involved in events giving rise to the dispute who may be custodians of information. This requires analysis of who the custodians are, what the reporting structure is within an organization, who has access to what data, and what systems and applications custodians use.

As you can see from this merely cursory review of the many steps involved in the identification, preservation and collection of ESI, there is a lot to take into account. And the risks of failing to take the appropriate action are real and significant. At worst, lawyers can expose themselves and their clients to sanctions or adverse rulings in litigation. At best — and this is still bad — the eDiscovery process may have to be redone, leading to substantial additional costs for clients.

A lawyer who is handling a case involving eDiscovery has a few different options. First is trying to go it alone, which is risky if they don’t have the requisite experience and expertise. Second is hiring an outside eDiscovery vendor, which can be helpful but still poses risks because the lawyer may have no way to evaluate the appropriateness of the process. A third option is to team up with another outside lawyer who specializes in eDiscovery who can help ensure that the process is defensible.

Regardless of the approach, one thing is certain: in our increasingly digital and remote-working world, eDiscovery will continue to gain more significance — and become more complex — in litigation.

Knowing the court rules is an important first step. Creating and running a defensible eDiscovery process requires a deeper understanding and expertise born of experience. If you have any questions, please contact Jean Kordenbrock.

Jean E. Kordenbrock is an experienced legal professional and entrepreneur across a broad range of legal areas, business, and a diverse clientele. She has the unique quality of being a skilled attorney while also leading her own teams where outcomes combine legal, political, and business expertise. Jean can be reached at (517) 377-0824 or

New Congressional Bill Would “Encourage” Higher Education Institutions to Remove Criminal History Questions from Admissions Processes

In August, Senator Brian Schatz introduced the Beyond the Box for Higher Education Act (Senate Bill 2634) in the U.S. Senate. If enacted, the legislation would encourage (not require) colleges and universities to remove criminal and juvenile justice questions from their admissions applications by providing guidance and training schools to change their policies. The U.S. Department of Education would be responsible for issuing ​​guidance and recommendations.

Companion legislation (HR 4950) was introduced in the U.S. House of Representatives.

As of 2019, roughly 72 percent of colleges and universities in the U.S. included criminal history questions in their admissions processes. Advocates for the legislation argue that admissions professionals often reject otherwise-qualified applicants with criminal records without giving sufficient consideration to their skills, interests, demographic or sociological backgrounds.

Background of the Beyond the Box movement

The Beyond the Box (or “Banning the Box”) movement was established in 2004 as a national civil rights movement of formerly incarcerated people and their families. Its goal is to help these individuals achieve personal and professional success through a range of resources and policies. A major focus of the movement is to change policies that create barriers for individuals with a criminal record by working with federal and state agencies.

Recent, Additional “Beyond the Box” Legislation

This legislation comes on the heels of other federal efforts, affecting higher education and businesses more broadly, to open up access to resources to incarcerated individuals and destigmatize criminal history. For example:

  • At the end of 2020, Congress reinstated Pell Grant access to incarcerated students through the passage of the FAFSA (Free Application for Federal Student Aid) Simplification Act, lifting a 26-year ban. Questions about past drug convictions will also be eliminated from the Pell Grant application process, effective for the 2023-2024 award year.
  • The Fair Chance to Compete for Jobs Act of 2019 will go into effect as of December 17, 2021. It bans federal agencies and contractors from asking job applicants about their criminal history.

It is important to note that the Beyond the Box for Higher Education Act is merely pending legislation. It is uncertain as to whether it will actually be enacted into law. And even if it is, the legislation seeks to “encourage,” not mandate, higher education institutions to remove criminal history questions from their admissions processes. However, as judged by other recent legislation enacted related to Pell Grants and federal government employment practices, there appears to be a growing trend toward eliminating the consideration of criminal history in financial aid, admissions and employment through the legislative process.

In light of this, higher education institutions may want to examine their admissions policies and do contingency planning to the extent their policies require disclosure of criminal history.

We will keep you updated on further developments relating to this issue.

If you have any questions, please contact Ryan Kauffman.

Fraser Trebilcock Attorney Ryan Kauffman

Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters. You can contact him at or 517.377.0881.