Arizona-2024-HB2564-Introduced

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 23, chapter 2, Arizona Revised Statutes, is amended by adding article 6.2, to read:

ARTICLE 6.2. EMPLOYMENT CONTRACTS FOR MINORS

START_STATUTE23-345. Definitions

In this article, unless the context otherwise requires:

1. "Artistic or creative services":

(a) Includes services:

(i) As an actor, actress, dancer, musician, comedian, singer, stunt person, voice-over artist or other performer or entertainer.

(ii) As a songwriter, musical producer or arranger, writer, director, producer, production executive, choreographer, composer, conductor or designer.

(b) Does not include services as an extra, a background performer or temporary work in a similar capacity.

2. "Custody" means a status embodying all of the following rights and responsibilities:

(a) The right to have physical possession of the child.

(b) The right and the duty to protect, train and discipline the child.

3. "Financial institution":

(a) Means a financial entity that is insured by the federal deposit insurance corporation.

(b) Includes:

(i) A State bank.

(ii) A Federal bank.

(iii) A credit union.

(iv) A Savings and Loan Association.

(v) A Trust company.

(vi) A Savings bank.

4. "Gross earnings" means the total compensation payable to the minor under the contract or, if the minor's services are being provided through a third party, the total compensation payable to that third party for the services of the minor.

5. "Guardian":

(a) Means an individual who is appointed or qualified by a court as a guardian of the minor.

(b) Includes a limited guardian.

6. "Guardian ad litem" means a neutral person the court appoints to investigate what solutions would be in the best interests of the child.

7. "Parent" means the natural or adoptive mother or father of the child unless parental rights were terminated by court order.

8. "Third party" means a third-party individual, a business entity or a casting agency. END_STATUTE

START_STATUTE23-345.01. Court approval; contract; minor; order

A. On or after January 1, 2025, a contract entered into between an unemancipated minor and another party cannot be disaffirmed on the ground that a minor entered into the contract if the contract was approved by the superior court in a county:

1. In which the minor resides or is employed.

2. That is the location of any party's principal place of business.

B. On petition from any party to a contract, the court shall set a hearing date and time to provide the parties reasonable notice and an opportunity to be heard.

C. The court's approval of the contract extends to the entirety of the contract.

D. For the purposes of any proceeding under this section, a parent or guardian is considered the minor's guardian ad litem for the court proceeding, unless the court orders on a showing of good cause, that a different individual should be appointed as a guardian ad litem in the best interests of the minor. END_STATUTE

START_STATUTE23-345.02. Minor's birth certificate; percentage gross earnings; trust; trustee

A. A parent or guardian who enters into a contract on behalf of a minor shall provide a certified copy of the minor's birth certificate that indicates the minor's minority to any other party to the contract. If a guardian has been appointed by the court, the guardian must provide a certified copy of a court document that appoints the individual as the minor's guardian.

B. At the time the court order is issued approving the minor's contract as prescribed in section 23-345.01, the court shall have jurisdiction over the trust and shall require both of the following:

1. That fifteen percent of the minor's gross earnings pursuant to the contract be set aside by the minor's employer to be held in a trust account for the benefit of the minor in accordance with this article. The minor's employer shall deposit these monies into the trust account within fifteen business days After receiving both a true and accurate copy of the trustee's statement pursuant to subsection C of this section and a certified copy of the minor's birth certificate pursuant to subsection A of this section.

2. That at least one parent or guardian be appointed as the trustee of the trust, unless the court finds that in the best interest of the child another guardian or entity shall serve as the trustee of the trust.

C. Before the minor receives an initial payment pursuant to the terms of the employment contract, the trustee of the trust shall provide the minor's employer with a true and accurate copy of the trustee's written statement pursuant to section 23-345.03 and, on receipt of the trustee's written statement, the employer shall provide the parent or guardian with a written acknowledgment of receipt of the trustee's written statement.

D. When making the initial deposit of monies pursuant to subsection B, paragraph 1 of this section, the minor's employer shall provide written notification to the financial institution that the monies are subject to this article.

E. Once the minor's employer deposits the monies into the trust, the minor's employer shall have no further obligation or duty to monitor or account for the monies. The trustee of the trust shall be the only individual or entity with the obligation or duty to monitor and account for the monies once the monies have been deposited by the minor's employer. The trustee of the trust shall conduct an annual accounting of the monies held in trust in accordance with generally recognized professional accounting and auditing principles.

