OCR Issues Guidelines on Title IX’s Application to NIL Payments
As the sun sets on the Biden administration, the Office for Civil Rights of the U.S. Department of Education (OCR) provided a new Fact Sheet on Jan. 16, 2025, to “clarify” how Title IX will apply to universities’ direct payments to student-athletes for use of their names, images and likenesses (NIL) under the proposed House vs. NCAA settlement. The Fact Sheet is consistent with decades of prior OCR guidance. It is not surprising that “compensation from a school for use of a student-athlete’s NIL” under the House settlement will qualify as “athletic financial assistance” subject to Title IX. It is also not surprising that OCR reminded schools that they retain responsibility to treat male and female student-athletes equitably even when NIL payments are made by affiliated third parties like collectives.
The key, as always, to Title IX compliance is in the implementation – the details of how schools are implementing their House structures.
Title IX Applies to Schools’ House Payments
While OCR inaccurately mingled two different Title IX standards applicable to athletic financial assistance on page 4 of the Fact Sheet (which confused many commentators on social media), OCR ultimately set forth the standard in the applicable Section 4 that is consistent with Title IX regulations dating back to 1979:
“When a school provides athletic financial assistance in forms other than scholarships or grants, including compensation for the use of a student-athlete’s NIL, such assistance also must be made proportionately available to male and female athletes.” (Emphasis added.)
This is not necessarily a dollar-for-dollar proportionality test. There may be legitimate non-discriminatory justifications to explain differences in who qualifies for House payments as well as their amounts, as long as a school’s House payment structure provides for equitable availability.
Implementation Is Key
The pathway for schools to implement House consistently with federal civil rights laws remains available for those universities that choose to take it.
The keys for schools’ Title IX-compliant implementation will remain implementing an equitable NIL marketing strategy and structuring good-faith NIL valuations, as many schools have begun to do. Of course, there are many nuances to the legal implementation.
Conclusion
Because the new Fact Sheet doesn’t change long-standing Title IX guidance, this particular Biden administration action is unlikely to affect Judge Claudia Wilken’s approval of the House settlement itself, and nothing would be accomplished if this Fact Sheet were withdrawn by OCR next week because it merely reiterates existing Title IX concepts. Of course, the incoming administration or Congress may take a new legal approach to this evolving area of our industry.
Lawsuits are inevitable over Title IX’s application to schools’ House implementation strategies. Developing Title IX-compliant NIL and House frameworks now are essential for future defense strategies.
Department of Education Warns NCAA Schools That NIL Deals May Implicate Title IX Obligations
The U.S. Department of Education warned National Collegiate Athletic Association (NCAA) schools that payments to athletes for the use of their names, images, and likenesses (NIL) implicate the gender equal opportunity requirements of Title IX of the Education Amendments, even if from outside sources.
Quick Hits
The U.S. Department of Education released a fact sheet that provides guidance on educational institutions’ Title IX obligations with NIL compensation for college athletes.
The guidance confirms the Department of Education’s view that NIL compensation from schools constitutes “athletic financial assistance” covered by Title IX’s equal opportunity requirements.
The guidance comes amid a changing landscape in college sports with NIL compensation and the prospect of potential revenue-sharing between schools and college athletes.
On January 16, 2024, the Department of Education’s Office for Civil Rights (OCR) released a nine-page fact sheet, titled, “Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities,” providing long-awaited guidance on schools’ obligations with respect to Title IX in the context of NIL.
The fact sheet confirms that the department views NIL compensation provided by a school as “athletic financial assistance,” which Title IX requires to be distributed in a nondiscriminatory manner under Title IX.
The guidance comes years after the NCAA lifted restrictions on college athletes’ ability to earn compensation for their NIL. This has led to the formation of so-called NIL collectives, organizations typically comprised of boosters, fans, alumni, and businesses, to facilitate NIL deals for athletes.
Further, the NCAA and major conferences have reached a proposed settlement in litigation that will pay nearly $2.8 billion in back pay to former athletes over the next ten years and establish a revenue-sharing framework in which schools will be allowed to share more than $20 million annually with their athletes.
Title IX regulations require schools to provide equal athletic opportunity, regardless of sex, including with “athletic financial assistance” that schools award to college athletes.
