By Stanley J. Silverstone, Esq.
A new New York City law with potential implications outside New York City is scheduled to go into effect on May 15, 2017. The “Freelance Isn’t Free Act” was signed by Mayor de Blasio on November 16, 2016, with the goal of protecting independent contractors by providing a right to a written contract and timely payment.
“Freelance worker” is defined in the law as a person who is hired or retained as an independent contractor, but does not include lawyers, doctors, or persons who are sales representatives under the New York Labor Law. A person who hires or retains a freelance worker is called a “hiring party” under the new law.
The law provides two main protections. First, it requires that when a contract between a hiring party and a freelance worker has a value of $800 or more, either by itself or when combined with all contracts for services between the same parties during the immediately preceding 120 days, the contract must be in writing and must include, at a minimum, (i) the names and addresses of the parties; (ii) a description of the services to be provided, the value of the services, and the rate and method of compensation; and (iii) the payment date or the method by which such date will be determined. Failure to offer a written contract to a freelance worker who has requested a written contract before starting the work could result in an award of $250 to the worker, plus attorney’s fees and costs.
Second, the law requires timely payment. The contracted compensation must be paid to the freelance worker either (1) on or before the date such compensation is due under the terms of the contract; or (2) if the contract does not specify a payment date, payment must be made no later than 30 days after the completion of the contracted services. In addition, once a freelance worker has started work under a contract, the hiring party cannot require the worker to accept less compensation as a condition of timely payment. Violation of the timely payment section subjects the hiring party to double damages, injunctive relief, attorney’s fees and costs – and the hiring party may be subject to these penalties even if it can be argued that the services were not completed or performed satisfactorily.
The law also contains an anti-retaliation provision, which bars a hiring party from retaliating against a freelance worker, or taking any action that penalizes a freelance worker, for exercising or attempting to exercise any right guaranteed by the law.
What the law does not say is whether it covers freelance workers who reside in New York City but provide services to customers outside the city, or whether it covers non-New York City workers who provide services to New York City customers. Until there are court decisions on the issue of the law’s jurisdiction, it will be best to comply with it when the work or either of the parties has a New York City connection. And, even if the new law does not apply, entering into written agreements for services is always good practice.