Just a few short years ago, employment lawyers began to comment on the legal landscape surrounding the burgeoning “gig-economy”; the name given to the growing sector of workers who were not, and did not want to be, beholden to one single employer. Instead, “gig” workers desire to offer their skills to many different companies and customers on their own terms and schedules.
As we all know, the COVID-19 pandemic has exacerbated this shift by making it more acceptable to work remotely from anywhere, at any time. What has also followed is a steady drum beat of legislation aimed at trying to protect workers from being taken advantage of. Whether you are a freelancer or hire one, you must be aware of the rights and obligations that come with those roles. Nowhere is this more relevant than in New York where not only is there a strong and ever-growing freelance ecosystem, but also an increasing regime of laws and regulations that will soon apply statewide here in New York.
New York City’s “Freelance Isn’t Free” Act
Our firm is consistently running into clients here in New York City who are not aware that if you work freelance in the city, or if you are a startup or small business that utilizes freelancers, you have been covered by the city’s “Freelance Isn’t Free” Act since May 15, 2017. The city’s law has the following requirements.
Freelance contracts valued at $800 or more (including multiple small projects within a 120-day period) must be in writing and contain the name and mailing address of both parties, a listing of all services to be provided, the value of the service to be provided, the rate and method of pay, and the date that the freelance worker is required to be paid (or the way to determine the worker’s payday).
Compensation to the freelancer must be paid on or before the date it is due under the contract, or if silent, no later than 30 days after the completion of services.
Those who hire freelance workers are prohibited from taking any actions that have been traditionally deemed as retaliatory (e.g., threatening, intimidating, harassing, discriminating against, etc.) for exercising, or attempting to exercise, any right under the new law, or for pursuing a new work opportunity.
City Administrative Rules also make void any provision containing a waiver of procedural rights in civil litigation (including class action rights) or containing a limitation on the ability for a worker to communicate contract terms to New York City’s Director of Labor Standards. Moreover, under the law, a freelancer may file an administrative complaint within two years of any violation, or can choose to sue their hiring party directly within either two or six years (depending on the type of violation).[1] Depending on the nature of the claim, freelance workers may recover the value of their services, double damages, reasonable attorneys fees and costs, injunctive relief, statutory damages, and/or “other such remedies as may be appropriate.”[2]
New York State’s Pending Law
Earlier this June, New York State’s legislature passed its own “Freelance Isn’t Free Act” to apply statewide.[3] The law has not yet been presented to Governor Hochul for her signature, but if she signs it (as is expected), it will take effect 180 days after signing and apply to contracts entered into after that date. The proposed state law mirrors New York City’s law in most material respects so, if enacted, freelance workers statewide would receive the same right to a written contract, the same right to be paid on a timely basis, and the same right to be free from retaliation, that freelancers have in the five boroughs. Moreover, the proposed state law would require a hiring party to keep each freelance contract they enter into for no less than six years and must make those contracts available to the New York Commissioner of Labor upon request (failure to do so will give rise to a presumption that any terms presented by the freelancer are the agreed upon terms). However, the proposed state law will not apply to certain occupations and trades such as construction contractors, medical professionals, commissioned salespersons, attorneys, and governmental entities.
As for enforcement, civil actions under the proposed state law can be brought by freelancers, or by the New York State Department of Labor. Like the New York City law, depending on the type of claim, freelancers who sue would be able to recover $250 for failure to have a written contract, double damages, injunctive relief, attorney’s fees and costs, and/or other remedies. However, unlike the New York City law, there is no time limit on when an administrative complaint may be filed.
It is expected that the Governor will sign the law and we will continue to monitor for additional developments. If you need any individualized counseling on New York State or City’s respective “Freelance Isn’t Free” Acts, contact Mattiace Tetro LLC.
[1] Either way, the freelancer must choose between going the administrative route or filing in court.
[2] For instance, a worker bringing a claim for failure to have a written contract may be entitled to $250 in damages. If the worker is not paid timely or in full, or if the worker was a victim of retaliation, he or she may be entitled to damages equal to the value of the contract. If the worker is not paid in full by the date provided in the contract, or if the worker is not paid within 30 days of completion of services, he or she may be entitled to double damages. Finally, if there is evidence of a pattern of violations by a hiring party, New York City may bring a civil action to recover a maximum civil penalty of $25,000.
[3] See https://www.nysenate.gov/legislation/bills/2021/s8369