Businesses and Freelancers Take Note – New York City Passes Protections for Freelance Workers

In the first law of its kind in the United States, New York City has passed a local law which establishes a variety of protections for freelance workers. Called “Establishing Protections for Freelance Workers,” or the “Freelance Isn’t Free Act,” the law provides freelance workers with the right to a written contract, and to be paid timely and in full. The law also prohibits retaliation and creates penalties for violations. Any person or business who hires a freelance worker in New York City should familiarize itself with the law, because there are significant consequences for failing to comply.

A freelance worker is defined as any person or organization, whether or not incorporated or using a trade name, who is hired as an independent contractor to provide services in exchange for compensation. Lawyers hired pursuant to the contract at issue, licensed medical professionals, and certain sales representatives, are excluded. A “hiring party” is any person who retains a freelance worker, other than any government or government office. The new law therefore has broad application.

A written contract is required whenever a hiring party retains the services of a freelance worker where the value of the contract is $800 or more, either on its own or when aggregating all contracts between the same parties for the preceding 120 days. There are minimum requirements to be included in the written contract such as the names of the parties, an itemization of all services to be provided, the value of the services, rate and method of compensation, and the date on which payment must be made or the mechanism for determining that date.

The law requires the freelance worker to be paid on or before compensation is due under the terms of the contract. If the contract does not specify the date of payment or the mechanism for determining the date, payment shall be made no later than 30 days after the completion of the services. Once performance of the services has begun, a hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount provided in the contract.

A freelance worker alleging a violation of the law may bring an action in court for damages and, in some cases, injunctive relief. The amount of damages will vary depending on the type of violation and includes statutory damages of $250 or an amount equal to the value of the underlying contract, double damages, and attorneys’ fees. Damages are also available if the hiring party retaliates against the freelancer for exercising, or attempting to exercise rights under the law. If there is reasonable cause to believe that a hiring party is engaged in a pattern or practice of violating the law, the City, through the corporation counsel, may commence an action and obtain injunctive relief, civil penalties and other appropriate relief.

By its terms, the law applies only to contracts entered into on or after the effective date, which is May 15, 2017.