New York City – Freelance Isn’t Free Act

On October 27, 2016, the New York Council voted unanimously to pass the Freelance Isn’t Free Act, which formalizes the practices related to hiring and employing freelance workers.  A freelance worker is defined as “any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.”  The Act will take effect May 15, 2017 and thereby require a written agreement for freelancers who will be compensated at least $800 in a 120-day period.  This legislation was drafted to protect New York City’s freelance workers from wage theft and delayed payments, and represents a profound expansion of freelancers’ rights that could also alter employment practices beyond the five boroughs.

The written agreement must contain several essential terms, including (i) the name and mailing address of both the hiring party and the freelancer; (ii) an itemization of all services to be performed; (iii) the value of services to be provided and the rate and method of compensation; and (iv) the date on which the hiring party must pay – if there is no specified date, payment must be made in full within 30 days of completion of services.

Freelancers alleging a failure to comply with the Act may file a complaint with the Director of the Office of Labor Policy and Standards, a division of the NYC Department of Consumer Affairs, who will consequently send a demand letter to the hiring party.  If the hiring party fails to sufficiently respond to the demand letter by making a payment or providing proof of payment, the freelancer may bring a civil action, whereby the hiring party would have the burden of disproving liability and would be susceptible to double damages and attorneys’ fees.  New York City’s Corporation Counsel may also commence an action against repeat offenders for civil penalties of up to $25,000.  The Act further shields freelancers with an anti-retaliation clause that protects them from retributive action by a hiring party.

Although the Act covers freelancers who live in New York City, there is some uncertainty regarding its application to contractors who live outside the city but are hired to work in the city.

Employers are urged to ensure that the written agreement which details the business relationship between the freelancer and hiring party is agreed to and executed prior to commencing performance.

If you have any questions about employment decisions or application to your business, please contact the GW attorney with whom you normally consult.

Categories: Employment Law