New York City’s new Freelance Isn’t Free Act (Local Law 1040 of 2016) https://www1.nyc.gov/assets/dca/downloads/pdf/about/Freelance-Law.pdf became effective on May 15, 2017. It is worth watching how this law will play out because it is likely to mean not only new business opportunities for New York attorneys, but also could be the forerunner of similar laws nationwide.
Basic Provisions
The Act establishes and enhances protections for freelance workers (i.e., independent contractors), specifically the right to:
- A written contract specifying the details of the agreement
- Timely and full payment
- Protection from retaliation
- An elaborate administrative complaint procedure
The law includes penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees. Individual causes of action will be adjudicated in state court.
This law also requires the City’s Office of Labor Policy and Standards https://www1.nyc.gov/site/dca/workers/workersrights/office-of-labor-policy-and-standards-for-workers.page to receive complaints, create a court navigation program, and gather data and report on the effectiveness of the law.
The law applies equally to for-profit and non-profit businesses. It excludes medical professionals, attorneys working under contract, and sales representatives.
Origins
Pre-Act, independent contractors had to go to court with claims for unpaid wages. Now, the law provides a statutory basis for their recovery.
The Act originated in vigorous advocacy by the Freelancers Union. https://www.freelancersunion.org/ A union survey found that there are around 54 million freelancers in the U.S.; 71% of survey respondents reported problems collecting payment during their careers.
Heretofore, independent contractors had virtually no rights and received no benefits. They operated outside the parameters of most employment laws.
The Act provides a complaint process for aggrieved freelancers. They may file a complaint with the Office of Labor Policy and Standards within two years after the acts alleged to have violated the law took place. It also provides for the filing of a civil suit. In addition, the City Corporation Counsel http://www.nyc.gov/html/law/html/home/home.shtml may bring a civil action to recover a civil penalty of not more than $25,000, and “any other appropriate relief.” Any City-instituted action does not preclude an aggrieved freelancer from also bringing a civil action.
Covered entities will have to review and revise their standard independent contractor agreements to ensure they comply with the new law as well as ensure compliance with it.
What’s Next?
New York City is the first jurisdiction in the country to provide this kind of protection to freelancers. Expect other states and municipalities to consider similar legislation.