New York State Enacts Law for the Protection of Freelance Workers

Paula Lopez, February 22, 2024

After vetoing a prior version of bill intended to protect freelancers in New York, on November 22, 2023, Governor Hochul signed into law Senate Bill 5026/Assembly Bill 6040 known as the Freelance Isn’t Free Act (the “Act”). The Act takes effect on May 20, 2024. The Act mirrors New York City’s 2017 Freelance Isn’t Free Act (N.Y.C. Administrative Code §§ 20-927 et seq.), which was the first law passed in the country for the protection of freelance workers. The Act aims to protect freelancers working outside New York City from non-payment and retaliation, as well as to provide freelancers with recourse against businesses who violate the law’s requirements.

The Act defines a freelancer worker as “any natural person or any organization composed of no 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. The definition excludes certain sales representatives, legal practitioners, medical professionals, and construction contractors. The compensation threshold under the Act is “an amount equal to or greater than eight hundred dollars, either by itself or when aggregated with all contracts between the same hiring party and freelance worker during an immediately preceding one hundred and twenty days.”

The law obligates a hiring party, defined as “any person who retains a freelance worker to provide any services,” to enter into a written contract with all independent contractors providing services valued at $800 or more. The definition of “hiring party” excludes the U.S. government, the state of New York, a municipality, and foreign governments.

The Act expressly requires the hiring party and freelance worker to enter into a written contract which includes, at minimum, the following terms:

1. Names and mailing addresses of the freelance worker and hiring party;
2. An itemized accounting of all the services to be provided by the freelance worker, the value of the services, the rate and method of compensation for such services;
3. The payment date;
4. The date by which the freelance worker must submit a list of services rendered under such contract to enable the hiring party to meet internal processing deadlines for payment.

The Act also provides that the labor commissioner may implement rules requiring additional terms. The labor commissioner will also make sample contracts available to the public on its website. A copy of the written contract must be provided to the freelance worker and the hiring party is required to keep the contract for a period of six years.

The compensation provided for in the written contract must be paid either on or before the date set in the contract, or no later than 30 days after the freelancer completes the services under the contract. The Act further states that, once a freelancer has started performing under the contract, the hiring party cannot condition timely payment on the freelancer accepting less than full compensation.

The Act also includes an anti-retaliation provision prohibiting a hiring party from denying a work opportunity to, discriminating against, or taking any action that penalizes or deters a freelance worker from exercising any right under the Act.  A freelance worker is afforded the right to file a complaint with the commissioner of labor or bring a civil action for violations of rights under the Act. A freelancer must institute an action for non-payment under the contract within six years and an action for failure to provide a written contract within two years.

A freelancer who prevails for claims for non-payment may recover 200% of the underpayment, injunctive relief, reasonable attorneys’ fees and costs. A freelancer can recover statutory damages in the amount of $250.00 for violation of the written contract requirement, and statutory damages in an amount equal to the value of the underlying contract for violations of the anti-retaliation provision. In addition to providing for the recovery of civil and criminal penalties, the Act empowers the Attorney General to commence a civil action and recover civil penalties of up to $25,000 from a hiring party who has engaged in a pattern or practice of violation the Act.

New York businesses engaged in hiring independent contractors should familiarize themselves with the increased obligations and risks imposed by the Act. Businesses should review their contracts and recordkeeping policies to ensure compliance with the requirements of the Act and should periodically monitor the New York Department of Labor website for further guidance on compliance with the Act.