New Rights for NYC Independent Contractors

With the “Freelance Isn’t Free” Act, NYC Administrative Code § 20-927, et seq., coming into effect this week, New York City workers are better equipped to receive proper payment and protection from prevalent wage theft practices by employers.  A skyrocketing number of freelancers, who steadily dominate today’s on-demand service economy, no longer have to worry that their status as independent contractors will impede their ability to receive full payment for their work in a timely manner.  Employers are now required to pay both liquidated damages and attorneys’ fees if they refuse to offer freelancers a written contract or are late in providing compensation to freelancers that fall under the act.

Under the statute, a freelancer is defined as “any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.”  The act affords freelance workers three major rights when providing any type of service to any private person or entity:

• First, workers have the right to require and retain a copy of a written contract for all work valued at over $800, either by itself or aggregated over the course of 120 days of employment. The contract must include: a) the name and mailing address of both the hiring party and the freelance worker; b) an itemization of all services provided, the value of the services provided, and the rate and method of compensation; and c) the date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined.

• Second, freelance workers have the right to prompt payment of wages which must be provided as stated under the terms of the contract or within 30 days of the completion of the worker’s services under the contract.

• Third, freelance workers have the right to protection from retaliation for exercising their rights under the Act and the hiring party shall not threaten, intimidate, discipline, harass, deny a work opportunity to or discriminate against a freelance worker.

Significantly, the Act establishes an enforcement mechanism that provides for statutory penalties in addition to recovery of unpaid wages.  The inclusion of statutory penalties, and the provision shifting the burden of paying a freelancer’s attorneys’ fees to an employer that violates the Act, substantially increases the amount of damages that a worker can recover and provides a meaningful deterrent to employers exploring ways to reduce their labor costs.

Extensive protections will now be extended to over four million freelancers in New York City who work in critical industries like construction, advertising, music, manufacturing, fashion, and film.  Further, the Act applies to independent contractors operating on their own within the gig economy, including for such companies as Uber, Lyft, Postmates, and TaskRabbit.  According to a recent survey by the Freelancers Union, more than 70% of freelancers have struggled to collect payment at some point in their careers.  This Act aims to solve this problem, and serve as a model for other cities and states to adopt in the near future.