New York’s “Freelance Isn’t Free Act” Becomes Effective May 20, 2024, and Brings Significant Changes to Independent Contractor Arrangements

On November 22, 2023, Governor Hochul signed into law the New York Freelance Isn’t Free Act, which mandates written contract, payment, record keeping, and anti-retaliation requirements on businesses that hire freelance workers. The Act is similar to New York City’s Freelance Isn’t Free law that was enacted in 2017, however, the State version is broader in scope and applies statewide. It becomes effective on May 20, 2024.

“Freelance Worker” Under the Act

A “freelance worker” is defined as “any natural person or organization 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” of $800 or more. The $800 threshold is determined by looking at either a single contract or the aggregate of all contracts between the freelancer and the hiring party within a 120 day period.

The Act only exempts four classes of workers from its requirements; namely (1) attorneys; (2) licensed medical professionals; (3) sales representatives (as defined by law); and construction contractors (as defined in the Act).

Written Contract Required

The Act requires that whenever a business or individual retains the services of a freelancer, the terms of the engagement must be memorialized in a written contract. The contract must include:

·      The names and mailing addresses of the parties;

·      An itemization of the services to be provided;

·      The value of the services;

·      The rate of compensation;

·      The date upon which payment is due or the mechanism to determine the payment due date; and

·      The date by which the freelancer must submit a list of services rendered for purposes of receiving timely compensation.

Freelance workers must be paid on or before the date set forth in the contract, but no later than 30 days after completion of services.

Additionally, written freelancer contracts must be maintained for a minimum of six years.

Penalties for Non-Compliance

The Act provides for double damages (i.e., 200% of underpayment), injunctive relief, and attorneys’ fees and costs for a failure to pay pursuant to the contract or in violation of the Act. Non-payment claims are subject to a six-year statute of limitations.

The failure to enter into a written contract can result in statutory damages of $250. Additionally, the Act authorizes the attorney general to commence a civil action against any individual or entity that engages in a pattern or practice of violating the Act, with potential civil damages of up to $25,000.

Takeaways

Starting on May 20, 2024, all businesses (or individuals) in New York that hire an individual, or business with only one person working for it, will need to comply with the Act. Business owners should note, however, that the Act does not address the proper classification of a worker as an independent contractor or an employee. Thus, when hiring freelancers businesses should carefully review the nature of the anticipated relationship, and consult with experienced counsel, to ensure both the proper classification of workers and compliance with the Act if a worker is properly classified as a freelancer.

If you have questions about the Act or the classification or your business’s workers, please schedule a complimentary consultation with us through our online scheduling system.

Information contained in this blog is provided for informational purposes and does not constitute legal advice or opinion. You should consult with an attorney regarding the specifics of your matter or legal issue.