Labor & Employment Law Daily Lacrosse officials are independent contractors; NLRB’s contrary finding reversed
Tuesday, June 18, 2019

Lacrosse officials are independent contractors; NLRB’s contrary finding reversed

By Lisa Milam, J.D.

When it deemed them employees and allowed them to unionize, the Board failed to sufficiently account for the fact that the athletic association paid the officials, on average, for only three games per year, for two-hour stints.

Lacrosse officials who are hired by an interscholastic athletic association to officiate playoff games are independent contractors, not employees under section 2(3) of the NLRA, the D.C. Circuit ruled. Using the common law of agency as its guide, the appeals court analyzed the relevant factors—particularly the limited duration of their employment and the scarcity of occasions in which they are employed—and found the weight of the evidence compelled this conclusion. Therefore, the officials could not unionize under the Act, and the appeals court granted the association’s petition for review of an NLRB order which found it had unlawfully refused to bargain with their union (Pennsylvania Interscholastic Athletic Association, Inc. v. NLRB, June 14, 2019, Griffith, T.).

The Pennsylvania Interscholastic Athletic Association (PIAA) is a nonprofit association that provides member schools with access to its pool of “registered sports officials” to referee sporting events. Its board of directors determines the method of and qualifications for registering officials; to determine their powers and duties; and to make and apply necessary policies, procedures, rules, and regulations for such officials.

In order to become a registered PIAA official, a referee must meet certain PIAA requirements, pay a registration fee, pass a background check, and earn at least a 75 percent score on a PIAA-administered test for the particular sport. Once an applicant’s registration is approved, he or she must become affiliated with a PIAA local chapter within 15 days, or face suspension. To stay a PIAA official, an individual must pay annual dues, attend at least six chapter meetings during the course of the sports season, as well as the chapter’s annual “rules interpretation meeting.”

The officials are required to satisfy numerous criteria to re-register with the PIAA every year, and there is no guarantee that registered officials will be selected to referee any games in a given year. PIAA may suspend or remove any official who does not comply with its constitution and rules.

Payment to officials. The member schools pay the officials’ fees for regular-season games—an 11 week season—which average about $70 per varsity game. Payments are made on a per-game basis, and schools do not withhold money for taxes or Social Security. PIAA does not involve itself in negotiating the fees, but it expressly disapproves of any attempt to negotiate fees collectively. Once an official accepts an assignment, PIAA policy requires that the host school and the official sign a contract, whose form is provided by the PIAA. It’s only in the post-season that the PIAA selects the officials for games, sets their rates, and pays them. That amounts to about eight to ten days of post-season work. At most, the PIAA pays the average official for only three games per year; for two-hour stints (and that’s a “generous estimate.”)

Board calls for election. The Association of Minor League Umpires, OPEIU Guild 332, sought to represent approximately 140 officials who refereed lacrosse games within two PIAA districts. The NLRB concluded that the officials were statutory employees of the PIAA under the NLRA and the regional director called for an election, at which the union prevailed. The PIAA refused to bargain with the union, insisting the officials were independent contractors and thus were not covered under the Act, and therefore, could not unionize. The Board disagreed, and found the PIAA violated Section 8(a)(5) by refusing to recognize and bargain with the union. The D.C. Circuit denied the agency’s petition for enforcement.

The groundwork. The D.C. Circuit opened by citing a few points of law regarding the independent-contractor analysis under the NLRA (currently a moving legal target). It noted that the analysis is “more art than science” and that the Restatement of Agency and its ten-factor test is the frame of reference, along with “whether the workers have a ‘significant entrepreneurial opportunity for gain or loss.’” (The court’s 2016 holding in Lancaster Symphony Orchestra v. NLRB was invoked liberally here, both for points of law and comparative purposes.) Citing its landmark 2009 case on the matter in FedEx 1 (an analysis reaffirmed in 2014) the court added that “no one factor” is determinative and the factors cannot simply be counted up on each side of the equation to declare a winner; rather, the “decisive factors” will vary by the circumstances of each case.

Board deference? As for deference due, the court explained that the NLRB is not to be accorded “special credence” on the question because it does not involve any “special administrative expertise” that a court does not also possess; at the same time, a court is to engage in something less than de novo review. “[W]e take a middle course, and will uphold the Board if at least it can be said to have made a choice between two fairly conflicting views. However, we will reverse the Board if “the evidence, fairly considered, fails to support the conclusion that the [workers] are employees under traditional agency law principles.”

In a footnote, in fact, the court relayed that after oral argument, PIAA notified the court of the Board’s subsequent SuperShuttle decision which altered its test for entrepreneurial opportunity articulated in FedEx Home Delivery. “Despite this change, we see no need to remand,” the court wrote. “Whether the Board’s approach has indeed changed is immaterial because, as SuperShuttle recognizes, we owe the Board no deference on matters of law, including the proper formulation of this inquiry.”

Finding of employee status reversed. Undertaking something-more-than-de-novo review, the appeals court held the NLRB erroneously found the officials were covered employees. In its analysis, the Board had failed to account for two particular factors that are strongly indicative of independent-contractor status: the few times in which the PIAA actually pays the officials (again, only 8-10 times per season, for 20 hours of work, at most) and the short duration of their employment with the PIAA (they can earn money in this job for only about 11 weeks per year; at most, they work 22-31 days per year, regular season and playoffs combined). “In fact, the Association represented without contradiction that it pays the average official for only 3 games per year, and officials who do not referee any postseason games never receive payment from PIAA.”

The Board had found this factor inconclusive, noting that while single-game assignments were short-term, the officials had an expectation of continued employment so long as they paid their annual dues. The Board also pointed out that many of the officials have been in the association for many years. “But unlike a worker who is automatically invited back year after year and, if available, assigned hours,” here, the officials had no guarantee they would be selected to actually referee a game in any given year, the court observed.

Other common-law factors. There were other factors supporting an independent-contractor finding: the skill and expertise required; the fact they provide their own equipment (whistles, pencils, and penalty markers); the numerous documents (constitution and bylaws, PIAA officials’ manual, the operative registration application) reflecting the parties’ mutual understanding that the officials are independent contractors; and the fact that the PIAA does not deduct withholding from the officials’ checks.

Granted, there were a few indicia of employment status. For example, the PIAA has considerable control over how officials are compensated by the schools—the determining factor to the Board, in drawing its erroneous conclusion. “It simply cannot be—as the Board thought—that the extent to which PIAA controls how the officials are compensated by the schools ‘outweighs’ this other compelling evidence,” the court said. It also acknowledged that the officials had little entrepreneurial opportunity—no chance to work “smarter” for greater profit—and that the PIAA has fairly significant control over the “means and manner” of the officials’ work, but these controls are “somewhat inherent in the nature of officiating.” Also, while the PIAA reserves the right to suspend or disqualify officials who violate its rules, there is no evidence that it has ever done so.

On balance, when properly accounting for the very few instances in which the PIAA actually pays the officials, and the short duration of their employment, the evidence favors a finding that the lacrosse officials are independent contractors, not covered employees. Therefore, the PIAA did not unlawfully refuse to bargain with the union.

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