A New York City law protecting freelance workers took effect on May 15, 2017. It broadly applies to all employers of freelance workers, including property owners, establishes new contracting, record keeping, and timely payment requirements, and authorizes penalties for failure to comply.
DEFINITION OF FREELANCE WORKER
Local Law 140 defines a freelance worker as a person, or an organization composed of no more than one person, hired or retained as an independent contractor, whether the individual is doing business under his or her own name, or is incorporated, or uses a trade name. Because freelancers are by definition independent contractors, the term does not include employees, such as superintendents or porters. Attorneys, medical professionals, and certain sales representatives are also excluded from the definition. Examples of freelance workers often hired by cooperatives and condominiums include painters, landscapers, and interior designers.
WRITTEN CONTRACT REQUIRED
The law requires a written contract between the freelance worker and the hiring party if the value of the service provided is at least $800 or if the total value of services performed in the last four months is at least $800. The written contract must include at least the following provisions:
- name and address of both parties;
- list of services to be performed by freelancer;
- cost of services and rate and method of compensation;
- date on which the hiring party must pay the contract price or the manner in which the date will be determined.
The contract price must be paid to the freelance worker on or before the date specified in the contract, or if there is no date in the contract, no later than 30 days after the completion of the freelance worker’s services under the contract.
The hiring party may not condition timely payment on the freelance worker agreeing to accept less than the full compensation set by the contract. The hiring party is also prohibited from threatening, intimidating, disciplining, harassing, or discriminating against a freelancer, from penalizing the worker for exercising any of the rights afforded to him/her under the Local Law, from engaging in conduct likely to deter a freelancer from exercising his/her rights under the Local Law, and from denying the freelancer future work opportunity because the freelancer has done so.
Under Local Law 140, freelance workers may file a claim against the hiring party with the New York City Office of Labor Standards which will then notify the hiring party and seek a response. The hiring party is given 20 days to either provide proof that the freelance worker has been paid in full or a written statement explaining the reason it has failed to pay. Failure to respond creates a rebuttable presumption that the hiring party committed the violations alleged.
The freelance worker must then bring a civil action to recover whatever is due to the worker plus penalties. The freelance generally has 6 years to file the action. A freelancer who prevails against the hiring party on a claim alleging a violation under the Local Law is to be awarded actual damages plus attorneys’ fees and costs plus all penalties that apply. The penalties include $250 for violation of the contracting provisions of the law, double damages for violation of the timely payment provisions, and the value of the contract for each instance of retaliation.
The agency may also bring an action alleging that a hiring party has engaged in a pattern of violations against a freelancer which can result in a civil penalty as high as $25,000 if the allegation is proven.
The new Local Law imposes significant penalties against employers who fail to adhere to its requirements. It is a reminder of the importance of signing written contracts for services, even for small jobs, to strictly comply with the payment requirements of those contracts, and to keep accurate records of payment. Boards and building managers should familiarize themselves with these requirements to be sure that inadvertent violation do not occur.