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NYC Passes New Law Protecting Freelance Workers

Posted May 19, 2017 by Justworks in Keeping Compliant
Does your business work with freelancers in NYC? A new law just went into effect that you should know about.

Update 07/25/2017: The NYC Department of Consumer Affairs has published the final rules implementing this act. You can find the highlights of those final rules here.

On May 15th, 2017, New York City’s “Freelance Isn’t Free Act” went into effect, establishing and enhancing protections for freelancers.

Although this summary does not encompass all the new requirements put forth by this measure, there are three main takeaways to know about: written contract requirements, unlawful payment practices, and protection against retaliation. We’ll cover them below.

1. Written Contract Requirement

Moving forward, many freelance services will require written contracts. This applies if a contract between a freelancer and hiring party has a value of $800 or more. That $800 could be by itself or when aggregated with all the contracts between the hiring party and freelancer during the past 120 days.

A hiring party is any person, organization, or entity other than a government that retains a freelancer to provide services for compensation. A freelancer is a person or organization hired or retained as an independent contractor to offer services in exchange for compensation. Certain sales representatives, attorneys, and licensed medical professionals are not considered freelancers covered by the new law.

Here are the steps the hiring party should take when hiring a freelancer for services valued at $800 or more:

  • Put the contract in writing. Each party should have a copy.
  • Include the name and mailing address of the hiring party and freelancer
  • Include an itemization of all the services the freelancer will provide, including:
  • Include an itemization of all the services the freelancer will provide, including the value of the services and the rate and method of compensation
  • Include the date on which the hiring party must pay the freelancer, or how the payment date will be determined

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2. Unlawful Payment Practices

Under the law, freelancers must be paid:

  • On or before the pay date in the contract
  • No later than 30 days after the freelancer completes their services under the contract if the pay date is not specified in the contract

Once the freelancer has begun services under the contract, the hiring party may not require the freelancer to accept less compensation than the contracted amount.

3. Prohibition Against Retaliation

No hiring party may threaten, intimidate, discipline, or harass a freelancer for exercising any of their rights under the new law. Hiring parties are also not allowed to discriminate or take penalizing action against a freelancer, or prevent a freelancer from obtaining a future work opportunity for exercising their rights under this law.

Conclusion

In summary, the new law has been put in place to create more clear-cut contracts between freelancers and their hiring party, assuring that the duties of the job and compensation are clear when the project begins and that freelancers are compensated for what their contract stipulated. Additionally, it protects freelancers from retaliation if a hiring party seeks to prevent them from exercising those rights.

You can read more in detail about the law here. NYC.gov has also provided a sample freelance work agreement that would comply with the law.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.