CLIENT UPDATE

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May 31, 2017

New York City’s “Freelance Isn’t Free Act” Goes Into Effect

On May 15, 2017, New York City’s “Freelance Isn’t Free Act” (“FIFA”) took effect, establishing certain protections for independent contractors, including freelance workers. For more information regarding FIFA and the classification of independent contractors, see our previous alerts: “New York City Counsel Passes the Freelance Isn’t Free Act” (http://putneylaw.com/cu_110316.html), and “New York Employers Should Prepare to Examine Their Independent Contractor Classifications” (http://putneylaw.com/cu_011217.html).

Under FIFA, freelance agreements worth at least $800 over the course of 120 days must be set forth in a written contract detailing the name and address of both parties, scope of work, rate, method of payment, and payment due date. Payment must be received within 30 days of work completion, unless the contract specifies otherwise. FIFA also forbids hiring parties from requiring that freelancers accept less than the amount stipulated in the contract in exchange for timely payment. Hiring parties cannot retaliate against a freelancer for pursuing payment, and can face a $250 penalty if they refuse to provide a contract. The law also establishes damages, double damages, injunctive relief, attorney’s fees, and “other remedies as may be appropriate.”

FIFA allows freelancers to bring their claims either via lawsuit in any court of competent jurisdiction, or through a complaint to New York City’s Office of Labor Standards. Serial violators are subject to a civil action brought by the Corporation Counsel of the City of New York for a civil penalty of up to $25,000. While FIFA places the burden of compliance on the hiring party, failure to comply does not render a contract between a hiring party and a freelancer void or voidable, nor does it otherwise impair any obligation, claim, or right related to such contract.

Takeaway for Employers

Employers should review all contracts with freelancers, as well as their accounts payable policies to ensure that freelance workers are timely paid in conformance with the terms of their contracts and/or the required 30 day time period. Employers should safeguard against ongoing obligations to freelancers by designing contracts to cover only specific engagements, and by clearly stating that the freelancer is not an employee. We recommend that such contracts be reviewed by counsel.

Employers should also be aware of the factors considered when determining whether an individual is an independent contractor versus an employee. Courts and agencies have considered relevant factors, which include but are not limited to:

  • the degree to which the employer controls or directs the manner in which the work is performed;
  • whether the worker can simultaneously perform services for other companies;
  • the extent of the worker’s opportunity for profit or loss;
  • whether the worker’s duties are performed for the employer on an ongoing or permanent basis;
  • whether the worker hires, supervises, and pays his or her own assistants;
  • whether the service performed by the worker is an integral part of the employer’s business;
  • whether the service performed by the worker is for a fixed term or project; and
  • the extent of the worker’s investment in equipment or materials needed to perform the job.

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If you have any questions regarding FIFA or the distinction between independent contractors and employees, please do not hesitate to contact us.