Freelancers and those hiring freelancers in New York City take note: In May 2017, New York City’s “Freelance Isn’t Free” Act will take effect. New York City passed the law in November 2016, and it is the first legislation in the country to create a range of legal rights to help to individual freelancers get paid. The new law governs agreements for services between individual freelancers/independent contractors and anyone who hires them, when the value of the services to be provided exceeds $800.
The law requires that the agreement be reduced to writing, and specifies information that must be included in the written agreement. The law also provides that the hiring party must pay fees owed to the freelancer by the time stated in the written agreement, or “no later than 30 days after the completion of the freelance worker’s services.” The law further prohibits any type of retaliatory action by a hiring party against a freelancer who exercises his rights under the law.
Perhaps most importantly, the law provides for significant penalties against any hiring party who fails to comply with the law’s provisions. A hiring party who fails to timely pay the freelancer’s fees can be liable for the amount owed plus that amount again as a penalty. A hiring party who fails to reduce the service agreement to writing upon the freelancer’s request can be liable for statutory damages of $250. Moreover, if the hiring party fails to pay on time AND fails to provide a written contract on request, the hiring party can be liable for the unpaid amount plus two times that amount. Finally, a freelancer who prevails on an action for any of these violations can recover his attorney fees incurred in bringing the action.
Similar types of enforcement mechanisms have been available to regular employees under federal and state law for decades. But freelancers were left out in the cold: when an unpaid bill was relatively small, freelancers had trouble justifying paying attorney fees to collect, and hiring parties saw little downside to dragging out payment or simply not paying at all. The Freelance Isn’t Free Act finally gives freelancers more ammunition in collecting what they’re owed, and adds protections for a growing section of the U.S. workforce.