BILL ANALYSIS
SB 1098
Page 1
SENATE THIRD READING
SB 1098 (Corbett)
As Amended June 22, 2010
Majority vote
SENATE VOTE :23-12
JUDICIARY 8-2 ARTS, ENTERTAINMENT, SPORTS
7-1
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|Ayes:|Feuer, Brownley, Evans, |Ayes:|Davis, Silva, |
| |Hagman, Huffman, Jones, | |Blumenfield, |
| |Monning, Saldana | |Charles Calderon, Gaines, |
| | | |Gatto, Monning |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Tran, Knight |Nays:|Audra Strickland |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Bradford, | | |
| |Huffman, Coto, Davis, De | | |
| |Leon, Gatto, Hall, | | |
| |Skinner, Solorio, | | |
| |Torlakson, Torrico | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Harkey, Miller, | | |
| |Nielsen, Norby | | |
| | | | |
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SUMMARY : Enacts the Uniform Athlete Agents Act (UAAA) for the
regulation of agents who represent student and professional
athletes, and effectively replaces, as of July 1, 2011, the
existing Miller-Ayala Athlete Agents Acts, the existing statutory
framework for regulating such activity. Specifically, this bill :
1)Requires athlete agents to register with and obtain a
certificate or registration from the Department of Industrial
Relations (DIR). Requires an applicant for certificate to
provide information concerning the prospective athlete agent's
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background, criminal and disciplinary history, and training and
experience.
2)Prohibits, subject to certain exceptions, a person from acting
as an athlete agent without a certificate of registration, and
would make void a contract to represent a student or
professional athlete made in violation of registration
requirements, and would make voidable, at the athlete's
election, an agency contract that does not conform to other
provisions of the act. Requires the certificate to be renewed,
as specified.
3)Requires the athlete agent to disclose the fact of registration
to a student or professional athlete and inform the athlete as
to where information may be obtained regarding the agent.
4)Specifies that DIR may suspend, revoke, or refuse to renew a
registration for conduct specified and shall provide notice and
an opportunity for a hearing in accordance with current law.
5)Specifies what an agency contract shall state or contain with a
prominent notice to students concerning the implications of
signing the contract. Requires that notice must also be
provided to the athletic director of the educational
institution, as specified.
6)Permits a student athlete to rescind a contract within 14 days
of signing the contract.
7)Provides that certain conduct of the athlete agent may subject
the agent to criminal and civil penalties and allows a court to
suspend or revoke the registration of the agent for criminal
violations, as specified.
8)Provides a professional athlete, student athlete or educational
institution with a right of action against an athlete agent for
damages caused by violation of the UAAA.
9)Requires an athlete agent to create a trust fund for any salary
or funds received on behalf of a professional athlete.
10)Allows DIR to assess a civil penalty against an athlete agent
not to exceed $25,000 for violation of the UAAA. Specifies this
penalty shall become operative on January 1, 2012.
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11)Creates the Athlete Agent Registration Fund and allows for DIR
to establish by regulation a fee to fund the costs of the
registration program.
12)Incorporates many of the specific restrictions on athlete agent
conduct that are presently provided for in the Miller-Ayala Act.
FISCAL EFFECT : According to the Assembly Appropriations:
1)Ongoing special fund costs of about $370,000 for four staff
positions, operating costs, investigations and administrative
hearings.
2)One-time special fund costs of about $110,000 for computer
programming.
3)Revenues from registration fees and renewals would support the
above costs including repaying any start-up loan. Assuming 300
new registrants in 2011-12, 400 in 2012-13, 500 new and renewals
in 2013-14 and thereafter, registration fees would be $1,800 in
2011-12, $1,250 in 2012-13, and $1,000 ongoing.
COMMENTS : In 1997, the NCAA and several academic institutions
asked the National Conference of Commissioners on Uniform State
Laws (NCCUSL) to draft a model bill that, according to the NCAA,
would "provide a uniform system for regulating athlete agents."
In 2000, NCCUSL completed the Uniform Athlete Agents Act.
Although prior to 2000 many states, including California, had
enacted statutes for regulating athlete agents, there were
substantial differences in registration and disclosure
requirements, which made it difficult for agents practicing in
several states to be certain that they were fully complying with
different state laws. The NCAA and the NCCUSL have concluded
that a uniform system will ensure that all athletes, educational
institutions, and agents will be subjected to a known and
consistent set of rules.
California was one of 28 states that regulated athlete agents at
the time that the NCAA asked the NCCUSL to draft a model law. The
Miller-Ayala Athlete Agents Act [AB 1987, (Miller), Chapter 957,
Statutes of 1996] created a comprehensive statute regulating the
activities of persons who worked as athlete agents. However, the
Miller-Ayala Act lacks a registration system similar to that
required under this model bill. Instead, a person can act as an
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athlete agent merely by filing required information with the
Secretary of State. However, there is presently no body that can
deny persons the ability to act as agents or revoke the authority
of those who acted unlawfully. For the most part, the
Miller-Ayala Act enforced its requirements by permitting persons
or institutions that were harmed to bring civil actions, giving
student athletes a 15-day right of rescission, and providing that
any contract that violated the terms of the statute was either
void or voidable by the athlete, depending on the nature of the
violation.
This bill takes a more proactive approach by authorizing DIR to
demand more rigorous registration requirements at the front end
and prohibiting anyone from acting as an athlete agent without a
certificate of registration. This bill would require an athlete
agent to renew the certificate every two years, and it would give
DIR the right to deny or revoke certificates for specified
violations or misconduct. The bill incorporates many of the
provisions of the Miller-Ayala Act with minor modifications to
make them consistent with the UAAA. The bill specifies that the
Uniform Athlete Act shall not become operative until July 1, 2011,
and provides that the existing Miller-Ayala Act will be repealed
as of January 1, 2012.
SB 1098 expressly provides that the costs of administering this
act is to be funded by the fees that DIR is authorized to collect
for each application for registration and renewal. The bill
specifies that such fees shall be deposited in a newly created
Athlete Agent Registration Fund. To cover start up costs, the
bill requires the Department of Finance to approve a loan from the
Labor Enforcement and Compliance Fund to the DIR. The bill also
provides that these funds shall be repaid, with revenue generated
from registration fees, on or before July 1, 2014.
According to the author, this bill will not only bring California
into line with the vast majority of other states that have adopted
the UAAA, it will also "be helpful for the many California agents
who do business across state lines." California, the author
notes, "has a large number of student athletes and professional
teams and this will give athlete agents a legitimate way to
register." The author also believes that, overall, this measure
will increase protections for student athletes and educational
institutions.
The DIR opposes this bill because it believes that it will "add
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regulatory and oversight functions, and new costs to the DIR's
regulatory role." In particular, DIR believes that the bill would
add duties "outside of an employment context as a contract between
an athlete agent and a student or professional athlete does not
involve an employer-employee relationship." DIR states that of
the 38 states that have adopted the UAAA, DIR is unaware of any
state that manages the program through its labor and workforce
agency.
The author responds to DIR's concerns about costs by pointing out
that the program will be self-funding through registration fees
and that start up costs are covered by the required loan, as
discussed above. The author also rebuts DIR's contention that the
agent-athlete relationship falls outside of the DIR's usual
concern with the traditional employment relationship. The author
points out, for example, that talent agents, who enter into
similar contractual relationships with clients, are presently
regulated by DIR. Finally, the author contends that amendments
taken in the Senate delayed implementation until July 1, 2011,
giving DIR added time to make needed adjustments.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0005927