New York Enacts Freelance Isn’t Free Act
At the end of 2023, New York State followed New York City’s lead by broadening the rights of freelancers and enacting the “Freelance Isn’t Free Act.” In many respects, New York State’s law is even broader than New York City’s law. The state law does not go into effect until May 20, 2024, but employers that rely on independent contractors should begin preparing now.
Parties Subject to the Freelance Isn’t Free Act
The Act applies to “freelance workers,” defined as any person or organization composed of no more than one person that is hired or retained as an independent contractor to provide services of $800 or more. Notably, the $800 threshold can be met by a single contract or aggregating multiple small contracts between the parties over the preceding 120 days. The law does not apply to sales representatives, attorneys, licensed medical professionals, and construction contractors.
A “hiring party” subject to the law is any person or entity who retains a freelance worker to provide any service. There are no exceptions or size limits for private-sector employers.
Under the new law, the parties must have a written contract that includes the parties’ names and addresses; a list of services to be provided and their value; the rate and method of compensation; payment date; and the deadline for freelancers to submit a list of services rendered for purposes of obtaining timely compensation. Moving forward, the Commissioner of the New York State Department of Labor may require additional terms and/or provide model contracts for employers to use.
With respect to compensation, the Act further states that freelancers must be paid in accordance with the terms of the contract. If the contract does not specify when payment must be made or the mechanism by which such date will be determined, then the freelancer must be paid no later than 30 days after completing the required services.
The hiring party must provide a physical or electronic copy of the contract to the freelance worker and both parties must retain a copy of the contract. However, the hiring party must additionally retain a copy of the contract for six years. Failure to do so gives rise to a presumption that the terms that the freelance worker has presented are the agreed-upon terms.
The Act also protects freelancers from retaliation, including discrimination, harassment, threats, intimidation, discipline, or denial of work opportunities for exercising or attempting to exercise any rights under the Act.
Any contract provision attempting to waive a freelance worker’s rights is void and unenforceable.
Enforcement and Liability for Failure to Comply with the Act
Freelancers can file a complaint with the New York State Department of Labor, which can impose civil and criminal penalties on employers. Alternatively, freelance workers can sue in court and obtain damages. The Act provides for double damages for failure to pay as provided in the contract or within 30 days of completion of services, injunctive relief, and other such remedies as may be appropriate.
Statutory damages are available where no written contract exists and for retaliation against freelancers exercising their rights.
The Act applies to contracts entered into on or after May 20, 2024. Accordingly, businesses that use independent contractors should speak with counsel now about drafting or updating contracts to comply with the new law.
Please feel free to contact any of our employment attorneys if you have any questions or would like our assistance in complying with New York’s new Freelance Isn’t Free 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.