Freelance Worker Protection Act Underway in California

The Freelance Worker Protection Act (FWPA) was enacted on September 28, 2024 in California, providing additional protections to freelance workers and independent contractors. The focus of the law is on workers’ rights to a written contract and to be paid on time for their services. The FWPA goes into effect on January 1, 2025, which means employers have only a few months to ensure compliance.

Freelance Worker Protection Act: Who Is Covered? 

A “freelance worker” is defined as 

“a person or organization composed of no more than one person, whether or not incorporated or employing a trade name, that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than two hundred and fifty dollars ($250), either by itself or when aggregated with all contracts for services between the same hiring party and independent contractor during the immediately preceding 120 days.”  

The term “professional services” references California Labor Code Section 2778 and includes services such as marketing, human resources administrator, travel agent, graphic design, fine artist, enrolled agent, photographer, content writer, and many others. 

A “hiring party” is defined as “a person or organization in the State of California that retains a freelance worker to provide professional services.” The term excludes federal, state, local, and foreign governments. It also does not apply to “individual[s] hiring services for the personal benefit of themselves, their family members, or their homestead.”

Why Was the FWPA Enacted?

According to sponsors and supporters of the bill, a substantial majority of freelance workers experience late or no payment for their services and lack written contracts. The growth in freelancing is also a factor, as this issue affects increasingly more workers. Other states and localities have passed similar laws.

What Are the Key Provisions in the FWPA?

According to the Freelance Worker Protection Act, contracts between freelance workers and hiring parties must be in writing and contain the following information:

• The name and mailing address of each party.

• An itemized list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation.
• The date on which the hiring party shall pay the contracted compensation, or the mechanism by which the date shall be determined.
• The date by which a freelance worker shall submit a list of services rendered under the contract to the hiring party to meet the hiring party’s internal processing deadlines for purposes of timely payment of compensation.

If no written contract exists, a freelancer can still use other communications and activities by the parties to prove the existence of a contract.

A signed copy of the contract must be provided to the freelance worker either physically or electronically. Hiring parties must retain the contract for four years.

Hiring parties are obligated to pay freelance workers what they owe under the contract by the contract due date. If no due date is specified, they must pay no later than 30 days after the completion of the freelance worker’s services under the contract. Importantly, after work has commenced, hiring parties cannot require freelancers to accept less compensation or provide more goods and services than what the contract provides as a condition of timely payment.

The FWPA also prohibits hiring parties from discriminating or taking any adverse action against a freelancer that penalizes the freelancer or is reasonably likely to deter the freelancer from opposing a prohibited practice, participating in an enforcement proceeding, or trying to assert or enforce their rights under the FWPA.

How Will the FWPA Be Enforced?

Freelance workers and public prosecutors can sue in court to obtain damages, reasonable attorneys’ fees and costs, injunctive relief, and any other appropriate remedies. Freelancers can obtain an additional $1000 if the hiring party refused to provide a contract. If the hiring party failed to pay on time, freelancers may obtain up to twice the amount that was unpaid when payment was due. Where no contract was provided, the unpaid amount is determined by the rate the freelance worker reasonably understood to apply to the work.

Other violations of the FWPA may result in damages equal to the value of the contract or the work performed, whichever is greater.

Next Steps

The law goes into effect January 1, 2025, and only applies to contracts entered into or renewed on or after that date. To prepare, employers that use freelancers should consult an attorney to review which freelancers must receive a written contract under the law, and then draft an appropriate freelance contract that complies with the FWPA to use after January 1st. 

In addition, discrimination policies should be revised to reflect the FWPA provisions. Procedures for paying freelancers should also be updated to ensure timely payments.

Please feel free to contact any of our attorneys if you have any questions or would like our assistance in complying with California’s Freelance Worker Protection Act.

NOTICE: Material provided on this website has been prepared by Kauff McGuire & Margolis LLP solely for general informational purposes, and it is not intended to and does not constitute legal advice. Material provided on the website is not privileged and does not create an attorney-client relationship with the Firm or any of its lawyers.