On October 27, 2016, the New York City Council approved a bill that would establish protections for freelance workers. It is expected that Mayor DiBlasio will sign the bill into law in the near future.
The bill, entitled “Establishing Protections For Freelance Workers,” defines a freelance worker as a single person, or an entity composed of no more than one person (whether incorporated or using a trade name), that is retained as an independent contractor to perform services in exchange for compensation.1 Individuals or entities practicing law, sales representatives, and licensed medical professionals are excluded.
The bill requires: (1) a written contract if the freelance work is worth at least $800, including multiple small projects over a 120-day period; (2) that payment for services be made timely and in full; and (3) that freelance workers be free of retaliation for exercising their rights under the bill. It also provides penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees.
The minimum terms of the written contract to which the freelance worker has a right include: (1) the name and mailing address of both the hiring party and the freelance worker; (2) an itemized list of services to be provided by the freelance worker, with the value of the services and the rate and method of compensation; and (3) the date on which the freelance worker will be paid, or a method for determining such date.
Potential damages vary depending on the violation, and can amount to a sizeable aggregate award. For example, a freelance worker who prevails in an action alleging a violation of the written contract requirement may be awarded statutory damages of $250. If the hiring party fails to pay timely or in full, or if the hiring party engaged in prohibited retaliation, the freelancer may also recover statutory damages equal to the value of the contract. Double damages may be awarded if the hiring party fails to pay in full by the date provided under the contract, or within 30 days after the completion of services if the contract does not include a date or mechanism by which such date can be computed.2 Statutory damages equal to the value of the contract are also available if the hiring party retaliates against a freelance worker for exercising, or attempting to exercise, any right under this bill. If there is evidence of a pattern of repeated violations, the City of New York, through the Corporation Counsel, may bring a civil action to recover a civil penalty not to exceed $25,000.
Finally, the bill provides a two-year statute of limitations for violations of the written contract requirement, and a six-year limitations period for bringing an action alleging failure to make timely or full payment or for retaliation.
If Mayor Bill de Blasio signs the bill into law as expected, it will take effect 180 days thereafter.
Recommendations to Employers
- Determine whether any independent contractors providing services for your organization fall within the definition of freelance worker.
- Enter a written contract with any freelance worker that includes, at a minimum, the terms listed above.
- Pay freelance workers on or before the date the compensation is due under the contract, or within 30 days after the completion of the freelancer worker’s services, if the contract does not specify the date payment is due.
- Once a freelance worker has begun performing under the contract, do not condition making timely payment on acceptance of less compensation than provided for in the contract.
- Take no retaliatory action against freelance workers who exercise their rights under the bill, by threatening or penalizing them for having done so, because they are protected from retaliation.