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Abstract: 

On March 26, 2014, the Regional Director for the National Labor Relations Board (NLRB) 13th District, Peter Sung Ohr, ruled that college athletes who receive athletic scholarships to play football at Northwestern University are “employees” under the National Labor Relations Act. The ruling allows the football players to unionize and, according to Robert McCormick, professor emeritus at Michigan State University College of Law, is “revolutionary for college sports.” If the IRS does determine that athletic scholarships are compensation for tax purposes, and if the definition of “qualified scholarship” or the taxable expenditure rules are not modified to create an exception, private foundations may need to modify their scholarship programs to avoid tax and reporting burdens. This article examines the NLRB ruling, the likely course the IRS will follow, and some steps foundations may want to consider as the full ramifications of this decision become clear.

Keywords: Northwestern University and College Athletes Players Association, NLRB Case 13-RC-12135; definition of “employee” under federal statute

Affiliations:  1: Strasburger & Price, LLP.