In the past six months, the federal courts have addressed some novel issues about what is a “sport” under Title IX, as well as questions of standing, retaliation, financial aid, class certification and Title IX’s equitable opportunities and benefits requirements. These cases reflect that the landscape of Title IX continues to change and requires careful attention to ensure that your school or institution does not inadvertently drift into Title IX violation.
Although transgender athletes have been competing for many years – recall Renee Richards playing professional women’s tennis in the 1970’s – the participation of trans-female athletes has recently resurfaced as a sensational headline topic. The Trump and Biden administrations took polar opposite positions and federal courts have issued conflicting rulings on this issue, which appears headed to the U.S. Supreme Court.
In February 2023, the U.S. Department of Education’s Office for Civil Rights (OCR) issued a resource to the higher education community reiterating some of the core concepts it uses to evaluate whether institutions are providing equal athletic opportunities consistent with Title IX. For colleges and universities, this new resource should serve as a not-so-subtle prompt to review their programs for compliance with applicable standards.
The National Labor Relations Board (NLRB) General Counsel has issued a complaint against the University of Southern California (USC), the Pac-12 Conference and the NCAA claiming that certain USC student-athletes are employees under the National Labor Relations Act (NLRA), and that the conference and the NCAA, along with the university, can be held jointly responsible employers for the treatment of those students under the law. This NLRB litigation portends fundamental consequences for private college and university athletic programs.
In its Bostock v. Clayton County, Georgia ruling in June 2020, the U.S. Supreme Court ruled that the prohibition on “sex” discrimination under Title VII of the Civil Rights Act of 1964 encompasses discrimination on the basis of sexual orientation and/or gender identity. The Bostock ruling raised, but did not decide, the question of whether or not other federal sex discrimination laws, such as Title IX of the Education Amendments of 1972 and the Fair Housing Act, might also inherently prohibit LGBTQ+ discrimination. While the Bostock ruling applies only to Title VII claims, the Biden administration has announced that federal agencies will apply Bostock’s definition of “sex” to other federal civil rights laws. On the day he was inaugurated, Jan. 20, 2021, President Biden issued an executive order stating that federal sex discrimination laws besides Title VII – including Title IX and the Fair Housing Act – should be interpreted as prohibiting gender identity and sexual orientation discrimination. Subsequently, in June 2021, the U.S. Department of Education (ED) issued guidance that Title IX prohibits LGBTQ+ discrimination. In addition, in February 2021, the U.S. Department of Housing and Urban Development (HUD) announced that it would enforce the sex discrimination provisions of the Fair Housing Act as encompassing LGBTQ+ discrimination.
The General Counsel for the National Labor Relations Board (NLRB or Board), who has authority for setting prosecutorial policy for the NLRB, issued a General Counsel Memorandum (GC Memo) today, reversing the prior Board General Counsel’s position and asserting the employee status of certain student athletes at private educational institutions. Board General Counsel Jennifer Abruzzo conveyed her enforcement position in a memorandum to the Board’s Regional Directors. Because non-unionized employees have rights under the federal labor law, the immediate impact will be that the NLRB’s enforcement arm will be processing complaints related to allegations of adverse treatment of certain student athletes for all variety of internal complaints against private institutions.
One month has passed since the NCAA Board of Directors adopted emergency legislation permitting student-athletes to monetize their name, image and likeness (NIL) without violating the long-standing amateurism requirements of NCAA Bylaw 12. Specifically, the NCAA: (1) acknowledged that a state law/executive order regarding NIL supersedes NCAA rules; and (2) provided blanket NIL coverage to student-athletes located in states that do not have a state law/executive order in place. This major change in NCAA legislation is charting new pathways for how student-athletes must be monitored by their institutions to avoid ineligibility. The creation of an internal institutional policy is one way to help organize and manage this new process.
On June 21, 2021, in an opinion providing a very interesting historical overview of collegiate athletics going back to the 19th century and the founding of what is now the National Collegiate Athletic Association (NCAA), the U.S. Supreme Court released its decision in the NCAA v. Alston case. The Supreme Court affirmed the lower court’s injunction of NCAA rules that restrict education-related benefits to Division I basketball and bowl subdivision football student-athletes.
The Supreme Court of the United States has denied both the NCAA’s and plaintiffs’ petitions for certiorari in the O’Bannon case. The parties had petitioned for review of the United States Court of Appeals for the Ninth Circuit’s decision issued in September 2015.
In that decision, the Ninth Circuit sided with the NCAA by vacating that portion of the District Court’s decision that would have required the NCAA to allow member institutions to pay limited deferred compensation to student-athletes for the use of their names, images and likenesses. At the same time, the Ninth Circuit also partly favored plaintiffs by upholding that part of the District Court’s ruling that enjoined the NCAA from enforcing its rules precluding member institutions from providing athletic scholarships up to the full cost of attendance.
The Supreme Court’s denial, which signifies only that it declined to review the case and not that it agreed with the Ninth Circuit’s decision, means that the Ninth Circuit’s decision will stand unchanged.
On March 15, 2016, plaintiffs in the O’Bannon case sought U.S. Supreme Court review of the United States Court of Appeals for the Ninth Circuit’s decision issued in September 2015. In that decision, the Ninth Circuit sided with the NCAA by vacating that portion of the District Court’s ruling that would have required the NCAA to allow member institutions to pay limited deferred compensation to student-athletes for the use of their names, images and likenesses. The Ninth Circuit’s decision did not wholly favor the NCAA, however, as it also upheld that part of the District Court’s ruling that enjoined the NCAA from enforcing its rules precluding member institutions from providing athletic scholarships up to the full cost of attendance. Reports indicate that the NCAA had earlier requested an extension of time to file its own petition to seek U.S. Supreme Court review and that it continues to consider this option following the O’Bannon plaintiffs’ request.
