In a statement, Northwestern acknowledged the ruling and says it plans to appeal.
The players' petition was a way to get a seat at the bargaining table in college sports and could change the landscape of the NCAA model.
Northwestern University fought the petition by saying its players are students, not employees.
But the board's decision indicates that there was enough evidence presented that the athletes are employees of the university -- getting paid in the form of scholarships, working between 20 and 50 hours per week and generating millions of dollars for their institutions.
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The athletes have said they're seeking better medical coverage, concussion testing, four-year scholarships and the possibility of being paid.
But while former Northwestern quarterback CJ Bacher said he agrees with the reform issues set forth by the College Athletes Players Association and other groups, he doesn't think unionizing is the way to achieve those goals.
"While we agree with CAPA's stated objectives, the decision made by the NLRB today is disconcerting to those of us that care deeply about the future success & stability of Northwestern athletics," Bacher said.
Richard Epstein, labor law professor at New York University, said the ruling has "vast implications for the structure of the sport, if upheld."
But he noted an appeal would likely take years to resolve.
The regional NLRB office said any requests for review of its decision must be filed with the board's headquarters in Washington, D.C. by April 9.
The NCAA promptly said that while it wasn't party to the proceeding, it was "disappointed" with the board's ruling and disagreed "with the notion that student-athletes are employees."
"We frequently hear from student-athletes, across all sports, that they participate to enhance their overall college experience and for the love of their sport, not to be paid," said the statement from NCAA chief legal officer Donald Remy. "While improvements need to be made, we do not need to completely throw away a system that has helped literally millions of students over the past decade alone attend college.
"We want student-athletes -- 99 percent of whom will never make it to the professional leagues -- focused on what matters most -- finding success in the classroom, on the field and in life."
Last week, Northwestern University's president emeritus said that if the football players were successful forming a union, he could see the prestigious private institution giving up Division I football.
"If we got into collective bargaining situations, I would not take for granted that the Northwesterns of the world would continue to play Division I sports," Henry Bienen said at the annual conference for the Knight Commission on Intercollegiate Athletics.
He further said that if the players won their fight, private institutions with high academic standards -- he specifically cited Duke and Stanford -- could abandon the current model in order to preserve academic integrity.
He compared it to the pullback of the Ivy League schools decades ago, when the Ivy League conference decided to opt out of postseason play and to end athletic scholarships, preserving the emphasis on academics for the players.
"In the 1950s, the 'Ivies' had some of the highest-ranked football teams in the country. The Princeton teams were ranked in the top 5 or 10 at that time. They continue periodically to have ranked basketball teams, but they've given up a certain kind of model of sports," he said, adding that "under certain conditions" the same could happen at other private elite universities that "continue to play big time sports."
Jerry Price, senior associate athletic director at Princeton, said that change for the Ivy League allowed those schools to maintain academic integrity in the sports where, at other schools, academics can often be compromised in the name of the game.
"It was sort of a breaking point moment," Price said, saying the Ivy League schools made the decision not to move forward like the bigger conferences -- to "draw the line with the commercialization of what football was becoming."
"And the results have been that Ivy football is not what it was in the first half of the 20th century," Price said. "Certainly not like Big Ten football, SEC football. Its crowds are generally less than 10,000 people. They play only 10 games a year. ... Certainly not what is going on at BCS level."
Bienen, who was president of Northwestern from 1995 to 2009, made his comments during a panel discussion that included a presentation from Ramogi Huma, the president of the National College Players Association (NCPA) and the man who helped organize another former Northwestern quarterback, Kain Colter, to lead a unionization attempt.
Huma talked, as he has for months, about the issues his organization sees as great flaws in the current NCAA model. The NCPA believes that athletes in the revenue-generating sports of college football and men's basketball are taken advantage of by universities, conferences and the NCAA, making billions from games, while the players sometimes struggle with basic needs like medical care, concussion testing and guaranteed scholarships.
Huma told CNN his organization has, for years, tried other strategies but failed.
"Everyone is entitled to opinions, but after a decade of advocacy, I've tried every other way," he said. "We've begged, pleaded, pressured, changed laws. There is no other way to bring forward comprehensive reform, and just like other billion-dollar industries, the answer is a union."
Huma said he won't comment on whether other teams at other schools are now planning to follow in the steps of the Northwestern football players, but he did note that the NLRB judge ruled in CAPA's favor on every point they made.
"This sets a precedent," Huma said. "This ruling is going to apply to all private schools in (Division 1). That's a significant number of schools, a significant domino to fall where hundreds of thousands of players will have rights under labor law and that's the first step in creating an environment where players are protected."
In March, the NCPA took its fight before the NLRB in Chicago and presented a case during a five-day hearing. Both sides recently submitted court briefs.
Northwestern's appeal could go as far as the U.S. Supreme Court, and it could take years before there is a definitive decision.
During his daylong testimony last week, Colter talked about year-round time requirements, at times 50 hours a week devoted to football.
Colter said he had to give up his major related to pre-med studies because he couldn't fit the classes into his schedule. The university countered that by bringing in students who were able to stay in rigorous classes, but Colter's sentiment was echoed by the NCAA itself in a 2012 survey that asked athletes what they would change about their college experience.
About 15% of men's football, baseball and basketball players said they would have had different majors had they not been athletes. Twelve percent of Division I football players said athletics prevented them from majoring in what they wanted. The average time spent on athletics in-season hovered around 40 hours per week for all three sports, according to the survey.
That flies in the face of the NCAA 20-hour rule, which states that, no matter the sport, coaches can't take up more than 20 hours of their players' time.