Florida’s Amended NIL Law: The Game Is Changing (Again)

Florida Governor Ron DeSantis signed a bill in June 2020 allowing college athletes in Florida to earn compensation for using their name, image and likeness (NIL).

The law took effect July 1, 2021. Florida’s law regarding intercollegiate athletes’ NIL underscores the importance of ensuring that participation in intercollegiate athletics will not infringe upon an individual’s ability to profit from her or his NIL.

Under the law, college athletes in Florida can enter endorsement deals and receive compensation for their NIL rights without the threat of losing their athletic eligibility. This law meant college athletes could profit from their brand and likeness through social media sponsorships, merchandise sales or appearances.

Since Florida’s NIL law took effect, the landscape of college athletics has changed. Based on the ever-evolving environment, universities in the conferences consisting of the National Collegiate Athletic Association’s (NCAA) largest schools have relocated to other conferences in hopes of garnering greater profits for their universities and opportunities for their student-athletes. Groups of fans associated with certain universities have banded together to collect money to compensate prospective and current student-athletes.

In response to the changing world of college athletics, Governor DeSantis signed yet another bill on February 16, 2023, revising the June 2020 law.

Noteworthy is not what the Florida legislature added in Florida’s revision to its NIL law, but what has been excluded and removed. The new law no longer makes a “clear distinction” between amateur intercollegiate athletics and professional sports. Further, compensation for an athlete’s NIL is not limited to “third parties” unaffiliated with the athlete’s school. The Florida legislature removed language from the 2020 statute barring a school from compensating an athlete for their NIL. Further, student-athletes under eighteen no longer must have their contracts approved under Fla. Stat. §§ 743.08 and 743.09.

The law no longer stops college athletes from entering agreements that conflict with their school’s team contract. NIL contracts can now endure longer than the period in which the athlete participates in an athletic program. Further, college athletes and their representatives no longer must disclose the athlete’s contracts to the schools.

Aside from the legislature’s removal of language in the 2020 NIL law, the most significant addition to Florida’s revised NIL law is the immunity granted to the state’s post-secondary educational institutions and their employees, including athletic coaches. This immunity relieves schools and their employees from liability for damages to a student athlete’s “ability to earn compensation using her or his name, image, or likeness resulting from decisions and actions routinely taken in the course of intercollegiate athletics.”

Florida’s amended NIL law still requires state universities to conduct at least two student workshops each on financial literacy and life skills. However, Florida universities must now include two additional workshops on entrepreneurship. Each of these workshops must last for at least five hours. Instead of completing the workshops during the student-athlete’s first and third academic years, Florida universities must now complete these workshops before the student-athlete graduates.

The Florida Legislature gives post-secondary educational institutions broad discretion on how to conduct the workshops, where to perform them, and what to discuss. However, the Legislature is clear that each of these workshops must include – at a minimum – information about entrepreneurship, financial aid, debt management, and a recommended budget for full and partial grant-in-aid intercollegiate athletes based on the current academic year’s cost of attendance. The law requires that these workshops include information on time management skills and available academic resources.

The Florida Legislature added that these workshops “may not be identical, and the second workshop must include more rigorous instruction.” Universities will have to create new or substantially different presentations, lectures and training to ensure they comply with this requirement. Because the Florida Legislature did not define “more rigorous instruction,” universities are left to interpret the legislature’s intent.

Considering the current uncertainty surrounding NIL legislation around the country, the revision to Florida’s NIL law may raise more legal questions than it answers. Schools and athletes in Florida could be asking:

• • How can universities benefit from the law’s revisions without violating NCAA’s bylaws?
  • May universities directly compensate student-athletes?
  • Are college athletes “professional athletes,” and if so, are they employees of their respective universities?
  • If the student-athletes are employees, what is the nature of the employment relationship?
  • How can universities afford to pay their new student-athlete employees?
  • What rights do the universities and their athletes have if a university was to terminate an athlete?
  • What are the tax implications on athletes and their schools?
  • What is the impact on Title VII and Title IX?

In a case currently on appeal, the student-athlete plaintiffs sued the NCAA, arguing they are joint employees of their respective universities and the NCAA and are therefore entitled to the benefits accorded to employees under the Fair Labor Standards Act (FLSA). The NCAA moved to dismiss the plaintiffs’ claims, arguing the plaintiffs are not entitled to benefits under the FLSA because they are not employees. The trial court refused the NCAA’s invitation to dismiss the case, and the NCAA appealed to the Third Circuit Court of Appeals. To resolve the dispute, the Third Circuit Court must determine whether athletes can be found to be employees.

The NCAA argues that college athletes are amateurs and should remain amateurs due to the nature of amateurism. However, this argument is contrary to the belief held by the Florida Legislature when it removed the “clear distinction” between amateurism and professionalism. The potential consequences of Florida’s revised NIL laws and the pending decision in this case cannot be understated.

In the legal context, Florida’s amended NIL law, which other states are sure to replicate, and the pending nationwide litigation will have a notable effect:

1. 1. Tax implications: The earnings that college athletes make from their NIL could be subject to taxation. The IRS has not yet issued guidance on how NIL earnings will be taxed, but the IRS will likely treat these earnings as taxable income.
   2. Contractual implications: College athletes who earn money from their NIL may need to enter contracts with sponsors or other third parties. These contracts could have legal consequences, such as potential conflicts with existing agreements or intellectual property disputes.
   3. Compliance implications: Schools, athletes and third parties must ensure that they comply with all relevant laws and regulations related to NIL. This could include NCAA bylaws, state laws governing NIL, as well as federal laws on endorsements and advertising.
   4. Increased involvement of agents and advisors: With the potential for significant earning opportunities, college athletes may be more likely to seek out the services of agents and other advisors. This could lead to increased regulation of agents and advisors and impact the relationship between athletes and universities.
   5. Impact on amateur status: The current model of college sports is based on the concept of amateurism, but the ability for athletes to earn money from their NIL certainly challenges this model. There may be a shift toward a more professionalized model of college sports, with athletes having more opportunities to earn money from their athletic abilities and performance.

Please contact Nicholas Patti or any member of Phelps’ Litigation team if you have questions or need compliance advice and guidance. Nicholas Patti is a licensed athlete-agent in the State of Florida.