During what has already been a huge year for labor and employment law developments in the Empire State, the New York City Council has taken another step toward turning the Big Apple into a paradise of worker-friendly laws. Last week, the council unanimously passed a bill enacting certain restrictions for businesses that hire freelance workers.
The “Freelance Isn’t Free” Act, introduced last December, amends the New York City Administrative Code to require a written contract between a freelance worker and the business engaging them if either a single engagement or an aggregate of engagements between the parties within the past 120 days has a value of $800 or more. The written contract must contain the name and mailing address of the hiring party and the freelance worker, a list and value of the services the freelance worker will provide, the rate and method of compensation, and the date by which the freelance worker must be paid or the mechanism for determining that date. If a contract does not specify when the freelancer must be paid or a mechanism for determining that date, payment is due no later than 30 days after the work is completed, and the hiring party cannot require that the freelancer takes less than the agreed upon amount as a condition of timely payment. Contract provisions that attempt to waive the freelancer’s rights are void.
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.” It excludes sales representatives as defined by the labor law, lawyers, and licensed medical professionals.
The act also includes a mechanism for freelancers to report complaints to a division within the city’s Department of Consumer Affairs and prohibits retaliation. Freelancers have two years to file complaints with the city. They may also file a civil action within six years of certain violations.
Finally, the law authorizes penalties ranging from $250 in some cases to double damages in others, in addition to attorney’s fees, and allows the city’s corporation counsel to bring an action against hiring parties who are repeat offenders. A court may award a civil penalty of up to $25,000 after finding a hiring party has engaged in a pattern or practice of violations.
What to Do Now
The act still needs to be signed by the mayor, but in the meantime, companies that contract with freelance workers should examine their current independent contractor practices and develop procedures where none exist. Businesses with operations in other large cities should monitor local news in case other city councils decide to follow suit.