The New York City Council, long-known for pushing the envelope when it comes to employment legislation, is at it again. The legislature is poised, in the near future, to pass a first-of-its-kind bill that would require written agreements between independent contractors and the entities that engage them (the Bill). The Bill would also impose substantial penalties on businesses that fail to comply with this and other requirements surrounding the independent contractor relationship.

Specifically, the Bill would require most entities that engage an independent contractor for $200 or more in services to execute a written agreement with the contractor before the contracted-for work begins. Such agreement must be written in plain language, in a dialect understood by both parties, and include, at a minimum:

  • An itemization of the services to be provided by the contractor
  • The contractor’s rate and method of compensation
  • The date on which the contractor must be paid or the mechanism by which such date will be determined
  • Any other terms that the Department of Consumer Affairs (the “DCA”), which would be tasked with enforcing the Bill unless the newly created Office of Labor Standards is given such jurisdiction, designates by rule

In addition, the Bill would require that all compensation earned by an independent contractor be paid within 30 days following completion of the contractor’s services or the date such payment is due under the written agreement, whichever is later. The Bill would also bar retaliation against contractors who engage in certain protected activity – e.g., opposing a practice prohibited by the Bill, filing a complaint or commencing an action alleging a violation of the Bill, or assisting the DCA’s investigation of an alleged violation.

The Bill would also provide allegedly aggrieved contractors with several avenues of recourse. First, the contractor may file a complaint with the DCA. If the DCA determines that a violation of the Bill has occurred, it may award double damages, equitable relief, attorneys’ fees, and costs, and assess civil penalties of up to $5,000.  Second, the contractor may also commence a civil action in court against the allegedly non-compliant business. There too, the contractor, if successful in proving his/her claims, can recover double damages, equitable relief, attorneys’ fees, and costs. In certain circumstances, entities that violate the Bill may also be guilty of a misdemeanor punishable by a fine of up to $500 or imprisonment of no more than three months.

A two-year statute of limitations, from the date on which the contractor knew or should have known of the alleged violation, will apply. Notably, any agreement purporting to waive a contractor’s rights under the Bill would automatically be deemed void as a matter of public policy. The precise scope of this provision – and whether it would bar contractors from entering into settlement agreements resolving their claims under the Bill – remains to be seen, and will likely need to be resolved by the courts.

Although the Bill was introduced in December 2015, it is expected to move rapidly to the floor of the NYC Council for a vote. Once passed, it will take effect one year after it is signed into law by Mayor Bill de Blasio. Stay tuned for future updates about the Bill’s progress.