Show Me the Money!

So Sayeth More than 400,000 NCAA Athletes on “National NIL Day!”

On Wednesday, June 30, the NCAA announced a new interim policy which would allow student athletes to earn income from their “NIL”- name, image and likeness, effective July 1. Given that it has been estimated that a social media influencer can make approximately 80 cents for each follower, some college athletes with four million followers could stand to earn $3 million in deals annually.

Numerous states had already enacted NIL laws allowing athletes to profit off their name, image and likeness this year. Thus, in the absence of controlling federal law, it was inevitable that the NCAA would finally relent and allow student athletes to engage in NIL activities as long as they are “consistent with the law of the state where the school is located.” And for students in states without NIL laws, they can now participate as long as they do not break NCAA or school rules.

BUT NOT SO FAST! Foreign students in the U.S. on F-1 or J-1 visas should be very careful until the issue is reviewed by DHS. The immigration regulations provide that any “nonimmigrant in the United States may not engage in any employment unless he has been accorded a nonimmigrant classification which authorizes employment or he has been granted permission to engage in employment in accordance with the provisions of this chapter.”

The question is whether DHS would consider these compensated athletes under the new NIL rules to be engaged in “employment” for purposes of maintaining their legal status and whether the student athlete’s immigration status permits this type of employment.

AS OF THIS DATE, DHS HAS NOT COMMENTED ON WHETHER COMPENSATED NIL ARRANGEMENTS CONSTITUTE EMPLOYMENT UNDER FEDERAL IMMIGRATION LAW. For this reason, extreme caution should be exercised by foreign students when considering whether to enter into these NIL agreements.

Recognizing that there is no legal guidance in this area, it could be argued that income from NIL arrangements constitutes passive income rather than employment- especially where income is generated merely from allowing a team jersey or photograph to be used by the entity paying the fees.

However, once “influencer” clauses are part of the deal where the athlete is required to post promotional messages on social media, that would probably cross the “passive” line and could be construed to constitute employment since the term employment is defined to include any service or labor performed by an employee for an employer within the United States. Could it be argued that social media is of such an international nature that it is not performed “in the United States”?

That remains to be seen but until we receive DHS guidance, athletes beware!

*Steven M. Ladik is past President of the American Immigration Lawyers Association and represents numerous professional golfers on the LPGA Tour and PGA TOUR. He also serves as the outside Immigration Counsel to the National Football League. He is a Partner at Seltzer Chadwick Soefje & Ladik, PLLC. www.realclearcounsel.com