Both New York State and New York City laws extend enhanced protections to freelance workers retained as independent contractors. Employers should be mindful of these requirements.
New York State Law
The New York State “Freelance Isn’t Free Act”(“FIFA”) (S5026), which took effect in August 2024, is aimed at providing protections to freelance workers working as independent contractors across New York State as well as in New York City.
FIFA defines a “freelance worker” 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 an amount equal to or greater than $800, either 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 Act specifically excludes the following individuals from the definition of a “freelance worker”:
- Individuals engaged in the practice of law;
- Licensed medication professionals;
- Construction contractors; and
- Certain sales representatives.
A “hiring party” is any person who retains a freelance worker to provide any service. The definition of “hiring party” does not include the federal government, New York State government, municipal government, and foreign governments.
Written Contract Requirement
A hiring party retaining the services of a freelance worker must have the contract contained in a written agreement that includes:
- The name and mailing address of both parties;
- An itemization of all services the freelance worker will provide, the value of the services to be provided and the rate and method of compensation;
- The date on which payment by the hiring party is due or the mechanism by which the due date for payment will be determined; and
- The date by which the freelance worker must provide a list of services under the contract to ensure timely payment.
Freelance workers and hiring parties may not waive these rights under the Act and any contract provision attempting to do so is void and unenforceable.
The hiring party must furnish a physical or electronic copy of the written contract to the freelance worker, and it must be retained by both parties. A model contract is available on the New York Department of Labor website.
Timely Payment
A freelance worker must be paid for their services in a timely manner on or before the date that compensation is due under the contract, or if the contract fails to specify, payment must be made within 30 days of the completion of the freelance worker’s services. Once the freelance worker is performing services under the contract, the hiring party must not require that the freelance worker accept less pay than agreed upon as a condition of timely payment.
Discrimination and Retaliation Protections
Additionally, FIFA protects freelance workers from discrimination, harassment, and retaliation, and a hiring party must not threaten, intimidate, discipline, harass, deny a work opportunity to, or discriminate against a freelance worker who exercises or attempts to exercise their rights under FIFA.
Remedies, Damages, and Penalties
The New York State Attorney General is authorized to investigate alleged violations of FIFA and impose remedies. The Attorney General may also bring an action on behalf of the state to enjoin a hiring party from violating FIFA and obtain restitution for impacted freelance workers, Civil penalties may be assessed in the amount of $1000 for a first violation, $2000 for a second violation, and $3000 for a third/subsequent violation. If evidence exists of a pattern or practice of violations, civil penalties may be imposed of not more than $25,000.
A freelance worker who believes that their rights under FIFA have been violated may also file a claim in court for up to two years for violations of the written contract requirements and for up to six years for the timely payment requirements or discrimination or retaliation.
For a hiring party’s failure to provide timely payment per the contract, damages and penalties may be obtained such as double damages, injunctive relief, attorneys fees and costs. For failure to provide a freelance worker with a written contract, a civil penalty of $250 may be imposed. A freelance worker who successfully brings a retaliation claim may obtain statutory damages equal to the value of the underlying contract for each violation, in addition to other damages.
New York City Law
New York City protections for freelance workers have been in effect since May 2017. Similar to the New York State law, Local Law 140 of 2016 (referred to as the “NYC law”) provides freelance workers with the right to have a written contract, timely and full payments, and protection from retaliation.
Definitions
The NYC law defines a “freelance worker” 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” but it does not include certain sales representatives, persons engaged in the practice of law, and any person who is a licensed medical professional.
A “hiring party” is defined as any person who retains a freelance worker to provide any service, but does not include:
- The United States government;
- The state of New York, including any office, department, agency, authority or other body of the state including the legislature and the judiciary;
- The city, including any office, department, agency or other body of the city;
- Any other local government, municipality or county; or
- Any foreign government.
Written Contract Requirement
Written contracts are required between a freelance worker and a hiring party if:
- The value of service provided equals or exceeds $800; or
- The total value of all services performed for a hiring party in the last four months equals or exceeds $800.
The written contract must include:
- The name and mailing address of the parties;
- An itemization of the services that the freelance worker will perform;
- The value of the services to be provided pursuant to the contract and the rate and method of compensation; and
- The date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined.
The Commission of Consumer and Worker Protection may by rule require additional terms to ensure that the freelance worker and the hiring party understand their obligations under the contract.
Timely Payment
Except as otherwise provided by law, the contracted compensation shall be paid to the freelance worker either:
- On or before the date such compensation is due under the terms of the contract; or
- If the contract does not specify when the hiring party must pay the contracted compensation or the mechanism by which such date will be determined, no later than 30 days after the completion of the freelance worker’s services under the contract.
Once a freelance worker has commenced performance of the services under the contract, the hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount of the contracted compensation.
Retaliation Protections
The NYC law prohibits hiring parties from harassing, threatening, disciplining, intimidating or discriminating against a freelance worker. Hiring parties are also prohibited from penalizing a freelance worker from or deterring a freelance worker for exercising their rights under the law.
Remedies and Damages
A freelance worker can file a claim with the commissioner within two years after the alleged acts occurred.
Subsequently, a freelance worker may bring a civil action against the hiring party in New York State court within two years for violation of the written contract provision and within six years for violation of the payment practices provision as well as retention and may be awarded damages, in addition to attorneys’ fees and costs as specified in the law.
Takeaways
In order to comply with these laws, covered employers in New York State and New York City, should where applicable:
- Familiarize themselves with the requirements of these laws.
- Review and revise internal processes and procedures of hiring freelance workers and independent contractors.
- Draft and prepare written contracts that comply with the laws’ requirements.
- Make sure to comply with New York State recordkeeping requirements and retain freelance workers contracts for a minimum of six years.
- Train HR, supervisors, and managers regarding the legal requirements.
New York City entities must follow New York City law as well as the more stringent New York State law.
This summary is for informational purposes only and is not intended to constitute legal advice. This information should not be reused without permission.