F. At any time, a parent, a guardian, the trustee or the minor, through the minor's guardian ad litem, on a showing of good cause may request that the court amend or terminate the trust, notwithstanding any provision in the declaration of trust. The court may only amend or terminate the trust after the court provides the parties with reasonable notice and an opportunity to be heard.

G. A parent or guardian shall promptly notify the minor's employer, in writing, of any change in facts that affect the employer's obligation or ability to set aside the monies in accordance with the order that includes a change of financial institution or account number or the existence of a new or amended court order. The written notification shall include a true and accurate copy of the trustee's written statement pursuant to section 23-345.03 and a certified copy of any new or amended order, as applicable.

H. For a minor's contract to perform artistic or creative services that is not submitted to the court for approval pursuant to section 23-345.01 or if the court denied approval, all of the following apply:

1. The employer shall set aside and deposit fifteen percent of the minor's gross earnings pursuant to the contract in a trust account for the benefit of the minor.

2. At least one parent or guardian shall serve as the trustee of the trust account. A parent, guardian or trustee or the minor through the minor's guardian ad litem may petition a court of competent jurisdiction to appoint another individual or entity to serve as trustee of the trust. The court may appoint another individual or entity to serve as the trustee of the trust if the court believes it is in the best interests of the child.

3. The minor's employer shall provide written notification to the financial institution that the monies are subject to this article.

I. The relationship between the parent or guardian and the minor is a fiduciary relationship pursuant to title 14, irrespective of whether a court has issued a formal order to that effect. The parent or guardian serving in a fiduciary relationship shall pay all liabilities incurred by the minor under the contract with the earnings of the minor, which includes:

1. Taxes.

2. Payments for personal services rendered to the minor.

3. Payments for professional services rendered to the minor.

4. Other reasonable business-related expenses.

J. This section does not alter any other existing responsibility of a parent or legal guardian to provide for the support of a minor child. END_STATUTE

START_STATUTE23-345.03. Trust account; withdrawals; trustee's written statement; notification; requirements

A. The trustee shall establish a trust account pursuant to this section at a financial institution that is located in this state within seven business days after the minor's contract is executed.

B. Withdrawals from the trust are prohibited unless:

1. The beneficiary attains eighteen years of age and submits a certified copy of the minor's birth certificate to the financial institution where the trust is located.

2. The minor beneficiary is emancipated by the court and submits a certified copy of the court's emancipation order to the financial institution where the trust is located.

3. Ordered by the court.

C. Within ten business days after the minor's contract is executed, the trustee shall prepare a written statement under the penalty of perjury and provide a copy to the parent, guardian, guardian ad litem, the minor's employer and the court, as applicable, and that includes the following account information:

1. The name.

2. The address.

3. The telephone number.

4. The Name of the account.

5. The Account number.

6. The name of the minor beneficiary.

7. The name of the trustee of the account.

8. Any related information needed by the minor's employer to deposit monies into the account.

9. A true and accurate copy of the documents that created the trust, which may include a declaration of trust, deed of settlement, account agreement, passbook or similar documentation.

D. On application by the trustee to the financial institution, the financial institution may handle the monies in one or more of the following methods:

1. Transfer monies to another account at the same financial institution, if the monies transferred shall continue to be held in trust.

2. Transfer monies to another financial institution if the monies transferred continue to be held in trust and the transferring financial institution has provided written notification to the financial institution to which the monies will be transferred.

3. Use all or part of the monies to purchase and hold in trust for the benefit of the minor the following:

(a) Investment funds offered by a company registered under the investment company act of 1940 (54 Stat. 789) if:

(i) The underlying investments are equity securities.

(ii) The investment fund is a broad-based index fund.

(iii) The investment fund invests broadly across the domestic or a foreign regional economy, is not a sector fund and has assets under management of at least $250,000,000.

(b) Government securities and bonds, certificates of deposit, money market instruments, money market accounts or mutual funds investing solely in those government securities and bonds, certificates, instruments and accounts that are available at the financial institution where the trust fund is held.

E. The purchases made pursuant to this section shall have the maturity date on or before the beneficiary attains eighteen years of age.

F. Any proceeds generated from the trust account shall be redeposited into the account or used to make further investment purchases. END_STATUTE

Sec. 2. Applicability

This act applies to contracts that are entered into between an unemancipated minor and any party or third party on or after January 1, 2025.