On November 16, 2016, New York City Mayor Bill de Blasio signed a law designed to provide better protection for non-employee, freelance workers. The new law aims to prevent wage theft by requiring written contracts and prompt payment, and by imposing penalties on those who hire freelancers and either fail to pay them, or retaliate against them for seeking to enforce their rights.

Background and Purpose

On October 27, 2016, the New York City Council unanimously passed the Freelance Isn't Free Act. The act requires a written contract for freelance opportunities valued at $800 or more, either by itself or when aggregated with all work performed for a single employing party over a span of 120 days. In many respects, the new law mirrors protections offered by the New York Wage Theft Prevention Act (See Employment Law Insider Alert, January 15, 2013).

According to a NYC Council document, approximately 1.3 million freelance contractors work in New York City. Nationwide, 71% of freelancers report having faced difficulty being paid for services provided. The average loss per year for freelancers is approximated at $6,000, based on 2014 data.

Contract Requirements

Written contracts with freelancers must state, at minimum, the name and address of both the freelancer and the hiring party, an itemized accounting of the work to be performed, the rate of pay, and the required payment date. If no date is specified, the freelancer must be paid within 30 days after completion of the work. The new law also protects freelancers from being harassed, intimidated or threatened for exercising their rights under the law.

Forms

Model contracts in English and six other languages will be provided by the newly created Office of Labor Standards within the Department of Consumer Affairs.

Enforcement and Penalties

The law sets up a complaint process to be enforced by the Office of Labor Standards. Statutory damages can be assessed against the hiring party for (1) failure to enter into a written contract, (2) failure to abide by lawful contract or payment provisions, or (3) retaliation against freelancers for seeking to enforce their rights. The law also provides for double damages, injunctive relief, and attorney's fees and costs for violating the lawful payment provisions.

Civil action may be commenced in a court of competent jurisdiction, and civil penalties of up to $25,000 may be assessed against a hiring party if there is a pattern or practice of violations found.

Effective Date

The Freelance Isn't Free law takes effect on May 15, 2017, and applies to contracts entered into with freelancers after this date.

Conclusion

Businesses should be prepared to enter into agreements for work performed by freelancers in New York City by May 15, 2017, or face penalties.

Bennett Pine is a shareholder in Anderson Kill's New York and Newark offices and is chair of the firm's employment & labor group. Mr. Pine has broad-based labor and employment law experience and regularly plays a hands-on role offering preventative maintenance advice and counseling to employers in the full range of legal issues affecting the workplace.

About Anderson Kill

Anderson Kill practices law in the areas of Insurance Recovery, Commercial Litigation, Environmental Law, Estates, Trusts and Tax Services, Corporate and Securities, Antitrust, Banking and Lending, Bankruptcy and Restructuring, Real Estate and Construction, Foreign Investment Recovery, Public Law, Government Affairs, Employment and Labor Law, Captive Insurance, Intellectual Property, Corporate Tax, Hospitality, and Health Reform. Recognized nationwide by Chambers USA for Client Service and Commercial Awareness, and best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes - with no ties to insurance companies and has no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. Based in New York City, the firm also has offices in Philadelphia, PA, Stamford, CT, Washington, DC, Newark, NJ and Los Angeles, CA.

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