New York Law to Protect Freelance Workers Goes Into Effect

Freelance Isn't Free Act business lawyerNew York City is the first city to implement a law to protect its 1.3 million freelance workers against nonpayment. The Freelance Isn’t Free Act (FIFA) mandates that employers sign a contract for freelance work that is valued at $800 or more, either for a single job or total services contracted within a 120-day period. The contracts must include the date the freelancer will receive payment; if they do not include the date of payment, businesses must compensate the freelancer within 30 days of completing the work. FIFA seeks to protect freelance workers against employer retaliation and can increase financial consequences for employers who violate the new rules.

FIFA applies to anyone who is hired or retained as an independent contractor to do work for a business that is not already on salary. Exceptions to this are “certain sales representatives, attorneys, and licensed medical professionals,” and does not include those who work for the city, state and federal government, according to city officials. FIFA applies to those who hire New York City freelancers, regardless of whether or not the business is located in the city. Additionally, the act extends these protections to freelancers regardless of their immigration status.

One of the main components of the act seeks to ensure that freelancers are paid the correct amount in a timely manner. According to a 2015 report by Freelancers Union, as many as 70 percent of freelancers reported not receiving payment for services rendered, with the average losses exceeding $6,000 annually. When a freelancer is hired by a business to perform over $800 of work within a four-month period, the worker and business must draw up a contract. The contract must clearly define the type of work to be performed, how much the freelancer will be paid for performing the services, and the date the worker will be compensated for their work. Both the freelancer and the hiring company are required to sign and keep a copy of the contract. If the freelance worker does not receive payment on the date specified within the contract or, if the contract does not specify a date, within 30 days of the completion of the services, the employer may be held liable for violation of the rules.

Employers who violate FIFA may be held liable for compensation by the freelancer. If an employer withholds payment for services, a freelance worker may file a complaint with New York City’s Office of Labor Standards. According to the Gothamist, the office director will draft a certified letter to the employer within 20 days to explain how the terms of the freelancer’s contract were allegedly breached. Workers may also file a complaint if the business does not enter into contract with them in the first place or if they retaliate against them for exercising their legal rights under FIFA. If the freelancer does not receive proper compensation after the employer receives the letter, he or she may choose to take the matter to court. If a plaintiff proves that their employer violated the rules, they may be awarded $250 in statutory damages in addition to the compensation owed. Employers who have consistently violated the rules may face civil penalties up to $25,000, according to Crains.

New York businesses should review current and future practices to stay in compliance with FIFA regulations. Employers should make sure that they have an independent contractor agreement in place that has been reviewed recently by a New York employment law attorney. In addition, all independent-contractor relationships need to be reviewed to make sure they are true independent contractors and not misclassified employees. Businesses who misclassify their workers expose themselves to fines and liability for unpaid wages and unpaid taxes. Finally, employers must ensure that they have independent-contractor agreements in place for all independent contractors that perform services for the business.

The laws and regulatory guidelines surrounding New York’s employment law practices are ever-changing. For this reason, many employers experience time-consuming stress when trying to adjust their practices to align with new regulations. When seeking guidance on how to navigate local, state and federal laws, it is important that business owners and employers consult an experienced business and employment law attorney. The New York employment law attorneys at Blodnick Fazio & Associates P.C. are experienced in handling various employment law matters, including those involving freelance workers. For more information or to schedule a consultation at our New York employment law office, call (516) 280-7105 or fill out our contact form.

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