SF 2330 (LSB 5146SV (1) 88)

SENATE FILE 2330

BY  COMMITTEE ON EDUCATION

(SUCCESSOR TO SF 2058)

A BILL FOR

An Act relating to compensation of college athletes and including effective date provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  261I.1  Definition.
   For purposes of this chapter, “postsecondary educational institution” means a regents institution, community college, or private postsecondary educational institution in Iowa. 
    Sec. 2.  NEW SECTION.  261I.2  Compensation of college athletes —— limitation on postsecondary institutions.
   1.  A postsecondary educational institution shall not enforce any rule, requirement, standard, or other limitation that prevents a college athlete enrolled at the institution from fully participating in intercollegiate athletics and earning compensation as a result of the use of the athlete’s name, image, or likeness rights, or athletic reputation, or that otherwise penalizes such an athlete. A college athlete’s financial aid eligibility, amount, duration, or renewal, or any other benefit for which the athlete is otherwise eligible, shall not be affected by the athlete earning compensation from the use of an athlete’s name, image, or likeness rights, or athletic reputation.
   2.  For purposes of this chapter, financial aid from a postsecondary educational institution in which a college athlete is enrolled is not compensation for use of the athlete’s name, image, and likeness rights, or athletic reputation. Such financial aid shall not be revoked or reduced as a result of an athlete earning compensation pursuant to this chapter.
    Sec. 3.  NEW SECTION.  261I.3  College athletes —— professional representation.
   1.  A postsecondary educational institution shall not interfere with or prevent a college athlete enrolled at a postsecondary educational institution from fully participating in intercollegiate athletics for obtaining professional representation in relation to contracts or legal matters, including but not limited to representation provided by athlete agents or financial advisors, or legal representation provided by attorneys.
   2.  Professional representation provided to college athletes enrolled at a postsecondary educational institution by athlete agents, financial advisors, or attorneys shall only be provided by persons licensed in the state of Iowa.
    Sec. 4.  NEW SECTION.  261I.4  College athletes —— apparel, equipment, or beverage contracts.
   1.  A college athlete shall not enter into an apparel, equipment, or beverage contract providing compensation to the athlete for use of the athlete’s name, image, or likeness rights, or athletic reputation that requires the athlete to display a sponsor’s apparel, equipment, or beverage, or that otherwise advertises for the sponsor during official team activities if such provisions are in conflict with a provision of the athlete’s team contract.
   2.  A postsecondary educational institution asserting a conflict described in subsection 1 shall disclose to the college athlete and the athlete’s legal representative, if applicable, the full contract that is asserted to be in conflict. The college athlete and the athlete’s legal representative, if applicable, shall not disclose to any other person the terms of an institution’s contract that the institution deems to be a trade secret or otherwise confidential.
    Sec. 5.  NEW SECTION.  261I.5  Disclosure of contract —— confidentiality.
   A college athlete who enters into a contract providing compensation to the athlete for use of the athlete’s name, image, or likeness rights, or athletics reputation, shall disclose the full contract to an official of the postsecondary educational institution at which the athlete is enrolled designated by the institution for that purpose. The institution and designated official shall not disclose to any other person the terms of such contract that the college athlete or the college athlete’s legal representative deems to be a trade secret or otherwise confidential.
    Sec. 6.  NEW SECTION.  261I.6  Compensation outside of official, mandatory team activities.
   The terms of a team contract of a postsecondary educational institution’s athletic program shall not prevent a college athlete from receiving compensation for using the athlete’s name, image, or likeness rights, or athletic reputation for a commercial purpose when the athlete is not engaged in official, mandatory team activities if such activities are recorded in writing and made publicly available. Such team activities shall not exceed twenty hours per week during the athletic season and eight hours per week during the off-season.
    Sec. 7.  NEW SECTION.  261I.7  Trust fund for compensation.
   A team contract of a postsecondary educational institution’s athletic program may require a college athlete to deposit some or all funds received as compensation for using the college athlete’s name, image, or likeness rights, or athletic reputation, into a trust fund, with all applicable state taxation deferred, until the athlete is no longer eligible to participate in the institution’s athletic program.
    Sec. 8.  NEW SECTION.  261I.8  Certification by treasurer.
   1.  A person shall not do any of the following without prior certification by the treasurer of state:
   a.  Provide professional representation to a college athlete as described in section 261I.3, subsection 1.
   b.  Administer a trust fund established pursuant to section 261I.7.
   2.  The treasurer of state shall establish by rule pursuant to chapter 17A certification processes for the persons described in subsection 1. The treasurer of state shall only certify persons who have significant qualifications for, or demonstrated experience providing, representation to college athletes in negotiations or financial or other relationships with athletic associations, conferences, or other groups or organizations with authority over intercollegiate athletics.
    Sec. 9.  NEW SECTION.  261I.9  Legal requirements —— applicability.
   1.  This chapter applies to contracts entered into, modified, or renewed on or after the effective date of this Act.