According to the OCR fact sheet, the Department of Education “does not view compensation provided by a third party (rather than a school) to a student-athlete for the use of their NIL as constituting athletic financial assistance awarded by the school.” However, the fact sheet warns that the OCR has “long recognized that a school has Title IX obligations when funding from private sources, including private donations and funds raised by booster clubs, creates disparities based on sex in a school’s athletic program or a program component.”
“The fact that funds are provided by a private source does not relieve a school of its responsibility to treat all of its student-athletes in a nondiscriminatory manner,” the Department of Education said in the fact sheet. “It is possible that NIL agreements between student-athletes and third parties will create similar disparities and therefore trigger a school’s Title IX obligations.”
The department noted the variety and evolving nature of NIL agreements in college athletics and specified that the application of Title IX “is a fact-specific inquiry.” Further, and in recognition of the continued evolution of college athletics, the department noted that “Title IX regulations assume that the receipt of financial assistance does not transform students, including student-athletes, into employees,” and the fact sheet, thus, operates under the same assumption. The Department of Education stated that it would “reevaluate” this position should the legal landscape around that issue change.
Next Steps
The fact sheet comes just days before the presidential administration changeover, which is anticipated to impact the federal government’s response to NIL pay and make systemic changes to college sports, including regarding the question of employee status. Still, the fact sheet indicates that schools may face risks under Title IX with the distribution of NIL compensation even if third parties are providing that money.
2024 Title IX Regulations Vacated Nationwide
On January 9, 2025, the Sixth Circuit Court of Appeals decided the case of Tennessee v. Cardona, vacating the 2024 Title IX regulations nationwide. The court ruled that the issuance of the 2024 regulations exceeded the Department of Education’s authority and was unconstitutional on multiple grounds.
The ruling may be appealed, but for now, institutions covered by Title IX should revert to compliance with their policies in effect under the 2020 Title IX regulations.
The 2024 Title IX regulations, which took effect on August 1, 2024, had faced several challenges that led to injunctions with varying geographic scopes. As a result, prior to the Cardona decision, the Title IX regulations were only effective in about half of the states across the U.S.
2024 Title IX Regulations: “Off the Books”
Yesterday, a federal district court in Kentucky issued a ruling in Tennessee v. Cardona, finding that the 2024 Title IX regulations are unconstitutional and violated the Administrative Procedures Act (APA) by being “arbitrary and capricious.” The court ordered vacatur, which “takes the unlawful agency action ‘off the books. . .’” and prevents application of the regulations “to all who would otherwise be subject to its operation.” (1)
The memorandum opinion of the court found that “expanding the meaning of ‘on the basis of sex’ to include ‘gender identity’ turns Title IX on its head.” (2) Further, the court determined that the First Amendment was violated by requiring Title IX recipients, specifically teachers, to use names and pronouns associated with a student’s asserted gender identity. (3) Furthermore, the court found that the regulations are overly broad and/or vague that schools have no way of predicting what conduct might violate the law. (4) For example, the court cited to the new regulation’s prohibition of “[u]nwelcome sex-based conduct that, based on the totality of circumstances, is subjectively and objectively offensive . . (5) As discussed in the training offered by SMGG on this topic, this portion of the regulation made determination of Title IX violations completely on a case-by-case basis, with no true guide as to offensive conduct. Due to the constitutional infirmity of the regulations, the court also found that the provisions violate the Spending Clause of the United States Constitution. (6)
In determining the appropriate remedy, the court found that all aspects of the new regulations were tainted with the provisions that the court deemed invalid, requiring the entirety of the regulations to be “jettison[ed].” (7) The court held that the “normal remedy” is vacatur when the challenged action of an administrative agency violates the law. (8) The court also granted plaintiffs’ declaratory relief, and characterized it as “Plaintiff States, their political subdivisions, and their recipient schools need not comply with the Rule to receive federal funding.” (9)
What this Means for Your School
The nationwide vacatur of the 2024 Title IX final rule means that the 2020 Title IX final rule as well as the prior Title IX regulations are in effect. It is anticipated that the Department of Education may issue guidance in the aftermath of yesterday’s ruling, which SMGG education attorneys will monitor.
(1) See, State of Tennessee v. Cardona, No., 2:24-00072 (Jan. 9, 2025), p. 13 (citations omitted).(2) Opinion, p. 7.(3) Id. at p. 8.(4) Id.(5) 34 C.F.R. §106.2 (emphasis added).(6) Opinion, p. 10.(7) Id. at p. 12.(8) Id.(9) Id. at p. 15.
