Kap, Collusion, and Labor Market Competition

Published October 16th, 2017 -  - 10.16.176


David Seligman is an attorney at Towards Justice in Denver, Colorado, where he litigates on behalf of low-wage workers to address systematic injustices in the labor market.

There are only a few dozen people on the planet who can play QB in the NFL. Colin Kaepernick is one of them. Yet, even though he’s expressed an eagerness to return to the playing field, Kaepernick has now been passed over for QB positions on several clubs. Many NFL stars–including Tom Brady, Richard Sherman, and Brandon Weedon (who was recently hired over Kaepernick for the Ravens’ backup role)–are convinced that Kap’s got the talent to be on the field. If that’s true, then why is he still out of work?

If all the clubs have independently decided that Kaepernick isn’t good enough to play for them that would be the perfectly innocent consequence of the teams acting out of their independent competitive interests. The teams may also be permitted to decide independently not to hire him because they’re worried his protests would turn away their fans–though that may be objectionable and short-sighted.

But what if one or some teams would want to hire Kaepernick to improve their offenses (as many commentators and experts have argued he would), but have all agreed with the rest of the league to refrain from hiring him if their competitors will refrain from hiring him as well? Or what if the NFL, acting through and on behalf of the teams, has prohibited its members from acting in their own self-interest? That kind of concerted conduct would be something different. That would likely violate both the NFL collective bargaining agreement and federal and state antitrust laws. It might even be criminal.

Colin Kaepernick recently filed a grievance under the league’s CBA arguing that the teams have “colluded” to deny him employment in the NFL. The core of his argument isn’t that the teams have treated him unfairly by independently refusing to hire him because of his protests. Rather, he takes issue with what he argues is the clubs’ concerted conduct. If the teams were acting independently, he argues, one of them would have surely snatched him up by now.

Kap’s case isn’t the first to raise concerns about employer collusion among professional sports clubs. Perhaps most famously, in the 1960s, St. Louis Cardinals Center Fielder (and underappreciated activist) Curt Flood challenged Baseball’s “reserve clause,” under which teams agreed not to hire players from other clubs–even after they’d completed their contracts–unless the player’s team released or traded him. That agreement not to compete for the best players was, in Flood’s view, a clear violation of the Sherman Antitrust Act, and when Flood was forced out of the league after refusing to sign on with the Philadelphia Phillies, who had acquired him in a trade, he sued the League. Flood ultimately lost his case in the U.S. Supreme Court because of Baseball’s historic, common law antitrust exemption. But because of the attention Flood brought to the issue, the reserve clause died a few years later.

Flood’s and Kaepernick’s cases are also tied to a broader struggle that expands far beyond sports, and it has nothing to do with Kaepernick’s role in initiating the powerful and politically-charged protests that we’ve seen throughout the NFL this season.

The right to be free from employer concerted conduct is critical to worker bargaining power and dignity.  When employers in Baseball agreed not to hire baseball players on a free market, they effectively bound workers to their employers in a kind of indentured servitude. Flood once remarked that he felt like a “piece of property to be bought and sold irrespective of [his] wishes.” And we can see how similar kinds of anticompetitive conduct would harm wages and working conditions. Without the threat of being able to find employment elsewhere–a threat provided by a free and competitive market–a worker has very little leverage to extract better working conditions out of her employer. And without the threat that she could go and work for a competitor, a job applicant has almost no leverage to extract decent wages.

Recent research and advocacy has concluded that anticompetitive employer conduct may be much more prevalent than we’d imagined, and that the effects may be wide ranging. High-profile cases have alleged antitrust violations harming high-tech employees, animators, and nurses. And economists, policymakers, and advocates have observed that perhaps anticompetitive forces like those that Kaepernick purports to be up against are rigging the labor market and making it harder for workers to earn a decent wage through work.

Under the prior administration, federal regulators had targeted these practices and suggested that they would use enforcement to help level the playing field. In part based on the Council of Economic Adviser’s recognition that anticompetitive forces could be playing a key role in suppressing wages, in 2016, President Obama’s Department of Justice and Federal Trade Commission issued guidance stating that the Department would criminally prosecute employers that engaged in concerted conduct, including by agreeing not to hire each other’s employees.

It’s very unlikely that the NFL and its owners will be prosecuted criminally for refusing to hire Kap. But, if it turns out they did collude, they could be in big trouble. The NFL can’t hide behind the fact that it’s a single league that (like any single employer) can decide not to hire anyone it pleases. In a 2010 case, the Supreme Court decided that for antitrust purposes the NFL might not be a single entity, but rather 32 “independent centers of decisionmaking” that could not agree to surrender their independence on matters about which they’d otherwise compete–surely decisions about whom to hire are among the teams’ core independent decisions.

Indeed, other franchises have been under heat for collusive employer conduct among their various competing parts. According to a recent New York Times article, fast-food franchises have been hit by antitrust suits for clauses in their franchise agreements that prohibit franchisees from poaching employees from one another. Through these provisions, the restaurant chains, which vehemently argue that they aren’t joint employers of franchise employees, prevent workers from moving between restaurants in search of better working conditions. The agreements, according to economists, might help to explain why fast-food restaurants have enjoyed booming financial success, while fast-food wages have stagnated. (Full disclosure: my organization, Towards Justice, is counsel to the fast-food workers in one of those lawsuits.)

The NFL and its owners would also have difficulty arguing that they’re protected because they’re part of a multiemployer collective bargaining agreement. The Supreme Court has held that employers that participate in multiemployer bargaining can act concertedly only when their conduct grows out of and is directly related to the bargaining process. It’s hard to see how a collective decision not to hire Kap would meet that standard. And besides, even if the owners didn’t violate the antitrust laws by colluding, they would have violated the CBA, which independently prohibits collusive conduct, and under which Kaepernick filed his grievance.

There’s still lots more to learn about what’s happened to Colin Kaepernick, and there’s lots and lots more to learn about the pervasiveness of anticompetitive practices in the labor market and how they might be suppressing wages. Collusive behavior by employers along with other constraints on labor market competition may help explain the mystery of why in a time of low unemployment, workers aren’t seeing the increase in wages that they’ve been waiting for since the end of the Great Recession. The age-old fight for a free and competitive labor market is as critical as it’s ever been. That fight is important to Kaepernick, and it’s important to millions of other workers across the country.

 

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