Last month, NYC Mayor Bill de Blasio signed the Freelance Isn’t Free Act (the “Act”) into law. The Act will be effective beginning May 15, 2017.
The Act extends significant protections to freelance workers, who are defined 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.” Excluded from this definition are commissioned salespersons, lawyers engaging in the practice of law, and licensed medical professionals.
Under the Act, a party who retains a freelance worker to provide any service where the contract has a value of $800 or more must enter into a written contract with the freelance worker. (The $800 threshold includes the aggregate value of all the contracts between the parties during the preceding 120 days.)
At a minimum, the contract must include the following information:
- Names and mailing addresses of both parties,
- Itemization of services to be provided by the freelancer, the value of those services, and the rate and method of compensation, and
- The date on which the compensation is due or the method by which that date will be determined.
In the case where the date of payment or method of determining such date was not set forth in the contract, the Act makes it unlawful for the hiring party to pay the freelance worker more than 30 days after the completion of services. The Act also prohibits the hiring party from requiring, as a condition of timely payment, that the freelance worker accept less compensation than the contracted amount.
A freelance worker can bring an administrative claim with the NYC Office of Labor Standards or a legal claim in civil court against a hiring party who violates the Act. Such claims must be filed within 2 years of the alleged violations. Prevailing freelance workers will be awarded $250 in damages for prevailing on a claim based on a hiring party’s failure to execute a contract or include all terms required in a contract. In addition, a freelance worker who prevails on this claim and any other claims for violations of the Act (including a retaliation claim for exercising his/her rights under the Act) will be awarded statutory damages equal to the value of the underlying contract. Double damages, injunctive remedies and other appropriate remedies may be awarded for prevailing on a claim based on unlawful payment practices, such as failure to pay or making late payments.
Hiring parties who are found to engage in a pattern or practice of violating the Act face a civil penalty of up to $25,000.