U.S. Department of Education’s 2024 Title IX Final Rule Addressing Sex-Based Discrimination and Sexual Harassment Vacated
On January 9, 2025, in State of Tennessee v. Cardona, Civil Action No. 2:24-cv-072-DCR, the U.S. District Court for the Eastern District of Kentucky vacated the Title IX Final Rule that was issued by the U.S. Department of Education on April 29, 2024, and became effective August 1, 2024. The ruling appears to apply nationwide.
Quick Hits
The U.S. District Court for the Eastern District of Kentucky vacated the U.S. Department of Education’s 2024 Title IX Final Rule, which had expanded the definition of sex-based harassment to include sexual orientation, gender identity, sex stereotypes, and pregnancy.
The court found that the 2024 Title IX Final Rule violated the First Amendment and the Spending Clause of the United States Constitution, and it exceeded the U.S. Department of Education’s authority under Title IX of the Education Amendments of 1972, which traditionally prohibited only discrimination based on sex as male or female, not gender identity. The court also determined the rule was vague, overbroad, and arbitrary.
The decision concluded that while the plaintiff states and their schools were not required to comply with the 2024 Title IX Final Rule to receive federal funding, they potentially “could violate Title IX in ways unrelated to the Final Rule, which might render them ineligible for federal funding.” The 2020 Title IX Rule remains in place for federal enforcement and investigations by the U.S. Department of Education.
Among other changes, the 2024 Title IX Final Rule expanded the definition of “sex-based harassment” to include harassment based on sex characteristics, sexual orientation, gender identity, sex stereotypes, and pregnancy.
It also changed when a response was required. The Final Rule had already been halted in twenty-six states, as numerous legal actions were filed to enjoin the U.S. Department of Education from enforcing the Final Rule.
The district court’s decision granted summary judgment to six states (the Commonwealth of Kentucky, the Commonwealth of Virginia, the State of Indiana, the State of Ohio, the State of Tennessee, and the State of West Virginia) and two intervenors, who were the plaintiffs, and it denied summary judgment to the defendants, Secretary of Education Miguel Cardona and the U.S. Department of Education.
Each side had moved for summary judgment. The decision rejected the Department of Education’s reliance on Bostock v. Clayton County, Georgia, 590 U.S. 644 (2020), a Supreme Court of the United States decision in which the Court held that Title VII of the Civil Rights Act of 1964 protects employees against discrimination because of sexuality or gender identity. In its decision, the district court noted that Title VII has different language, goals, and defenses than Title IX and described inconsistencies the Final Rule created within Title IX, which allows sex-based separation in various circumstances. Notably, the new rules did not address transgender participation in sports.
The decision holds that the Final Rule and its corresponding regulations:
violated the United States Constitution, specifically the First Amendment and the Spending Clause;
exceeded the U.S. Department of Education’s statutory authority under Title IX, which prohibits discrimination based on sex as male or female, not gender identity;
infringed on the free speech rights of teachers and others by requiring them to use names and pronouns associated with a student’s asserted gender identity or face harassment claims;
were vague and overbroad and did not provide clear notice to the states of the conditions for receiving federal funds under Title IX; and
were arbitrary and capricious under the Administrative Procedure Act.
The decision concluded that the U.S. Department of Education did not provide a reasoned explanation for departing from its long-standing interpretation of Title IX and that it failed to account for the “glaring inconsistencies” and consequences of the Final Rule.
The court vacated the entire Final Rule and its corresponding regulations, and declared that they were unenforceable nationwide. The decision also granted declaratory relief to the plaintiffs, stating that they did not have to comply with the Final Rule to receive federal funding. The decision modified the fourth request for declaratory relief, holding that “it goes too far to affirmatively conclude that the plaintiff-states ‘are entitled to funding irrespective of their compliance with the Rule.’” After noting that “the plaintiff-States potentially could violate Title IX in ways unrelated to the Final Rule, which might render them ineligible for federal funding,” the court stated that “a more accurate way to characterize this declaratory relief is that the Plaintiff States, their political subdivisions, and their recipient schools need not comply with the Rule to receive federal funding.”
The U.S. Department of Education has not yet commented on the decision. For purposes of federal enforcement and investigative actions by the U.S. Department of Education, the 2020 Title IX Rule is still in place.