On October 27, 2016, the New York City Council passed the "Freelance Isn't Free" Act. The Act, which is designed to provide enhanced protections for freelance workers, may have serious implications for construction and engineering firms that hire individuals on a freelance basis to perform management, supervision, scheduling and consulting services on projects in New York City.

The Act's stated purpose is to provide freelance workers "the right to a written contract, the right to be right to be paid timely and in full, and the right to be free from retaliation." To accomplish this purpose, the Act contains extensive damages provisions for non-payment and non-compliance with the Act's terms. For example, a freelance worker who prevails on a claim of unlawful payment is entitled to recover double the amount of damages proved and to be reimbursed for his or her reasonable attorney's fees and costs. In some cases, an employer may face greater liability for its freelance workforce than it does for its own employees. In addition, repeat offenders of the Act's provisions are subject to civil penalties of up to $25,000.

By its own terms, the Act is very likely to cover any number of individuals who regularly provide the construction industry with services on a freelance basis, including inspectors, schedulers and consultants. While the Act definitely covers freelance workers who live in New York City, there is some ambiguity about whether it also applies to freelance workers who live outside the city but who are either working for companies based in the city or on projects taking place in the city. Obviously how these issues are determined will have a significant bearing on construction and engineering firms.

While the Act will take effect on May 15, 2017, it is not too early for employers of freelance workers in New York City to begin preparing to comply with the Act's many new requirements. Like it or not, there are many new contract compliance and document retention provisions that employers of freelance workers will need to understand and comply with.

Because of the novelty of the Act – it is the first of its kind in the country – it remains to be seen how the Act will be enforced and interpreted.