On May 15, a new law takes effect in New York City that will require written agreements between many, if not most, independent contractors and the entities that engage them. As we previously reported, the “Freelance Isn’t Free” Act (the Act) requires that virtually all entities that engage a “freelance worker” for $800 or more in services, execute a written agreement with the contractor before the work begins. “Freelance worker” means “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 written agreement must include, at a minimum:
- The name and mailing address of both the hiring party and the freelance worker
- An itemization of all services to be provided by the contractor
- The value of the services
- The rate and method of the contractor’s compensation
- The date on which the contractor must be paid, or the mechanism by which such date will be determined
- Any other terms that NYC’s newly created Office of Labor Standards designates by rule
Beyond the requirement of a written independent contractor agreement, the Act also bars wage theft and retaliation against contractors, and imposes substantial penalties on businesses that fail to comply with these and other requirements surrounding the independent contractor relationship.
A flyer created by the Office of Labor Standards concerning the Act can be found here.
The “Freelance Isn’t Free” Act represents a major sea change with respect to independent contractors. As a result, all NYC businesses that use independent contractors should immediately review and update their independent contractor agreements as appropriate, or speak with counsel about preparing such an agreement, and align their payment practices with the Act. Given the steep penalties for violating the law, the time to act is now.