New York’s Freelance Isn’t Free Act to Start: Are You Ready?

Businesses in New York should take note that New York’s “Freelance Isn’t Free” Act (FIFA) goes into effect on August 28, 2024. As we reported earlier this year, the law requires written contracts with freelancers for services of at least $800 over a 120-day period. Those who employ freelancers must ensure they start using agreements that comply with the law by August 28th. The new law is particularly likely to impact businesses that rely heavily on gig work. 

Who Is a “Freelance Worker” Covered Under FIFA?

A “freelance worker” is defined as any person or organization composed of no more than one person who is hired or retained as an independent contractor to provide services of $800 or more. Sales representatives, attorneys, licensed medical professionals, and construction contractors are excluded.

The $800 threshold can be met by a single contract or by aggregating multiple smaller contracts between the parties over the preceding 120 days. 

Who Is a “Hiring Party”?

A “hiring party” under FIFA 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. Governmental entities are not considered hiring parties.

What Are the Key Requirements of FIFA?

Contracts entered into on or after August 28th must be in writing and include 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. The Commissioner of the New York State Department of Labor (DOL) has the authority to require additional terms and/or provide model contracts for employers to use. 

Freelancers have the right to be paid as provided in 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. Hiring parties cannot require freelancers to accept less compensation as a condition of timely payment. 

Notably, none of these rights can be waived in the contract, and freelancers are protected from discrimination, harassment, threats, intimidation, discipline, or denial of work opportunities for exercising or attempting to exercise any rights under the Act.

Hiring parties must provide a physical or electronic copy of the contract to the freelance worker. Contracts must be retained by the hiring party for six years. If they fail to do so, it creates a presumption that the terms the freelancer presents are the agreed-upon terms.

How Will the Law Be Enforced?

Freelancers can sue in court for damages or file a complaint with the Department of Labor. If a complaint is filed, the Attorney General has the power to investigate it and bring an action against the hiring party. 

What Is a Hiring Party’s Potential Liability?

Liability depends upon the type of violation but can include double damages (200% of the amount owed), attorneys’ fees and costs, and injunctive relief.

A freelancer can also seek a civil penalty of up to $25,000 if the hiring party “engaged in a pattern or practice” of violating FIFA. However, the penalty goes to New York rather than the freelancer.

Separately, the Attorney General can obtain a penalty of up to $1,000 for a first violation, $2,000 for a second violation, and $3,000 for a third or subsequent violation.

Have You Prepared?

Businesses that use independent contractors should speak with counsel prior to August 28, 2024, 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.