Last week, a three-judge panel for the United States Court of Appeals for the Ninth Circuit voted 2-1 to deny the O’Bannon plaintiffs’ petition for a rehearing en banc of the Ninth Circuit’s September 30, 2015 decision on the NCAA’s appeal of the District Court’s 2014 decision.On appeal, the Ninth Circuit had upheld that part of the District Court’s ruling which enjoined the NCAA from enforcing its rules precluding member institutions from providing athletic scholarships up to the full cost of attendance, but disagreed with that part of the District Court’s decision which would have required the NCAA to permit member institutions to pay deferred compensation to student-athletes in an amount up to $5,000 per year for the use of their names, images and likenesses.While the parties’ next steps in the case are presently unknown, both the O’Bannon plaintiffs and the NCAA could potentially seek U.S. Supreme Court review of the Ninth Circuit’s decision.
On November 27, 2015, the United States Department of Education announced a reversal of its previously existing prohibition against the payment of incentive compensation based on students’ program completion or graduation rates. The announcement follows two successive federal appeals court decisions, in 2012 and 2014, that the Department had not articulated a sufficient rationale for the prohibition. Although the announcement may impact retention and graduation based incentives on any number of fronts, it is of particular interest in the context of coaching and other athletics personnel employment contracts, where the prohibition had created significant uncertainty as to the permissibility of bonuses based on these metrics. As many will recall, on October 29, 2010, the Department adopted so-called Title IV “Program Integrity Rules.” Among other things, these new regulations eliminated previously existing regulatory safe harbors under the statutory prohibition against payment of incentive compensation for securing enrollment, and reversed a prior Department position that payments based on retention, degree completion or graduation were not considered impermissible enrollment-based compensation. In response to a comment questioning the applicability of the prohibition to the recruitment of student-athletes, the Department explained that:
[r]ecruitment of student-athletes is not different from recruitment of other students. Incentive compensation payments to athletic department staff are governed by the restrictions included in [the regulations]. If the payments are made based on success in securing enrollments or the award of financial aid, the payments are prohibited; however, the Department does not consider “bonus” payments made to coaching staff or other athletic department personnel to be prohibited if they are rewarding performance other than securing enrollment or awarding financial aid, such as a successful athletic season, team academic performance, or other measures of a successful team.
Based upon the Department’s statements that (a) incentivizing retention, degree completion or graduation is equivalent to prohibited incentivization of success in securing enrollments, and (b) athletic recruitment is no different than recruitment of other students, it appeared as though athletic department bonuses tied to student-athlete retention or program completion (e.g., graduation rate bonuses and/or Academic Progress Rate (APR)-based bonuses) would violate the new regulations. On March 17, 2011, however, the Department issued a “Dear Colleague” letter for the stated purpose of clarifying a number of new Title IV regulatory requirements, including the revised incentive compensation restrictions. Among other things, the “Dear Colleague” letter noted that:
[t]he preamble [to the new regulations] noted that bonuses for athletic personnel to reward performance other than securing enrollment or awarding financial aid, such as a successful athletic season, team academic performance, or other measures of a successful team, are permitted. . . . This statement merely reflects the fact that the payment of bonuses to athletic personnel is a common practice and is not typically viewed as incentive compensation based on recruitment of individuals as students, but at most may indirectly reward success in recruiting that small subset of individuals whose enrollment would benefit the institution’s athletic program.
Unfortunately, this “clarification” created more ambiguity than it resolved. For example, one could adopt a narrow reading of this explanation as standing for the proposition that payments based on successful on-field/on-court performance reward only indirectly success in recruiting, and that such bonuses (but not bonuses based on retention or academic progress) are therefore permissible. Alternatively, one could read the explanation more broadly as stating that athletic personnel may be paid bonuses based on retention or academic progress because they are not recruiting individuals for the purpose of increasing general student enrollment, but are instead recruiting individuals for the limited benefit of the institution’s athletics program. Under this broader reading, the incentive compensation prohibitions would not apply to athletic department staff insofar as they related solely to the recruitment of student-athletes. In the wake of the Dear Colleague letter, institutions adopted varying practices with respect to retention- or graduation-based incentive compensation in coaching and other athletics employment agreements. Some institutions proceeded cautiously, and restructured academic performance bonuses to be based on GPA or other clearly permissible metrics. Others, believing strongly in the merit of compensating personnel for keeping student-athletes in school and questioning whether the Department truly intended to prohibit this practice, retained graduation rate and APR-based bonus structures. Thankfully, the Department’s November 27 announcement removes any remaining uncertainty in this regard, and clearly supports the use of such bonus structures, as well as retention- or graduation-based compensation in other contexts. The Department’s announcement does not change other aspects of the continuing prohibition on paying commissions, bonuses or other forms of incentive compensation based directly or indirectly on securing enrollments or financial aid. Among other things, the Department expressly refused to alter its prohibition on compensation tied to minority enrollments, which had also been questioned in the court decisions referenced above, stating that the Program Integrity Rules bar compensation based on the number of students enrolled, “irrespective of the student’s minority or other status and irrespective of whether the goal of the recruiters is to increase diversity.”