Tag: student-athletes

New Lawsuit Addresses Eligibility Concerns for US Collegiate Athletes

It has been over two years since the National Collegiate Athletic Association (“NCAA”) lifted its prohibition on college athletes being able to profit from their name, image, and likeness (“NIL”). When people traditionally think of NIL, they think of student athletes at the collegiate level receiving payment for their likeness. However, collegiate athletes are not the only student athletes able to avail themselves of the burgeoning world of NIL.

To date, thirty-three states have enacted some form of legislation or executive order permitting high school athletes to profit from their NIL. As the NIL landscape continues to develop, one of the more interesting questions posed as a result of these new policies is whether or how a student athlete’s engagement in NIL at the high school level might affect their NCAA eligibility. A new lawsuit of first impression could address this very issue.

In November 2023, Matt and Ryan Bewley, twin brothers from Fort Lauderdale, Florida, filed a federal lawsuit against the NCAA in the U.S. District Court for the Northern District of Illinois.

The Bewleys are former basketball players at Overtime Elite Academy (“OTE”). OTE is a professional basketball league and training program for high school players. “In addition to basketball training, OTE places equal importance on education. The league offers a fully accredited curriculum, allowing players to pursue their academic goals alongside their basketball aspirations.”[1] OTE players can either make a career playing for the OTE league, or they can play until they satisfy the coursework necessary to graduate and go to college and perhaps play for a college team.

Established mere months before the NCAA lifted their ban on NIL, OTE, coincidentally, was founded in part to offer an alternative path for athletes to receive compensation for their talents.[2] As such, OTE initially offered their athletes only salaries. After the NCAA changed their NIL policies, however, OTE adjusted the options available to their players. Because accepting a salary can threaten college eligibility, OTE today offers their players one of two options: they can either collect a salary or, for those with collegiate-level aspirations, opt for a scholarship instead thus keeping their eligibility intact.

When the Bewleys signed with OTE, they did not have the option to elect a scholarship. Instead, they were paid a salary. The brothers were later awarded and accepted scholarship offers to play for Chicago State University. As a result of their OTE payments, however, the NCAA, citing amateurism rules, deemed the Bewley brothers to be ineligible. The NCAA reasoned that because the Bewleys’ OTE compensation exceeded their “actual and necessary expenses,” they could not be considered amateur players. Additionally, the NCAA “also said the twins competed for a team that considered itself professional.”[3]

In their lawsuit, the Bewleys argue that the NCAA’s amateurism rules are anticompetitive and violate federal antitrust law; specifically, Section 1 of the Sherman Act. They allege that the NCAA is effectively restraining trade by limiting the amount of compensation that student-athletes can receive. This argument is reminiscent of the arguments raised by the Plaintiffs in the Alston case, which opened the door for NIL. In Alston, the Plaintiffs argued that the NCAA violated federal antitrust law by placing limits on the education-related benefits that colleges and universities can provide to student-athletes. The United States Supreme Court ruled in favor of the Plaintiffs in Alston, applying antitrust law directly to the NCAA and finding that the rule was an anti-competitive restriction on interstate commerce.

Both Alston and now Bewley challenge the NCAA’s authority to regulate student-athletes’ compensation. The Bewley brothers are also alleging that the NCAA’s determination violates state law, specifically, the Illinois Student-Athlete Endorsement Rights Act (“ISAEA”). The ISAEA allows student-athletes in Illinois to monetize their NIL by entering into deals with any company or organization.

The NCAA’s primary rebuttal in Bewley is that, while student-athletes can now profit from their NIL, they are still considered “amateurs” and should not be paid to play for professional teams while at the high school level. Specifically, the NCAA provides that “[p]rospective student-athletes may accept compensation from their club team while in high school, provided payments do not exceed costs for the individual to participate on the team.”[4] In other words, the compensation received must be “actual and necessary,” which the NCAA defines as being: meals, lodging, apparel, equipment and supplies, coaching and instruction, health/medical insurance, transportation, medical treatment and physical therapy, facility usage, entry fees, and other reasonable expenses.

The NCAA believes that the Bewleys’ compensation from OTE exceeded these permissible limits, maintaining that it was not related to legitimate educational expenses and that their participation in the OTE program was akin to playing for a professional team.

The outcome of the Bewley case could have a significant impact on the future of compensation in college athletics, and specifically as it relates to the further application of federal antitrust law to the NCCA as well as nuanced circumstances where high school athletes who received payment before the NCAA permitted NIL now face risks relating to their collegiate eligibility.

[1] What is Overtime Elite?, Fan Arch, https://fanarch.com/blogs/fan-arch/what-is-overtime-elite (last visited November 11, 2023).

