Film Room: updates on House implementation, DOE and NLRB

House Implementation Committee Update

Last week, the NCAA and Defendant Conferences released an Implementation Committee Status Report that: 

• noted technical mechanisms (i.e., software) that may be employed to track and report institutional payments to student-athletes
• reiterated that an “NIL Clearinghouse” will be utilized to review third-party NIL deals over $600 to “ensure they are legitimate, fair market NIL agreements and not being used as pay-for-play”
• acknowledged the development of a new infrastructure to “enforce rules prohibiting third-party pay-for-play, eliminate circumvention of the 22% cap, and ensure the new NIL model achieves its objectives” 

The update is welcome but leaves important and difficult questions unanswered. What’s the criteria to determine fair market NIL? What is third-party pay-for-play, and how does the NIL Clearinghouse go about disentangling a student-athlete’s on-field ability from the value of that student-athlete’s name, image and likeness? How can such a necessarily fact-specific inquiry be undertaken for thousands—tens of thousands? hundreds of thousands?—of student-athletes in a condensed time period that allows for the resolution of any dispute in a window that’s small enough to not impact the playing season? 

Forthcoming answers to these questions will be imperative for institutions to consider when building an infrastructure for athletic success in the new model. 

DOE’s Title IX Revenue Share Reversal

The DOE’s Office for Civil Rights (OCR) rescinded the January Fact Sheet regarding the applicability of Title IX to House revenue share payments. The statement announcing the policy decision included the following notable quote from Craig Trainor, Acting Assistant Secretary for Civil Rights: 

“Title IX says nothing about how revenue-generating athletics programs should allocate compensation among student athletes. The claim that Title IX forces schools and colleges to distribute student-athlete revenues proportionately based on gender equity considerations is sweeping and would require clear legal authority to support it. That does not exist.”

While the OCR statement is clear, keep in mind that (1) OCR’s position doesn’t limit a student-athlete’s private right of action and (2) courts are the final arbiter of what the law means.

Relatedly, DOE secretary nominee McMahon’s congressional hearing occurred last week. The focus of the hearing was elsewhere than House revenue share. 

NLRB Employer-Employee Reversal

Also last week, the NLRB rescinded a prior memo that had noted its view that student-athletes are employees. Student-athlete groups that had sought unionization under theories consistent with the memo abandoned those efforts in recent weeks, perhaps anticipating the NLRB’s change. 

While the subject matter has a familiar ring, this activity at the NLRB is separate from the ongoing Johnson litigation, which seeks a court decision establishing an employer-employee relationship for a wide swath of student-athletes. As we noted a few weeks ago, a response from the NCAA and a number of institutions to the plaintiffs’ amended complaint in Johnson is due in late March—two weeks before the House hearing. 

Another Eligibility Challenge

A baseball student-athlete filed another lawsuit that challenges the NCAA’s eligibility rules. Like the Pavia case, the Osuna case involves a student-athlete arguing that JUCO seasons should not count against NCAA eligibility. The court already denied the student-athlete’s request for a temporary restraining order precluding the application of the rule at issue, meaning that the student-athlete remains ineligible. The court set an expedited briefing schedule on the student-athlete’s request for a preliminary injunction, with the hearing scheduled for later this month. 

We’ll keep you posted as the various courts considering eligibility-related challenges enter decisions.