Effective July 24, 2017, employers in New York City will be limited in the provisions they may include in independent contractor agreements with individuals performing services in New York City.

Pursuant to newly promulgated Rule 12-05 of Title 6 of the Rules of the City of New York, which applies to NYC’s Freelance Isn't Free Act:

  1. Any contract entered into by a hiring party and freelance worker shall not include any prospective waiver or limitation of rights under the Freelance Isn’t Free Act. Any such waiver or limitation shall be invalid as a matter of law.
  2. If a contract includes language that waives or limits a freelance worker’s right to participate in or receive money or any other relief from any class, collective, or representative proceeding, said waiver or limitation is void.
  3. Wherever a hiring party asks a freelance worker to waive or limit, via contract, any other procedural right normally afforded to a party in a civil or administrative action, any such contractual waivers and limitations are void under section 20-935 of the Administrative Code. Such rights include but are not limited to procedural rights of parties to a civil action established by the New York Civil Practice Law and Rules, the Federal Rules of Evidence, and the Federal Rules of Civil Procedure.
  4. A freelance worker has the right to disclose the terms of a contract with a hiring party to the director. Any private contractual agreement that purports to waive or limit a freelance worker’s right to communicate the terms of such a contract to the director is void as against public policy.

Subsection (b) explicitly prevents employers from including collective/class action waivers in their independent contractor agreements. Subsection (c) seemingly prohibits arbitration provisions and provisions that shorten the applicable statutes of limitations. Subsection (d) voids confidentiality provisions that do not exclude from their prohibitions disclosure to the Director of NYC’s Office of Labor Standards.

The new rules also:

  • Broadly define “adverse action” in the context of the Freelance Isn't Free Act’s retaliation provision to include, inter alia, any action “reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right” under the Act;
  • Confirm that the Freelance Isn't Free Act applies regardless of immigration status;
  • Clarify what the term “value” means, when establishing jurisdiction and defining what damages are due under the Act, the “reasonable” value of services, supplies, and expenses; and
  • Establish a “motivating factor” standard applicable to retaliation claims under the Act.

Companies should consider these new rules when drafting independent contractor agreements applicable to individuals performing services in New York City.

Additional information about the Freelance Isn't Free Act can be found here: https://www.littler.com/publication-press/publication/new-york-city-pass... .