Legal Memo Reports | The Legal Edge: NIL
November 12, 2025
A Quick Welcome
Welcome back to the Legal Memo Reports! This week's memo addresses a major unresolved issue in the NIL world: the F-1 Visa Trap.
While domestic athletes pursue opportunities, international student-athletes (ISAs) remain significantly restricted by U.S. immigration law.
This briefing breaks down the precise line between permissible "passive" income and illegal "active" work that risks an ISA's visa status.
[IMPORTANT NOTICE]: This newsletter provides general educational insights. Please see the full legal Disclaimer at the bottom of this email before acting on any information.
Article 1
What NIL Activity is Prohibited Under the F-1 Visa?
The F-1 student visa is issued for the purpose of study, placing heavy restrictions on employment or commercial activities within the U.S.. F-1 students are generally prohibited from working off-campus without specific authorization (like CPT or OPT) and cannot engage in self-employment, including operating a personal NIL business. The definition of "employment" is interpreted broadly by immigration agencies.
The Active vs. Passive Distinction
The legality of an ISA's NIL activity hinges on the distinction between active and passive income within the U.S..
Permissible (Passive Income): Activities where income is not tied to active services. Examples include receiving royalties from licensing a logo or image for merchandise sold online, or group licensing agreements. This is permissible even if the income is deposited into a U.S. bank account.
Impermissible (Active Income): Any activity where the student performs service or labor within the U.S. for compensation. This includes:
Active Engagements: Appearances, autograph signings, content creation, or paid meet-and-greets.
Self-Employment: Selling branded merchandise or monetizing a personal brand from a U.S. location.
Unpaid Work: Even unpaid NIL work may be considered unauthorized if it benefits a third party, such as a business or collective.
Crucial Caveat: If the ISA performs the NIL activity entirely outside the United States, the activity does not constitute work for F-1 visa purposes.
Article 2
Heightened Liability for Institutions and Consequences for ISA’s
Institutional Liability & Consequences
Universities face legal exposure for facilitating or allowing unauthorized employment, including potential civil and criminal penalties and loss of federal funding. For the ISA, noncompliance can result in severe consequences:
Loss of F-1 visa status and immediate requirement to leave the U.S..
Ineligibility for future immigration benefits.
The Conflict and Risk Mitigation
The current policy creates an untenable conflict where an ISA must often choose between violating U.S. immigration law or violating NCAA policy (which prohibits payment for work not performed).
"Knowing Hire" Risk: Institutions hoping to mitigate risk by structuring payments as independent contractor agreements are still vulnerable. Immigration law makes no distinction between independent contractors and employees; both models require proper authorization to perform services. Universities can be charged with "knowing hire" violations even if the payment is reported via a Form 1099.
Lack of Guidance: Despite ongoing efforts and court cases challenging USCIS interpretations, no specific federal guidance has been issued to permit F-1 visa holders to participate in active NIL opportunities.
Institutional Responsibility: Institutions benefit from recruiting ISAs. To support equitable opportunities, they should proactively:
Hire immigration counsel to design NIL compliant protocols.
Create NIL-abroad options for students to monetize from their home countries.
Until the Department of Homeland Security (DHS) amends regulations or issues clear guidance, ISAs are limited to low-level, passive opportunities. Consulting with an experienced immigration attorney is essential to minimize the severe risk of non-compliance.
P.S. Catch up on the full NIL compliance story!
Need Immediate Action? If you missed our last two briefings, get the resources designed for instant use: "5 Questions to Ask Your NIL Advisor"
Want Long-Term Strategy? This Friday, Issue #21 is hitting your inbox, dissecting The Employment Status Bomb: Why NIL is Pushing Athletes Toward Unionization
Critical Context: Issue #20 broke down The Legislative Jungle: How State Laws & Federal Bills Affect Your NIL Contract. Read Here: https://the-legal-edge-nil.beehiiv.com/p/the-legislative-jungle-how-state-laws-federal-bills-affect-your-nil-contract-issue-20
Disclaimer: This newsletter provides educational insights and general information related to the legal side of Name, Image, and Likeness (NIL). It does not constitute legal, financial, or professional advice, and should not be relied upon as such. This content is for informational purposes only, and you should always consult with a qualified professionals for advice tailored to your specific situation.
NIL laws are constantly evolving, and the information provided might not be the most current at all times.