NYC Requires Employers to Have Written Contracts with Independent Contractors
New York City (“NYC”) became the first city in the USA to pass legislation to protect independent contractors (“Freelance workers” or “Freelancers”) by passing the Freelance Isn’t Free Act (“FIFA”), effective May 15, 2017. FIFA establishes and enhances protections for freelance workers. Briefly, it requires their right to a written contract between the hiring party and the Freelancer, the right to be paid timely and in full, and the right to be free of retaliation.
FIFA also establishes penalties for violations of these rights, including statutory damages, double damages, injunctive relief, attorney’s fees, and other such remedies as may be deemed appropriate. Where there is evidence of a pattern or practice of violations, the NYC Corporation Counsel may bring civil action to recover, civil penalties up to $25,000 against the hiring party.
Specifically, FIFA requires a written contract whenever a contract for freelance services has a value of $800 or more (either by itself or when aggregated with contracts made between the same parties in the immediately preceding 120 days). The written contract must include, at a minimum, (i) the name and mailing address of both parties, (ii) an itemization of services to be provided, (iii) the rate and method of compensation, and (iv) either the date on which the hiring party will pay the agreed-upon compensation or the mechanism to determine that date. A Committee Report on FIFA stated that the requirement for a written contract is satisfied by any writings, such as “an e-mail, a letter, an advertisement or a text message, or some combination of those,” that meet New York State law requirements.
Absent of the above terms, the hiring party must pay the Freelancer within 30 days after completion of the project, irrespective of when the invoice was rendered. Once a Freelancer has commenced these services, the hiring party cannot defer payment in threat of a reduced payment. Failure to enter into a proper contract automatically entitles the Freelancer a $250 award. Combination of failures and/or abuses of FIFA subject the hiring party to the aforementioned damages, relief, remedies and/or penalties.
FIFA specifically exempts from its definition of a freelance worker sales representatives, lawyers, and licensed medical professionals. However, the law specifically does not address how to determine whether an individual is legally classified as an employee or an independent contractor.
The above does not constitute legal advice; it is an alert providing only general information. If you have any questions about this alert, please contact Eric Lerner at firstname.lastname@example.org.
Click here if you wish to view the entire FIFA act, as published by NYC.