AthleticBusiness.com has partnered with LexisNexis to bring you this content.

Copyright 2014 Gannett Company, Inc.
All Rights Reserved
USA TODAY

Ever since the National Labor Relations Board announcement last week that Northwestern's football players had been deemed employees by the regional director of the board's Chicago office, the phrase "unintended consequences" has been cited by many who question what might lie ahead for college athletics.

What about taxes? What about Title IX? Won't this cost the players more money than it's worth?

At this point, nobody can answer those questions with 100% confidence, because a structure such as this has never been formed. However, USA TODAY Sports spoke with College Athlete Players Association President Ramogi Huma and others about whether the concerns were legitimate. "We vetted that over several months," Huma said, adding they were discussed before NLRB Regional Director Peter Sung Ohr's hearing on the matter.

Huma said Sunday that he and CAPA co-founder Kain Colter, a former Northwestern quarterback, are traveling to Washington for meetings Wednesday and Thursday with members of Congress. As they prepare to take their message to a new audience, a few topics that have generated the most debate:

Taxes: This is the biggest issue for many detractors, who say that because the players are now deemed employees they must pay taxes.

"If you look at it the way the NLRB laid it out, that's the compensation for their work, it should be taxable," said David Murphy, a labor lawyer in California who previously practiced in Chicago.

The issue is with tuition, as players are already taxed for room and board. Additional stipends -- such as one proposed in 2011 by NCAA President Mark Emmert -- could be taxed, but Huma said that is still a "net gain" for the players, because they still would be receiving more money than at present.

Huma pointed to a provision in the tax code specifically about athletic scholarships that provides a worksheet for figuring out what is taxable. It notes that a scholarship for a "degree candidate" is not taxable. One could make the argument that the athletes are still degree candidates.

However, Paul L. Caron, a professor at the Pepperdine School of Law and editor of the TaxProf Blog, noted a separate part of that section that says scholarships provided for services are taxable is more applicable to this case.

The tax decision won't be made by the NLRB, but in his decision Ohr wrote, "The fact that the Employer does not treat these scholarships or stipends as taxable income is not dispositive of whether it is compensation." If a scholarship does not have to be taxable income to be compensation, then that essentially means the tax status of the compensation is irrelevant in the eyes of the NLRB when it comes to employee status.

"The IRS itself would have to change its own tax code," Ohr said. "There's no reason to think the IRS is going to make any accommodations to change that."

However, Caron said the opposite would have to happen -- the IRS would need to make an exclusion for this kind of service. That kind of exclusion could theoretically be designed from Ohr's interpretation.

"(Ohr is) exactly right that you can have various exclusions from the Internal Revenue code," Caron said. "I think he's certainly right that the IRS could interpret (the tax code) in the way he's suggesting. I don't think it's a slam-dunk in any stretch of the imagination, though."

Title IX: Title IX requires the school to give male and female athletes equal treatment. The very idea of a union does not affect Title IX, but some worry that Northwestern could be forced to break the law in negotiations.

Huma said that it is up to the school's "discretion" when it is in negotiations. "I don't know if there's anything that we're negotiating for that would invoke Title IX or not," he said.

Under Title IX, some provisions or resources in athletics departments are required for athletes in all sports. For example, if unionized Northwestern football players bargained for medical coverage of sport-related injuries for five years after they have graduated, then the school might need to address such coverage for all of its athletes. But other benefits -- for example, a better kind of football helmet that helps prevent concussions -- would not fall under Title IX.

Pay-for-play: It is a major misconception, Huma said, that the Northwestern players are trying to get paid. CAPA's goals focus on medical coverage and establishment of an education trust. Another goal is for players to gain the ability to market themselves, but for that to happen NCAA rules first would have to be changed.

CAPA's case is built on the idea that players are already compensated in the form of scholarships. "College athletes are already paid to play," Huma said.

Steelworkers' role: What is the endgame of the United Steelworkers involvement? Huma said he sees it as their "charity work," because they are receiving no dues from CAPA or the players. It's not a "grab," he said.

Huma originally reached out to a number of unions when he was looking for an avenue for change in 2000. The USW, he said, was the only union interested in a partnership. And when Colter brought the unionization idea to Huma, Huma asked the USW for help.

"Believe me, they did not jump at it," he said. "They took a very close look, first of all, at the law. It actually took them quite a while to determine whether it would be appropriate, whether it would work."

March 31, 2014

 
Copyright © 2014 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.
Terms and Conditions Privacy Policy