   2.  College athletes, postsecondary educational institutions, athletic associations, conferences, or other groups or organizations with authority over intercollegiate athletics, and state or local officials seeking to prosecute violators of this chapter, shall not be deprived of any protections provided under Iowa law with respect to a controversy that arises in Iowa and shall have the right to adjudication in Iowa of a legal claim that arises in Iowa.
   3.  A legal settlement shall not permit noncompliance with this chapter. Any such provision is void and unenforceable.
    Sec. 10.  NEW SECTION.  261I.10  Severability.
   The provisions of this chapter are severable pursuant to section 4.12.
    Sec. 11.  Section 422.7, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  59.  a.  Subtract, to the extent included, the amount of any income deposited in a trust fund under section 261I.7.
   b.  Add, to the extent previously deducted under paragraph “a”, the amount withdrawn during the tax year from a trust fund under section 261I.7.
    Sec. 12.  EFFECTIVE DATE.  This Act takes effect July 1, 2023.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the compensation of athletes enrolled at postsecondary educational institutions. The bill defines “postsecondary educational institution” as a regents institution, community college, or private postsecondary educational institution in Iowa.
   The bill prohibits a postsecondary educational institution from enforcing any rule, requirement, standard, or other limitation that prevents a college athlete enrolled at the institution from fully participating in intercollegiate athletics and earning compensation as a result of the use of the athlete’s name, image, or likeness rights, or athletic reputation or that otherwise penalizes such an athlete. The bill provides that a college athlete’s financial aid eligibility, amount, duration, or renewal, or any other benefit for which the athlete is otherwise eligible, shall not be affected by the athlete earning compensation from the use of an athlete’s name, image, or likeness rights, or athletic reputation.
   The bill prohibits a postsecondary educational institution from interfering with or preventing a college athlete enrolled at the institution from fully participating in intercollegiate athletics for obtaining professional representation in relation to contracts or legal matters. The bill provides that professional representation provided to college athletes enrolled at a postsecondary educational institution by athlete agents, financial advisors, or attorneys shall only be provided by persons licensed in the state of Iowa.
   The bill prohibits a college athlete from entering into an apparel, equipment, or beverage contract providing compensation to the athlete for use of the athlete’s name, image, or likeness rights, or athletic reputation that requires the athlete to display a sponsor’s apparel, equipment, or beverage, or that otherwise advertises for the sponsor during official team activities if such provisions are in conflict with a provision of the athlete’s team contract. The bill requires the disclosure of the full contract to the college athlete and the athlete’s legal representative in such instances and provides for the nondisclosure of the terms of such a contract.
   The bill requires a college athlete who enters into a contract providing compensation to the athlete for use of the athlete’s name, image, or likeness rights, or athletics reputation, to disclose the full contract to a designated official of the postsecondary educational institution at which the athlete is enrolled and provides for the nondisclosure of the terms of such a contract.
   The bill provides that the terms of a team contract of a postsecondary educational institution’s athletic program shall not prevent a college athlete from receiving compensation for using the athlete’s name, image, or likeness rights, or athletic reputation for a commercial purpose when the athlete is not engaged in official, mandatory team activities if such activities are recorded in writing and made publicly available. The bill limits such team activities to twenty hours per week during the athletic season and eight hours per week during the off-season.
   The bill provides that a team contract of a postsecondary educational institution’s athletic program may require a college athlete to deposit some or all funds received as compensation for using the college athlete’s name, image, or likeness rights, or athletic reputation into a trust fund, with all applicable state taxation deferred, until the athlete is no longer eligible to participate in the institution’s athletic program.
   The bill requires certification by the treasurer of state before a person may provide professional representation to a college athlete as described in the bill or administer a trust established pursuant to the bill. The bill requires the treasurer of state to establish certification processes by rule and to only certify persons who have significant qualifications for, or demonstrated experience providing, representation to college athletes in negotiations or financial or other relationships with athletic associations, conferences, or other groups or organizations with authority over intercollegiate athletics.
   The bill applies to contracts entered into, modified, or renewed on or after the effective date of the bill.
   The bill provides that college athletes; postsecondary educational institutions; athletic associations, conferences, or other groups or organizations with authority over intercollegiate athletics; and state or local officials seeking to prosecute violators of the bill shall not be deprived of any protections provided under Iowa law with respect to a controversy that arises in Iowa and shall have the right to adjudication in Iowa of a legal claim that arises in Iowa. The bill provides that a legal settlement that permits noncompliance with the bill is void and unenforceable. 
   The bill includes severability provisions.
   The bill takes effect July 1, 2023.