New Requirements for Engaging Freelance Workers in NYC
As of May 15, 2017, anyone engaging a freelance worker in NYC where the contract or contracts between the two parties has a value of $800 or more calculated over a 120 day period must comply with the new requirements under the “Freelance Isn’t Free Act” (“FIFA”). Freelance workers are defined, under FIFA, as including any natural person, or any organization (composed of no more than one person) that is hired or retained as an independent contractor to provide services in exchange for compensation. FIFA excludes salespersons working as independent contractors, lawyers engaging in the practice of law, and licensed medical professionals from coverage.
The primary requirement under FIFA is that companies or individuals engaging freelance workers to provide the qualifying amount of services must enter into a written contract. FIFA provides $250 in statutory damages along with attorney’s fees and costs to freelance workers that establish a violation of this new requirement for a written agreement. However, the person bringing the complaint must establish that he or she actually requested that the agreement be reduced to writing.
A committee report from the New York City Council accompanying the bill suggests that the requirement to reduce the agreement to writing may be flexible and could be met in a variety of ways, such as with an email, a letter, an advertisement or a text message, or some combination of there off, so long as the writing satisfies the New York requirements for a contract and contains the information required under FIFA. At a minimum, FIFA requires the following information to be included in all written agreements:
- The name and mailing address of both 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 pursuant to the contract and the rate and method of compensation; and
- The date on which the hiring party must pay the agreed compensation or the mechanism by which such date will be determined.
The Office of Labor Policy and Standards has stated it will make model contracts available on its website for use by the general public at no cost in English and in six other languages. No date has been provided for when the model contracts will be made available.
FIFA prohibits companies or individuals from paying compensation later than agreed upon. If no time period is specified in a written agreement, then payment must be made within thirty days of completion of services. As FIFA does not define the term “completion,” companies and individuals may want to require freelance workers to provide an invoice or bill upon finishing the specified services to avoid ambiguity with respect to when the work was completed.
Once the worker has started performing services under a contract, FIFA prohibits conditioning timely payment on an agreement to accept less than the originally agreed upon amount. The statute provides for double damages, along with attorney’s fees and costs, if a company or individual fails to timely pay the freelance workers in accordance with the terms of the written agreement.
Under FIFA, the NYC Corporation Counsel will be able to bring civil actions on behalf of the City of New York against businesses or individuals believed to have engaged in a “pattern or practice” of violating this statute. These actions by the Corporation Counsel do not preclude a freelance worker from bringing his or her own claim and could result in civil penalties up to $25,000 for businesses or individuals determined to be violating the statute.
Finally, FIFA prohibits companies or individuals from retaliating against freelance workers who have complained about violations of the new protections and provides for statutory damages in the amount of the value of the underlying contract for each violation. Prohibited retaliation would include refusing to provide further opportunities for work to a person that complained.
Based on the new FIFA requirements affecting those engaging with freelance workers in NYC, we advise any clients that regularly engage these types of individuals, whether in their business or personally, to review their practices at this time.
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