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The “Freelance Isn’t Free Act” Is Designed To Level The Playing Field Between Hiring Parties And Freelancers
ANALYSIS
On November 22, 2023, Governor Kathy Hochul signed into law the “Freelance Isn’t Free Act” to protect freelance workers in contracting. New York City has had a similar law in place since 2017.
The law defines “freelance worker” as any natural person or 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 an amount equal to or greater than $800, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days.
Sales representatives, attorneys, medical professionals and construction contractors are excluded from the protections of the law.
Whenever a “freelancer” (as defined above) is hired, a written contract (or an electronic copy) must be provided to the freelancer, and must include:
- the name and mailing address of both the hiring party and the freelance worker;
- an itemization of all services to be provided by the freelancer, 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 contracted compensation or the mechanism by which such date will be determined; and
- the date by which a freelance worker must submit a list of services rendered under such contract to the hiring party in order to meet any internal processing deadlines of such hiring party for the purposes of compensation being timely rendered by the agreed-upon payment date.
The contract must be retained by the hiring party for six years, and to simplify the process the Department of Labor will make “model” contracts available on its website.
Payment to the freelancer must be paid either as per the agreement, and if the agreement doesn’t specify a time – within 30 days after completion of the assignment. The amount, once agreed to, cannot be reduced except by mutual agreement.
The new law also provides recourse for retaliation, and a hiring party may not “threaten, intimidate, discipline, harass, deny a work opportunity to, or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right guaranteed under [the law], or from obtaining any future work opportunity because the freelance worker has done so.”
Complaints may be filed with the Department of Labor. The law empowers the DOL to conduct investigations, award relief, and impose civil and criminal penalties.
Somewhat uniquely, the DOL can also take assignments from freelancer for monies owed to them, sue on behalf of freelancers, join multiple claimants together in a single action and work with authorities from other states to enforce the law.
Freelancers may file civil actions, and enjoy a six-year statute of limitations on their claims. Double damages are available as well as attorney’s fees and costs, creating an incentive for lawyers to represent freelancers in smaller cases.
Steps To Take
- Watch for model contracts to be released on the New York State Department of Labor website (coming soon).
- Review business relationships with independent contractors and freelancers and evaluate which ones will likely cross the $800 threshold mandating written agreements.
- Consult with legal counsel on the necessity of developing freelance agreements pursuant to the Act if the model agreements are inadequate.
The new law takes effect on May 20, 2024 and applies only to contracts entered into on or after that date.
