New York City Affords Statutory Protections to Freelance Workers

Paula Lopez, November 22, 2016.

On November 16, 2016, Mayor Bill de Blasio signed into law the “Freelance Isn’t Free Act,” which amends Title 10 of the N.Y.C. Administrative Code to provide certain protection to freelance workers.  In passing this law, New York City is the first city in the country to enact legislation that affords protections to freelance workers.  Proponents of the law note that independent contractors and freelance workers make up the fastest growing sector of the workforce and should have protections that ensure full and timely payment for their work.  While the law does not afford freelancers the full scope of protection that an employee would enjoy, it does establish enhanced protections for freelancers such as the right to a written contract under certain circumstances, the right to be paid timely and in full, and the right to be free from retaliation.

The Freelance Isn’t Free Act defines “freelance worker” as “any natural person or any organization composed of not more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.”  Excluded from the definition are “sales representatives” as defined under Labor Law 191-a, attorneys, and doctors.   The Act defines “hiring party” as “any person who retains a freelance worker to provide services” and excludes from the definition of “hiring party” the federal, state and city government.

The following protections are afforded to freelance workers under Act:

1.    Under Section 20-928, a written contract is required whenever the value of the contract between the hiring party and freelancer is $800 or more, either by itself, or when aggregated with all contracts entered into by the same parties within the preceding 120 days.  The contract must include the following information:

• The name and mailing address of both parties;
• All services to be provided by the freelance worker, the value of the services, and the rate and method of compensation; and
• The date of payment under the contract or the means for determining such date.

The director of the New York City Office of Labor Standards may implement additional rules regarding the required contract terms.

2.    Under Section 20-929, the hiring party must pay the freelance worker on or before the date due under the contract or, if the contract does not specify a date certain, no later than 30 days after completion of the services under the contract.  After the freelance worker has commenced performance of the contract, the hiring party is prohibited from requiring as a condition of timely payment that the freelance worker accept less compensation than originally contracted for.

3.    Under Section 20-930, a hiring party is prohibited from retaliating against a freelance worker for exercising or attempting to exercise any right afforded under the Act or from obtaining future work opportunities.

A freelance worker aggrieved by a violation of the law must elect to either file a private cause of action against the hiring party or an administrative complaint with the New York City Office of Labor Standards.   A freelance worker who prevails in his claim can recover the contract amount of compensation, double the amount of proven damages, reasonable attorney’s fees and costs, injunctive relief, and certain enumerated statutory damages based on the type of claim alleged.

The Freelance Isn’t Free Act also permits the City to commence a civil action against a hiring party engaged in a “pattern or practice of violations” of the new law and recover a civil penalty of up to $25,000.00, payable into the general fund of the city.

The law will take effect on May 15, 2017 and will apply only to contracts entered into after such date. The Act provides that any contract provision waiving the rights afforded under the Freelance Isn’t Free Act is void against public policy.  Therefore, New York City employers that rely on freelance workers should ensure that their policies and procedures comply with the requirements under the Act before its effective date.