- Henry Park
Freelance Isn't Free Act
Last year, the New York City Council passed a law known as the Freelance Isn't Free Act that specifically addressed issues facing gig economy workers. The law takes effect today, May 15, 2017 (a copy of the law as enacted is here). The law amended Title 10 of the N.Y.C. Administrative Code (see link) and will be enforced by the New York City Office of Labor Standards (see § 20-927). The law defines "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." The definition specifically excludes commissioned sales representatives, lawyers, and licensed medical professionals (see § 20-927). The law defines "hiring party" as "any person who retains a freelance worker to provide any service," with a few exceptions (see § 20-927). What does this mean going forward for freelancers and hiring parties? 1. A Written Contact May Be Required. The law only affects agreements entered into after May 15, 2017. The law requires that a hiring party execute a written contract with a freelance worker when the value of the services is $800 or more, either by itself or in aggregate over the preceding 120 days (see § 20-928.a). The contract must include at least: (1) the name and mailing address of both the hiring party and the freelancer; (2) an itemization of all services to be provided by the freelancer, (3) the value of the services to be provided, (4) the rate and method of compensation, (5) the date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined (see § 20-928.b). All freelance worker should request a written contract before starting work because that is a requirement if you are alleging only a violation of the written contract requirement (see § 20-933.a.5). A freelancer has two years to bring a claim asserting a violation of the written contract requirement (see § 20-933.a.2). If a hiring party fails to provide a written contact after being requested, the freelancer may be awarded statutory damage of $250.00 (see § 20-933.a.5, b.2(a)). Additionally, the freelancer may be awarded damages equal to the value of the underlying contract (see § 20-933.b.2(b)). Furthermore, if the freelancer prevails on any damage claim under this Act, the freelancer shall be awarded their reasonable attorney's fees and costs (see § 20-933.b.1). 2. No Forcing Freelance Workers To Accept Less Compensation. The law requires that a hiring party pay the freelancer by the date in the contract, or no later than 30 days after completing the services under the contract (see § 20-929.a). In any case, the hiring party is forbidden from conditioning timely payment on the freelancer accepting less than the contracted compensation (see § 20-929.b). A freelancer has six years to bring a claim asserting a violation of the timely and complete pay requirement (see § 20-933.a.3). If a hiring party violates this requirement, than the freelancer is entitled to double damages (see § 20-933.b.3). 3. No Retaliation. The law prohibits a hiring party from retaliating against a freelancer from attempting to exercise their rights under this law, or from obtaining future work opportunity because the freelancer has done so (see § 20-930). A freelancer has six years to bring a claim asserting a violation of prohibition against retaliation (see § 20-933.a.3). If a hiring party violates this prohibition, the freelancer is entitled to damages equal to the value of the underlying contract (see § 20-933.b.4). Don't Rely On The Administrative Complaint Process. When a freelance worker believes its rights have been violated, the freelancer has two choices to seek redress. Choice One. The freelancer can initiate a complaint procedure with the Office of Labor Standards (see § 20-931.a). However, this is a toothless procedure. Once a complaint is filed, the Office has 20 days to send the hiring party a written notice of the complaint (see § 20-931.d). The hiring party will then respond with: (a) a written statement that the freelancer has been paid in full and proof of such payment; or (b) a written statement that the freelancer has not been paid in full and the reasons for the failure to provide such payment" (see § 20-931.e.1). The Office will forward the response to the freelancer within 20 days of receiving it, along with a materials informing the freelancer that they can bring a civil action (see § 20-931.e.2). Choice Two. The freelancer can initiate a civil action in a court (see §§ 20-931.c, 20-933). As the complaint procedure appears to be little more than a pro forma process, I would expect that most freelancers would skip this option and instead immediately file a civil action.