On November 22, 2023, New York State Governor Kathy Hochul signed into law the “Freelance Isn’t Free” Act (the “Act”), which is set to take effect on May 20, 2024. The Act requires a party retaining services from a freelance worker to provide the freelance worker with a written contract if the freelance work is worth at least $800, inclusive of multiple projects, over a 120-day period.
Under the Act, a “freelance worker” is defined as “any natural person or 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. Hence, the Act applies only to situations where a business retains the services of an individual to perform certain work for the business, whether the individual performs the work under a corporate or trade name, or their own individual legal name. Nevertheless, the Act provides that the following individuals are not considered freelance workers: (1) attorneys, (2) licensed medical professionals, (3) sales representatives, and (4) construction contractors.
The Act defines a “construction contractor” as “any person, sole proprietor, partnership, firm, corporation, limited liability company, association or other legal entity who by oneself or through others offers to undertake, or holds oneself out as being able to undertake, or does undertake a construction project.” Moreover, the Act defines a “construction project” as “the providing of any labor or services, and the use of any materials or equipment in order to alter, build, excavate, add to, subtract from, improve, repair, maintain, renovate, move, wreck or demolish any bridge, building, highway, road, railroad, land, tunnel, sewer, drainage or other structure, project, development, or improvement, or the doing of any part thereof, including the erection of scaffolding or other structures or works in connection therewith.”
The written contract between a freelance worker, as defined by the Act, and the hiring party must, at a minimum, specify (1) the parties’ names and mailing addresses; (2) 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; (3) the date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined; and (4) the date by which a freelance worker must submit a list of services rendered to the hiring party in order to meet any internal processing deadlines for the purposes of timely compensation by the agreed-upon date. In addition, the Act also sets a 30-day deadline for payment in full unless another time frame is agreed to.
Under the Act, the hiring party must not retaliate or take any action that is reasonably likely to deter a freelance worker from exercising or attempting to exercise any right under the Act. Once a freelance worker has commenced performance of the services under the contract, the hiring party cannot require as a condition of timely payment that the freelance worker accept less compensation than the amount of the contracted compensation. The hiring party is required to keep a copy of its contracts subject to the act for a period of no less than six years and make such contract available to the commissioner upon request. The failure of a hiring party to produce the contract, upon request of the commissioner, gives rise to a presumption that the terms that the freelance worker has presented are the agreed upon terms. Freelance workers may file a complaint with the State Department of Labor (the “DOL”) for violations of the law. Additionally, a freelance worker may file a civil action in any court of competent jurisdiction for damages, which would be subject to a six-year statute of limitations.
In sum, the Act provides that a party retaining services from a freelance worker (as defined in the Act) must provide the freelance worker with a written contract and failure to do so can leave the hiring party vulnerable to the terms the freelance worker presents to the DOL and/or subject the hiring party to certain violations by the DOL.
If you have questions about the Act, please contact one of our partners: Matthew S. Quinn, at (212) 447-5510 or mquinn@qmlegal.com, Christopher P. McCabe, at (212) 447-5520 or cmccabe@qmlegal.com, Simon Block, at (212) 447-5530 or sblock@qmlegal.com, or Jonathan Krukas, at (212) 447-5560 or jkrukas@qmlegal.com.
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