Legal Blog

PA Passes Name Image Likeness (NIL) Law

On June 25, 2021, Governor Wolf of Pennsylvania signed a bill that provides parameters for Name Image Likeness (NIL) activities for student-athletes. Specifically, it relates to, “college athlete compensation related to name, image or likeness and professional representation.” This law was effective June 30, 2021.

The NCAA directs student-athletes and institutions to abide by the state laws where they reside. It follows that student-athletes and universities in the Commonwealth must abide by this new NIL law.

Does This Law Apply to All Colleges in PA?

The law applies to Institutions of Higher Education. Per the law, the following are Institutions of Higher Education:

Essentially, every university or college is covered by this law. With that being said, institutions should confer with counsel to confirm the NIL statute applies to them. For the purposes of this blog, Institutions of Higher Education will be referred to as “Universities.”

What Can Student-Athletes Do and What Can’t They Do?

The law mirrors the NCAA Guidance and explains that a College student-athlete may earn compensation for the use of their NIL.

NIL Contracts Must be Commensurate with Market Value

Interestingly, it explains that the NIL must be “commensurate with the market value” of their NIL. It is worth noting that the “market value” of a student-athlete’s NIL is a bit of an unknown, seeing that this is the first time in history that college athletes are permitted to enter into such agreements. With that being said, student-athletes should consult with an Athlete Agent to ensure that NIL agreements are fair and valued in line with contracts in similar industries and arenas.

NIL Agreements Cannot Be Inducement for Performance or Attendance

The state law mimics the NCAA Guidance as it puts clear limits on the NIL Contracts. CSA’s cannot enter into a contract for compensation in exchange for, “a current or prospective student-athlete to attend, participate or perform at a particular [University].” This is what the NCAA calls, pay-for-play.

NOTE: A college student-athlete is defined as an individual who participates in intercollegiate athletics for an institution of higher education. This law doesn’t apply to students who participate in intramural sports or club sports.

University Trademarks, Logos and Service Marks

Student-athletes do not have a right to use the name, trademarks, service marks, logos, symbols or any other intellectual property, registered or unregistered of their University or Athletic Conference in any of their NIL activities. Student-athletes should be aware of these limitations when entering into a NIL contract.

Prohibited NIL Contracts

Student-athletes are prohibited from entering into contracts relating to (1) adult entertainment products and services, (2) alcohol products, (3) casinos and gambling (sports betting), (4) the lottery, (5) betting in connection with video games, online games and mobile devices, (6) tobacco and electronic smoking products and devices, (7) prescription pharmaceuticals and (8) a controlled dangerous substance.

Notice to the University

Student-athletes MUST disclose the contract at least 7 days prior to the execution of the contract to the University.

Professional Representation

Student-Athletes are allowed to obtain professional representation from the following individuals:

  • Athlete Agent. The NIL Law defines an Athlete Agent as, “a person who enters into an agency contract with an individual or a Student-Athlete or directly or indirectly recruits or solicits an individual or a student-athlete to enter into an agency contract.” It must be noted, that Athlete Agent does NOT include:
    • spouse, parent, sibling, son, daughter or grandparent;
    • an individual person acting solely on behalf of a pro sports team
    • a coach, trainer or another employee of the postsecondary school who is acting on behalf of a student-athlete of the same secondary or postsecondary school.

(NOTE: This is interesting that the law only prohibits a coach/trainer/employee from serving as an agent for an athlete at the University where the coach/trainer/employee works. So, Coach X at PITT University is prohibited from being an athlete agent for Student A who plays soccer at PITT. However, according to the PA NIL Law, Coach X at PITT University is not prohibited from being an athlete agent for Student A who plays soccer at PHILLY University.)

  • Financial Advisor.
  • Attorney. It must be noted that the attorney must be licensed to practice law in the Commonwealth. The law also sets a limitation on attorney representation. A person that represents the University cannot represent the student-athlete.

