New York State Law for Independent Contractors – What You Need to Know

On November 22, 2023, New York State took a significant step towards safeguarding the rights of freelance workers by enacting the “Freelance Isn’t Free” Act. This legislation, set to take effect on May 20th, 2024, aims to provide vital protections for freelancers and independent contractors across the state.

The Act’s requirements are not new to New York City employers. As explained in a previous alert, New York City passed its own law of the same name in October 2016, which took effect in May 2017. The statewide act mirrors the protections set forth in the City’s law.

All employers in New York State must soon comply with these requirements. Employers who engage freelancers or independent contractors, must understand the implications of this law and ensure compliance to avoid potential legal ramifications.

Who Does the “Freelance Isn’t Free” Act Impact?

The “Freelance Isn’t Free” Act is designed to benefit freelance workers throughout New York State, offering crucial protections in a rapidly evolving gig economy. While freelance workers contribute valuable skills and services to businesses of all sizes, they often face challenges such as late or non-payment, lack of written contracts, and retaliation for asserting their rights. This law seeks to address these issues and establish clear guidelines to protect freelance workers from exploitation and unfair treatment.

Key Provisions of the Act

• Right to a Written Contract: Under the “Freelance Isn’t Free” Act, employers are required to provide a written contract for freelance services valued at $800 or more. This contract must outline the scope of work, payment terms, and other essential details to ensure clarity and transparency for both parties.
• Right to Timely and Full Payment: Freelancers have the right to receive payment for their services within 30 days of completing the work, or by the agreed-upon deadline specified in the contract. Additionally, employers must pay freelancers in full for completed work, without unjustified deductions or delays.
• Right to Freedom from Retaliation: Freelancers are protected from retaliation by employers for exercising their rights under the “Freelance Isn’t Free” Act. This includes the right to file complaints or take legal action against employers who violate the provisions of the law.

Implications for Employers

As employers who engage freelancers or independent contractors, it is imperative to familiarize yourselves with the requirements of the “Freelance Isn’t Free” Act and ensure compliance to avoid potential legal liabilities. Failure to adhere to the provisions of the law can result in significant penalties, including monetary fines and legal action.

To mitigate the risk of non-compliance and uphold ethical business practices, employers should take the following steps:

• Review Existing Contracts: Evaluate current agreements with freelancers to ensure compliance with the requirements of the “Freelance Isn’t Free” Act. If necessary, update contracts to include the mandated provisions and clarify expectations regarding payment terms and other relevant details.
• Establish Transparent Payment Processes: Implement clear and efficient payment processes to ensure timely and full payment to freelancers for their services. This may involve establishing invoicing procedures, tracking payment deadlines, and resolving any disputes promptly and fairly.
• Employee Classification: Under the recent Fair Labor Standards Act, employers should take precautions each time they hire a new worker to ensure that the worker is properly categorized as either an employee or an independent contractor. Employers should also conduct routine checks to ensure that workers hired as independent contractors have not become employees over time due to a shift in their work.

The “Freelance Isn’t Free” Act represents a significant milestone in the ongoing efforts to protect the rights of freelance workers in New York State. By understanding the provisions of the law and taking proactive steps to ensure compliance, employers can uphold fair and ethical practices while fostering mutually beneficial relationships with freelance workers.

Please contact your LMC professional if you have questions on how to ensure your compliance with this new legislation.