Since our last notice on Names, Images, and Similarities Laws (NIL) was posted, there have been a number of newly enacted and proposed state and federal laws that we would like to highlight.
In January 2021, Michigan Governor Gretchen Whitmer signed House Bill No. 5217, which allows students to begin monetizing their NIL rights. Michigan’s law shares a number of similarities with 6 other state NIL laws that have been passed. [1] that it: (1) contains rules governing athletes’ disclosure requirements, (2) contains licensing requirements for agents, and (3) prevents a sports student’s aid or scholarship from being reduced or revoked for earning NIL-. based remuneration. One notable difference is that while this law prohibits a student-athlete from entering into a contract that contradicts his team’s contract, it is limited to NIL contracts where a student exhibits a sponsor’s clothing or otherwise must advertise the sponsor. This is a more explicit and narrow construction than the other state NIL laws. Michigan’s law is set to go into effect on December 31, 2022.
On March 26, 2021, Arizona Governor Doug Ducey signed Law 1296 of the Arizona Senate. In accordance with Michigan and the other states that have passed NIL legislation, Arizona prohibits (1) student-athletes from entering into contracts that conflict with their team’s contracts, (2) includes agent licensing requirements and (3) protects student-athletes from being denied a scholarship or eligibility for their sport if they receive NIL-based compensation. One of the different things about Arizona law is that it also prevents athletes from entering into contracts that conflict with the intellectual property rights of another person or their institution. There is also no requirement that student athletes disclose endorsement contracts. Pursuant to the Arizona legislative process, all laws come into effect 90 days after state law is adjourned, unless otherwise specified in the bill. Applying this formula to the postponement of Arizona state law on April 24, 2021, Senate Draft 1296 is expected to go into effect on July 23, 2021.
In transitioning to the federal level, the Law on Economic Freedom for College Athletes was introduced at the 117th Congress on February 4, 2021.[2] This bill gives student-athletes the right to be represented by an agent and prohibits colleges, universities, and sports associations from preventing or regulating agent relationships between students and athletes. Receiving NIL compensation will not adversely affect a sports student’s eligibility. Interestingly, the Law on the Economic Freedom of University Athletes does not contain an explicit prohibition for student-athletes to enter into contracts that affect team contracts, nor does it contain any explicit disclosure requirements. What sets this law apart from others is that it prohibits colleges and universities from preventing student-athletes from forming a collective representative to facilitate group licensing agreements. This is important in that it may lead to a myriad of labor law and intellectual property issues / considerations that the sports departments want to consider and consider. Additionally, the bill addresses discrimination-related concerns by encouraging those institutions and / or parties to do so.Associated with institutions that provide NIL-related support to student athletes will make that support available to all college athletes regardless of race, gender, or sport.
An additional federal law is the Law on the Protection and Compensation of Amateur Athletes of 2021.[3] Also in accordance with several state NIL laws, the bill must be published within 7 days of the sports student signing an endorsement contract. This requirement also applies to the recruitment of athletes. Before signing a letter of intent, they must disclose the endorsement contracts by providing the institution with a copy of the contract. The bill prohibits institutions from penalizing or banning student athletes for being represented by an agent, and limits penalties related to transfers. A student athlete does not lose his eligibility if he notifies the intention to transfer at least 7 days before the transfer and does not do so within 60 days of the start of his sporting season or during the season itself.
There are several highlights of this bill that require the attention of sports departments, compliance officers, and other college administrators. Primarily, these are (1) the formation of the Amateur Intercollegiate Athletic Corporation (AIAC), (2) the permission of college athletes to declare the return of a professional sports draft to college sports, and (3) the legally binding disclosure that colleges and Universities must make athletes before they commit to enroll in the institution. The AIAC is an independent company, comprised at least in part of current or former student-athletes, whose mission is to provide guidelines for best practice regarding agency and endorsement contracts. A particular purpose they serve is to provide athletes with a method of resolving contractual disputes quickly by providing a neutral referee to resolve complaints. Second, the bill allows student-athletes who enroll in a professional draft sport to return to college sports if they: (1) receive no compensation from a professional league, professional team, sports agent, athlete representative, or professional affiliate receive sports and (2) declare their intention to resume competition in college sports within 7 days of the completion of the draft. Third, before an athlete commits to enroll in a particular facility, the facility must provide the sports student with the following information: (1) The amount and duration of the grant grant that the facility will provide to each facility in support of the athlete in the academic year in to which they are entitled, and also after their eligibility expires, (2) the percentage of health insurance required during the athlete’s eligibility and the amount of expenses the facility pays during and after the athlete’s eligibility period; and (3) whether the institution will purchase disability insurance.
The landscape of NIL legislation is evolving rapidly and constantly. Florida’s NIL law is scheduled to come into effect in July 2021. Massachusetts, Pennsylvania, and West Virginia could well have passed NIL laws this calendar year if the law had been passed very soon after. It’s also worth noting that 9 states – Alabama, Arkansas, Georgia, Iowa, Kansas, Louisiana, Mississippi, New Mexico, and Oregon – proposed NIL laws in February or March 2021, and each bill will take effect on either July 1. 2021 or January 1, 2022.
[1] California, Colorado, Florida, Idaho, Nebraska, and New Jersey.
[2] The bill was introduced in both the US House of Representatives and the US Senate, with HR 850 being introduced, introducing Representative Lori Trahan (D-MA) and p. 238 Senator Chris Murphy (D-CT).
[3] This bill was introduced and sponsored by Senator Jerry Moran (R-KS) on February 4, 2021.
2021 Goulston & Storrs PC. National Law Review, Volume XI, Number 105
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