Restrictions on Universities

Under this law, Universities are prohibited from:

  • Upholding a limitation that prevents a CSA from earning compensation through the use of their NIL;
  • Arranging third-party compensation for the CSA as a way to induce the recruitment of a prospective CSA. Universities must allow students to make money off of their NIL. However, it is crucial that the Universities not engage directly or indirectly in activities that even resemble paying a prospective student-athlete to come to their school.
  • Interfering with a CSA’s ability to participate in intercollegiate athletics because the CSA obtained professional representation in relation to contracts or legal matters related to NIL. Essentially, Universities cannot retaliate against a CSA for obtaining representation in NIL matters.

Universities Have Some Input

The law affords the Universities some authority to limit a Student Athlete’s contractual freedom.

  • EXISTING UNIVERSITY SPONSORSHIP CONTRACTS

The University may step in and prohibit a student-athlete from entering into a NIL agreement that conflicts with an, “existing institutional sponsorship arrangement at the time the college student-athlete discloses a contract to the [University].”

  • INSTITUTIONAL VALUES

The University may step in and prohibit a student-athlete from entering into a NIL agreement when such involvement would conflict with the Institutional Values of the University. The law goes further and requires all Universities to have a policy that specifies the “name, image or likeness activities in which college student-athletes may or may not engage.”

Athletic Conferences Have No Say

The PA NIL law is clear, athletic conferences cannot restrict a CSA from engaging in NIL activities. Moreover, the athletic conferences cannot prevent an institution from participating in the conference because the CSA’s are engaging in NIL activity. Essentially, athletic conferences cannot govern NIL activity of CSA’s.

What if a Student’s Name is on a Jersey?

There is a dedicated section to this issue. The law is explicit:

A person that produces a college team jersey, a college team video game or college team trading cards for the purposes of making a profit shall make a royalty payment to each college student-athlete whose name, image, likeness or other individually identifiable feature is used.

This is big. If a CSA’s name is on a jersey or used in a video game, that CSA is entitled to a royalty. CSA’s should be aware of their rights under this law.

Does NIL Affect Scholarships or Financial Aid?

The law is clear: NIL compensation may not affect the student-athlete’s scholarship eligibility, duration or renewal.

BOTTOM LINE

As the school year gets underway and the fall seasons get moving, institutions and student-athletes must stay current with the requirements of the NCAA Guidance and the Pennsylvania specific law. Individuals and institutions in other states must look at their state-specific laws if any.

Susie.Cirilli@offitkurman.com | 267.338.1395

Susie M. Cirilli is a Labor & Employment attorney that assists clients with issues involving the ADA, FMLA, and Title VII claims. Susie litigates on matters related to hostile work environment, discrimination based on sex, sexual orientation, pregnancy, race and disability. Susie has experience representing employers in fact-finding conferences and mediations before the PHRC and the EEOC. Susie’s practice also consists of counseling and advising clients on employment matters. She often advises employers on day to day employment matters and assists her clients on employee issues such as hiring and terminations, which includes drafting and negotiating separation agreements. Susie has experience drafting and revising employment agreements, employee handbooks, non-compete and non-solicitation agreements. Susie is admitted in the Middle District and Eastern District of Pennsylvania. She is also admitted in the Federal Court for the District of New Jersey.

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman, one of the fastest-growing, full-service law firms in the United States, serves dynamic businesses, individuals and families. With 15 offices and nearly 250 lawyers who counsel clients across more than 30 areas of practice, Offit Kurman helps maximize and protect business value and personal wealth by providing innovative and entrepreneurial counsel that focuses on clients’ business objectives, interests and goals. The firm is distinguished by the quality, breadth and global reach of its legal services and a unique operational structure that encourages a culture of collaboration. For more information, visit www.offitkurman.com.

DELAWARE | MARYLAND | NEW JERSEY | NEW YORK | NORTH CAROLINA | PENNSYLVANIA |SOUTH CAROLINA | VIRGINIA | WASHINGTON, DC