Articles and Publications
Jan 28, 2020
California's Fair Pay to Play Act
On Sept. 30, 2019, California Governor Gavin Newsom signed the Fair Pay to Play Act (California’s Pay to Play). The new law, which will go into effect on Jan. 1, 2023, gives student-athletes at colleges and universities in California the right to negotiate deals with third parties over the commercial use of their names, images and likeness, making California the first state to create a legal right for college student-athletes to be compensated for such uses. This new law does not create a right for athletes to be paid by their schools; instead, it addresses how companies and organizations can use the athlete’s image and how student-athletes have a right to profit from these uses. California’s Pay to Play also authorizes student athletes to hire agents to assist in negotiating certain endorsement opportunities.
While the law will allow college athletes the right to be paid for the use of their identities, such a right may lead to important limitations for California schools. One of the primary issues is the concern that California colleges would cease to be members of the National Collegiate Athletic Association (NCAA) since they would be unable to satisfy certain elements of the NCAA’s amateurism policy. As noted on the NCAA’s website,
“... student athletes enrolling… at a Division I or II schools must receive a final amateurism certification before being eligible to compete.” Situations that may impact a college athlete’s amateur status include: using a recruiting agency; being represented by a professional sports agent; or endorsing a commercial product or service.”
The consequences of failing to meet the NCAA’s standard of amateurism may include no longer being allowed to participate in national championships sponsored by the NCAA or being removed from the NCAA altogether. This begs the question of whether the NCAA can lawfully ban California colleges and universities from competing because they are following a state law. Proponents of California’s Pay to Play assert that Section 1 of the Sherman Act precludes the NCAA from banning California schools simply for complying with state law as it would arguably constitute an illegal form of wage fixing and an unlawful restraint of trade.
Opponents of this law, including NCAA President Mark Emmert, argue that under California’s Pay to Play, for all intents and purposes, student-athletes become employees of schools and universities. Specifically, Emmert argues that when unrestricted licensing agreements or unrestricted endorsement deals are in effect, the model of college athletics does not exist because deals will be arranged with the support of the school; therefore, student-athletes become professional employees of the school. As a result, because student-athletes may become employees of colleges and universities, there is the potential for a whole host of complications related to federal and state income taxes, Social Security, Medicare and workers’ compensation.
The NCAA is now tasked with potentially revising its amateurism policy in the coming years. State officials set the 2023 effective date, in part to allow California’s colleges and universities ample time to prepare for the sweeping changes. Therefore, despite the potential implications, there is still time before California’s Pay to Play goes into effect, allowing the NCAA to determine its appropriate course of action.
For more information regarding this new act, contact a Chuhak & Tecson Employment law attorney with questions.
This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.
Client Alert authored by: Andrew G. Fullett, Associate
—A special thanks to Chuhak & Tecson P.C. law clerk Elisabeth Volk for her contribution to this article.