[2] Overtime Elite: Basketball Leaguge to Pay High School Players Six-Figure Salaries, Boardroom, https://boardroom.tv/overtime-elite-basketball-league-to-pay-high-school-players-six-figure-salaries/ (March 4, 2021):

OTE sees itself as a solution to the lack of compensation for amateur athletes and will offer every player a minimum salary of $100,000 per year, plus bonuses and equity shares in Overtime. Players will also profit from their likeness, a long-disputed issue in college sports, through sales of jerseys, trading cards, video games, and NFT’s.

Athletes will also be able to sign direct sponsorships with sneaker companies, something that is not allowed for collegiate athletes.

“Paying basketball players isn’t radical,” said Overtime President, Zack Weiner. “What’s radical is telling people who put in thousands of hours of work that they have to do it for free.” OTE will change this.

[3] Twin Brothers Suing NCAA in Federal Court Over Eligibility Dispute Involving NIL Compensation, Associated Press News, https://apnews.com/article/ncaa-nil-lawsuit-3f8cd7d2c6f7b73e816f77741663fb24 (November 3, 2023, 9:10 PM) (internal quotations omitted).

[4] Payment from Sports Team, NCAA, http://fs.ncaa.org/Docs/eligibility_center/ECMIP/Amateurism_Certification/Payment_from_team.pdf (last visited November 11, 2023).

© Copyright 2023 Squire Patton Boggs (US) LLP
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Competition for Control of College-Athletes Enters New Playing Field

November 7, 2023, may become a monumental day in the history of the National Collegiate Athletic Association (NCAA). It is the first day of a potentially groundbreaking hearing. Region 21 of the National Labor Relations Board will be hearing a case brought by members of the football, men’s basketball, and women’s basketball teams against the University of Southern California (USC), the PAC-12, and the NCAA. The crux of their argument is that the three major entities should be considered “joint employers” who have systematically misclassified the players as “student-athletes” rather than as employees.

The implications of this Board hearing could have far-reaching implications across the country. The NLRB General Counsel Jennifer Abruzzo has already signaled that, in her opinion, certain players at colleges and universities should qualify as employees of their institutions. If the administrative law judge were to agree with Abruzzo’s opinion, the impact on the national landscape of collegiate athletics would be immediate.

If these players are found to be employees, each player would be entitled to the benefits of traditionally employed individuals, such as compensation, overtime, social security, worker’s compensation, health and safety protections, protections against discrimination and harassment, and a statutory right to unionize and collectively bargain for a share of collegiate sport revenues.

While being found to be employees would be looked at as a major win for the impacted players, such a determination would cause complicated issues for colleges and universities across the country. These issues include compliance with Title IX of the Education Amendments of 1972 and the Immigration Nationality Act, among others. Further, having some teams but not others qualify likely will create a two-tier system throughout the country. This divide would be even further enhanced if the Board finds certain players, but not others, qualify as employees.

Testimony will not be heard until the week of December 18, at the earliest. Higher education institutions, players, and fans alike will be monitoring this hearing as it progresses.

Jackson Lewis P.C. © 2023
For more news on Student Athletes as Employees, visit the NLR Entertainment, Art & Sports section.

Division I Universities Must Be Ready for Changes to the NCAA Infractions Process

The NCAA Division I Board of Directors has adopted key changes to the way in which NCAA infractions matters will be investigated and processed in the future. The changes, which take effect on January 1, 2023, are intended to modernize and enhance the process, while focusing resources on the most serious violations. Another objective is to reduce the time needed to process and resolve violation proceedings.

President of the University of Georgia and Chair of the Division I Board of Directors Jere Morehead said in August that NCAA members are “committed to resolving cases fairly and in a timely fashion, thus holding those responsible for violations accountable and avoiding penalizing those who were not involved in rule-breaking.”

Among the key changes are the following:

Enhanced duty to cooperate: Institutions, staff, and student-athletes, upon learning of potential violations, will be required to preserve information, to provide immediate access to all electronic devices, and to encourage family members, spouses, boosters, and others to cooperate in the investigation. The number of aggravating and mitigating factors in the Bylaws has been expanded to reward prompt and full cooperation and deter efforts to hinder or impede investigations.

New head coach responsibility standard: Head coaches will be held responsible for serious violations committed by those who report to them directly or indirectly. Only in determining the appropriate penalty will the Committee on Infractions (COI) consider whether the head coach promoted compliance and monitored the program. The previous infractions approach, which included a rebuttable presumption of responsibility on the part of a head coach, has been abandoned.

