New York City Freelancer’s Law Set to Go Into Effect May 15, 2017

On November 16, 2016, Mayor Bill de Blasio signed the New York City “Freelance Isn’t Free Act” (the “Freelancer’s Act”) which will apply to contracts with freelancers entered into on or after May 15, 2017. The text of the law, Int. No. 1017-C can be found on the City Council’s website. The law will be administered by the Director of the New York City Office of Labor Standards (OLS), a newly created office within the Department of Consumer Affairs.

The Freelancer’s Act only applies to individual freelancers, rather than companies, as it 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.” (emphasis added). The law does not apply to sales representatives, lawyers, and medical professionals.

Written Contract Requirement

The Freelancer’s Act requires a written contract for any agreement for freelance services worth $800 or more, either by itself or when combined with all services between the same parties during the immediately preceding 120 days. The written contract must contain, at a minimum:

• the name and mailing address of the hiring party and the freelance worker;
• an itemization of all services to be provided by the freelance worker;
• the value of the services to be provided;
• the rate and method of compensation;
• the date on which the compensation must be paid, or a mechanism by which the payment date will be determined.

According to the New York City Council’s “committee report” accompanying the law, the contract can be set forth in an email, letter or other written communication as long as it includes all of the required elements. OLS is expected to publish model contracts in several languages on its website.

Payment Provisions

Under the law, payment for a freelancer’s services must be made when due under the terms of the contract or, if the contract does not specify a date, no later than 30 days after the completion of the freelancer’s services. Once a freelancer has started work, the hiring party cannot require the freelancer to accept less than full payment as a condition for obtaining timely payment.

Retaliation or Discrimination Prohibited

The Freelancer’s Act prohibits retaliation or discrimination against any freelancer who exercises his or her rights under the law, which may include denying the freelancer a new work opportunity.

Complaints

A freelancer may file a complaint with the Director of OLS within two years after the occurrence of any alleged violations of the Freelancer’s Act. The Director will notify the hiring party and seek a response. Failure to respond will create a “rebuttable presumption” in any later civil court action that the hiring party committed the violations alleged in the complaint.

The Director of OLS cannot order a hiring party to pay damages to a freelancer and can only provide a freelancer with a copy of the hiring party’s response, advise him or her of the right to bring an action in court, and provide information on how to do so.

Instead of filing a complaint with OLS, a freelancer may file an action directly in court within two years of any alleged violation of the written contract or payment requirements or within six years of any alleged discrimination or retaliation. A freelancer alleging a violation of the written contract requirement must prove that he or she requested a contract before the work began.

Penalties

Courts can assess a penalty of $250 penalty for violations of the written contract requirement, with higher damage awards for other violations. A court may impose a civil penalty of $25,000 if it finds a pattern or practice of violations.

Next Steps

Employers should ensure that any freelance assignment for $800 or more that they expect will be entered into or renewed on or after May 15, 2017, complies with the new law. Employers should also train individuals who are responsible for relationships with freelancers about the requirements of the law.

The OLS may issue rules further explaining the Freelancer’s Act and will issue a report one year after the effective date in which it may recommend changes to the law. Any further developments will be reported here.

Please do not hesitate to contact any of our attorneys if you have questions about the New York City Freelance Isn’t Free Act.