New York State Freelance isn’t Free Act Takes Effect
Recently, the New York State Freelance Isn’t Free Act (the “Act”) took effect. The Act, which requires written contracts between hiring parties and freelance workers containing specific terms, largely mirrors New York City’s law of the same name, which took effect in 2017.
Definition of Freelance Worker and Hiring Party
The Act only applies to contracts between freelance workers and entities that qualify as hiring parties. “Hiring party” is defined broadly as anyone who retains a freelance worker to provide any service, except government entities.
A freelance worker is defined as a person or organization composed of no more than one person, regardless of whether they are incorporated or employing a trade name. To be a covered freelance worker, the individual must be charging the hiring party at least $800 for their services. The Act provides that the $800 threshold can be met either by a single contract or the aggregate of all contracts between the hiring party and the freelance worker in the preceding 120 days. The Act excludes sale representatives, attorneys or persons engaged in the practice of law, licensed medical professionals, and construction contractors from the definition of freelance worker.
The scope of New York City’s analogous law is identical to the Act, except that the City law does consider construction contractors to be freelance workers covered by the requirements of the law.
Written Contract Requirement
Both the Act and the City Law require a written contact between the hiring party and the freelance worker. The written contract must be provided to the freelance worker either physically or electronically and at a minimum include the following information:
The name and mailing address of both the hiring party and the freelance worker
An itemization of all services to be provided by the freelance worker, the value of the services to be provided pursuant to the contract, and the rate and method of compensation
The date on which the hiring party must pay the freelance worker or the mechanism by which the payment due date will be determined
The date by which a freelance worker must submit a list of services rendered under the contract to the hiring party to meet any internal processing deadlines of the hiring party for the purposes of compensation being timely rendered by the agreed-upon payment date
Under the Act, the hiring party must retain a copy of the contract for at least six years. The Act also directs the New York Commissioner of Labor (“Commissioner”) to make model written freelance contracts available on the website of the New York State Department of Labor. The Commissioner has not yet published these model contracts. However, the New York City Department of Consumer and Worker Protection has published a model contract for freelance workers that complies with the City law.
Timing of Payment
The Act, like the City Law, requires that freelance workers receive pay for their services on or before the date that such compensation is due under the terms of their contract with the hiring party. If the contract does not specify when the freelance worker will be paid or the mechanism by which the date of payment will be determined, the freelance worker must be paid no later than 30 days after the completion of their services. In addition, once a freelance worker has begun performance of their services under the contract, the hiring party cannot require, as a condition of timely payment, that the freelance worker accept less compensation than the amount contracted for.
Violations & Remedies
The Act provides a variety of avenues for freelance workers to address violations of the Act. Freelance workers may report alleged violations of the Act to the Commissioner, who may investigate complaints and award relief including civil and criminal penalties. The Act also permits the Commissioner to investigate and equitably remedy disputes between freelance workers and hiring parties; take assignments of wage claims from freelance workers; file lawsuits to collect wages from hiring parties in assigned claims; and bring together multiple wage claims against a single hiring party in a single action.
Freelance workers and their authorized representative (a term not defined by the Act), may also bring an action in court for violations of the Act. A freelancer who prevails in such an action may be awarded monetary damages, attorneys’ fees and costs, injunctive relief, and other appropriate remedies.
Finally, the New York Attorney General is authorized to bring a civil action on behalf of New York State to enforce violations of the Act where there is reasonable cause to believe that a hiring party is engaged in a pattern or practice of violations of the Act. Where a pattern or practice of violations of the Act is found, the Attorney General may impose a civil penalty of up to $25,000.
Next Steps
Employers should review their contracts and arrangements with freelance workers, as well as any template contracts, for compliance with the Act. Employers with questions about the Act or their contracts with freelance workers should contact Caroline Secola at csecola@fglawllc.com or any attorney at the firm.
DISCLAIMER: This alert is provided to clients and friends of the firm for informational purposes only and the distribution of this alert is not intended to, and does not, establish an attorney-client relationship. This alert also does not provide or offer legal advice or opinions on any specific factual situations or matters. This communication may be considered Attorney Advertising. Prior results do not guarantee a similar outcome.