Additional method for resolution: A new alternative for resolving infractions cases has been added, with the aim of providing the COI greater flexibility and reserving full hearings for only the most serious cases. The new method, known as a “Written Record Hearing,” will be employed in cases in which the facts are largely undisputed and the alleged violations not numerous or significant.

Clarification of appeal standard and limitation of appeals: Findings and penalties by the COI will be affirmed by the Infractions Appeals Committee (IAC) if there is information in the record that supports the decision. Findings and penalties will not be set aside unless no reasonable person could have made the ruling given the factual record. Appeals to the IAC as to the penalties imposed will be limited to those sanctions that fall outside legislated penalty guidelines, or “core penalties.” The majority of appeals will be decided based on the written record without the need for oral argument. Finally, and as is also the case with the revised COI process, extensions of time will be granted only in extreme and clearly defined circumstances.

Aggravating and mitigating factors: The new guidelines clarify which factors apply to institutions and which apply to involved individuals. Previously, this was unclear and often debated. New aggravating factors have been added, including hindering an investigation or inhibiting the COI’s processing of a case. New mitigating factors also have been added, including a demonstration of exemplary cooperation by, for example, securing meaningful cooperation from an outside party.

Name, image and likeness (NIL): In this rapidly evolving area, the bylaws provide that if available information indicates that behaviors surrounding an NIL offer or agreement is contrary to NCAA legislation, it shall be presumed that a violation occurred.  The charged institution or involved individual will then be required to rebut this presumption with credible and sufficient information that a violation did not occur.

In addition to the above changes, the new infractions construct eliminates the Independent Accountability Resolution Process (IARP), which had been created at the recommendation of the Commission on College Basketball chaired by Condoleezza Rice. While acknowledging the panel’s thoroughness in deciding the several cases referred to the IARP, it was concluded that this new process prolonged case timelines and required substantial additional resources to bring cases to resolution.

Finally, the Board of Directors announced that it will consider additional future changes that may help to deliver timely and fair outcomes in infractions matters. Among the subjects under further consideration are (i) requiring increased documentation of recruiting efforts, (ii) adjusting the size and composition of the COI, (iii) modification of penalty ranges (including alternatives to post-season bans), and (iv) enhancing confidentiality rules for involved parties during investigation by the NCAA enforcement staff.

Jackson Lewis P.C. © 2022
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Michigan Bill Would Bar Student-Athlete Unionization

Jackson Lewis Law firm

With a National Labor Relations Board decision on whether football players at Northwestern may proceed with their unionization efforts looming, Michigan is considering a bill that would prevent student-athletes from similarly attempting to unionize.

The bill, sponsored by Rep. Al Pscholka, would prevent student-athletes at Michigan’s public universities from exercising collective bargaining rights based on their participation in a university sports team. It states, “a student participating in intercollegiate athletics on behalf of a public university in [Michigan]…is not a public employee entitled to representation or collective bargaining rights….”

Michigan has seven public universities competing at the Division I level. The bill would bar student-athletes at these universities from engaging in unionization efforts similar to the ones undertaken by the football players at Northwestern.

While none of the seven universities has faced a union organizing campaign from any of its student-athletes, prompting one opponent of the bill, Rep. Andy Shor, to describe the bill as a solution to a nonexistent problem.

“I don’t understand the tremendous rush on this,” Shor said. “We’re taking an action that addresses something that’s happening in Evanston, Illinois.”

However, if the Board finds in favor of the football players at Northwestern, universities across the country likely will face similar unionization efforts from other student-athletes. Michigan’s may be an attempt to get out in front of such efforts.

According to Ramogi Huma, the president of the organization spearheading the unionization campaign at Northwestern, the College Athletes Players Association, Michigan’s bill is “backhanded confirmation that student-athletes are state employees by including them in a list of workers who can’t bargain effectively.” However, the bill does not categorize student-athletes as employees and, indeed, it states that “individuals whose position does not have sufficient indicia of an employer-employee relationship” are also prevented under the bill from engaging in collective bargaining.

Huma also warned that if the bill passes, it would have a negative impact on the ability of Michigan’s public universities to recruit student-athletes because prospective student-athletes interested in being part of a union could elect instead to go to either private universities in Michigan or universities in states with no restrictions on their unionization efforts.

Thus far, none of the seven Division I public universities in Michigan have commented publicly on the bill. However, the bill likely is being closely followed by them as well as public universities in other states and major athletic conferences, such as the Big Ten, home to Northwestern, Michigan, Michigan State, and Ohio State.

ARTICLE BY

Michael B. Ackerstein
OF
Jackson Lewis P.C.