On November 22, 2023, New York Governor Kathy Hochul signed into law the “Freelance Isn’t Free Act,” which provides new protections for freelance workers throughout the state.  The new law takes effect on August 28, 2024, and sets forth certain requirements for employers when retaining the services of a freelance worker.  The key aspects of the new law are as follows:

Definition of “Freelance Worker”

Pursuant to the Act, a “freelance worker” is defined as “any natural person or 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.

Written Agreement Requirement

Under the new law, when a business retains the services of a freelance worker the terms of the agreement must be memorialized in a written contract if (i) the cost of a single project is equal to or exceeds $800, or (ii) the freelance worker has provided multiple services to the business within a 120-day period that equals or exceeds $800 in the aggregate. Hiring parties will be required to “furnish a copy of such written contract, either physically or electronically, to the freelance worker,” and each party must retain a copy of the written contract. The contract must be provided to the freelance worker and retained by the hiring party for at least six years. The contract must include:

1. The names and mailing addresses of the freelance worker and the hiring party
2. An itemized accounting of the services to be performed
3. The rate of pay
4. The payment date
5. The date by which the freelancer worker must submit to the hiring party a list of services rendered under the contract to enable the hiring party to meet any internal processing deadlines to ensure timely payment.

According to the New York State Department of Labor (“DOL”), model contracts will be published on its website prior to the law taking effect, which may be used by businesses that retain the services of a freelance worker.

Timely Payment

Further, the new law requires that freelance workers must be compensated either: 1) whenever such compensation is due under the terms of the contract; or (2) no later than thirty days after the completion of the freelance worker’s services if the contract does not provide a specific date or specify the mechanism by which the payment date will be determined.

Violations

Freelance workers or their “authorized representative[s]” will have the ability to file a complaint with the labor commissioner alleging violations of the law’s requirements seeking an “investigation of such complaint and statement setting the appropriate remedy.”

In addition, the law provides that freelance workers or their “authorized representative[s]” may bring an action alleging violations of the law in “any court of competent jurisdiction for damages.” Businesses found to be in violation of the law’s requirements are subject to “statutory damages equal to the value of the underlying contract” and reasonable attorneys’ fees and costs, a prevailing party alleging a hiring party’s failure to timely pay contracted compensation may recover “double damages, injunctive relief, and other such remedies as may be appropriate.” Violations of the law’s anti-retaliation provision may entitle freelancers to recover “statutory damages equal to the value of the underlying contract for each violation.”

Additionally, the state attorney general will be authorized to bring civil actions in court on behalf of the state to enforce violations of the law, “[w]here reasonable cause exists to believe that a hiring party is engaged in a pattern or practice of violations.”

Summary

Employers who hire and utilize freelance workers/independent contractors should prepare now by reviewing their existing agreements to ensure they are in compliance with the new law.  We will continue to monitor developments regarding the new law and will provide them and the DOL’s model agreements, as they become available.  Should you have any questions regarding the New York State Freelance Isn’t Free Act, please contact Ali Law Group.

HRtelligence was created by the team at Ali Law Group, LLC.  Should you have any questions or need assistance, please contact Ali Law Group.

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