On October 27, 2016, the New York City Council passed legislation that would establish protections for freelance workers. “Establishing protections for freelance workers” (Int 1017-2015) protects independent contractors’ rights by requiring that certain contracts be in writing, by establishing payment timelines, by prohibiting retaliation, and by establishing an outreach and education program to assist freelance workers. The first-in-the-nation bill, which is also being referred to as the Freelance Isn’t Free Act, creates penalties for violating independent contractors’ rights, including statutory damages, double damages, injunctive relief, and attorneys’ fees.
Who Is Covered?
The legislation defines a “freelance worker” as any person that is hired as an independent contractor to provide services in exchange for payment. An individual may be a freelance worker, according to the legislation, regardless of whether the freelancer is incorporated or employing a trade name. The definition excludes:
- sales representatives (as defined in section 191-a of the labor law);
- lawyers (who are members in good standing of the bar and who are not under any court order suspending, enjoining, restraining, disbarring, or otherwise restricting them in the practice of law); and
- licensed medical professionals.
The legislation defines “hiring party” as “any person who retains a freelance worker to provide any service” and excludes:
- the U.S. government;
- “the state of New York, including any office, department, agency, authority or other body of the state including the legislature and the judiciary”;
- New York City, “including any office, department, agency or other body of the city”;
- “any other local government, municipality or county”; or
- “any foreign government.”
Contracts Must Be in Writing
Section 20-928 of the legislation requires a freelancer and hiring party to reduce any agreement valued at $800 or more to writing and for each party to retain a copy of the contract. The $800 minimum threshold represents the value of a contract “by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days.” The written contract must include at least the following information:
- the name and mailing address of both parties;
- an itemization of the services that the freelance worker will provide, the value of the services pursuant to the contract, and the rate and method of compensation; and
- the date on which the hiring party must pay the freelancer or the mechanism by which a payment date will be determined.
In terms of the timing of payment, section 20-929 specifies that, “except as otherwise provided by law,” the hiring party must pay the freelance worker on or before the date that compensation is due under the contract. Alternatively, if the contract does not specify when a payment must be made or a mechanism by which to determine when a payment must be made, the hiring party must pay the freelance worker “no later than 30 days after the completion of the freelance worker’s services under the contract.” The legislation prohibits the hiring party from requiring a freelance worker who has started to perform the contracted-for services to accept less compensation than agreed upon in the contract—as a condition of timely payment.
Section 20-930 of the legislation prohibits hiring parties from retaliating against freelancers. Specifically, hiring parties may not “threaten, intimidate, discipline, harass, deny a work opportunity to or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelancer worker from, exercising or attempting to exercise any right guaranteed under this chapter, or from obtaining future work opportunity because the freelance worker has done so.”
Establishment of a Navigation Program
Section 20-932 of the legislation requires the director of the Office of Labor Standards (OLS) to create a navigation program to provide information on the law and assistance to freelance workers. The program must provide information about: courts and procedures; templates and relevant court forms; classifying workers as employees or independent contractors; and obtaining translation, interpretation, and other courtroom services. In addition, the navigation program will provide a list of organizations to help freelance workers identify attorneys.
The navigation program will provide outreach, education, and assistance by phone, website, and email. The website will make model contracts in English and six other languages available for use by the public.
The legislation specifies the steps freelance workers may take if a hiring party violates the law. Specifically, within two years of an alleged violation, a freelance worker may file a complaint with the director of the OLS. The complaint triggers the director’s obligations to provide notice to the hiring party, followed by the hiring party’s opportunity to respond.
The director does not have jurisdiction over a complaint if:
- either party has initiated a civil action “alleging a violation of this chapter or a breach of contract arising out of the contract that is the subject of the complaint”; or
- either party “has filed a claim or complaint before any administrative agency under any local, state or federal law alleging a breach of contract that is the subject of the complaint.”
Section 20-933 of the legislation permits freelance workers to file an action in court for violations. In addition, the corporation counsel may bring a civil action on behalf of the city “[w]here reasonable cause exists to believe that a hiring party is engaged in a pattern or practice of violations of this chapter.”
A freelance worker who prevails would be entitled to damages, attorneys’ fees, and costs. The chapter’s permissible statutory damages include $250, the value of the underlying contract, double damages, injunctive relief, and other remedies.
The legislation permits the recovery of a civil penalty totaling not more than $25,000 for a finding that a hiring party has engaged in a pattern or practice of violations—which would then be paid into the city’s general fund.
The bill is currently awaiting the mayor’s signature. Mayor Bill de Blasio is expected to sign the bill into law shortly.