NYC Council Passes “Freelance Isn’t Free” Act

On October 27, 2016, The New York City Council unanimously passed a local law, the Freelance Isn’t Free Act, aimed to enhance protections for freelancers and purportedly to prevent wage theft. Under the law, freelancers include individuals (and organizations having no more than one person) retained as an independent contractor to provide services in exchange for payment. The law, however, excludes from coverage sales representatives (as defined in section 191 of the New York Labor Law), persons engaged in the practice of law under the contract at issue (and who are members in good standing of a bar and not under any restrictions with respect to the practice of law), and licensed medical professionals. The law does not apply to the United States government, New York City, and New York State (and their respective offices, departments, agencies, authorities, etc.) any local government, municipality, or county, along with any foreign government.

The law requires companies who retain the services of a freelancer, where the contract value is $800 or more (either standing alone, or when combined with other contracts between the parties over the prior 120 days), to enter into written contracts. Such contracts must include, at a minimum, the name and addresses of the hiring party and freelancer, an itemization of all services, the value of the services, the rate and method of compensation, and the payment date (or method for determining such a date). The law requires payment as specified under the terms of the contract, or if not specified, within 30 days after the services are completed.

The law includes an anti-retaliation provision prohibiting hiring parties from taking actions intended to penalize a freelancer’s rights under the act, from deterring a freelancer from exercising such rights, and from obtaining future work.

The law creates procedures for freelancers to file complaints with the Office of Labor Standards (“OLS”), a division of the Department of Consumer Affairs, within two years after the alleged unlawful acts occurred. Alternatively, a freelancer may file a civil action within two years (for claims involving failure to provide a written contract) and within six years (for claims involving retaliation or nonpayment). If a freelancer prevails on a non-payment claim, he or she may recover attorneys’ fees, double damages, injunctive relief and other damages.

NYC Corporation Counsel may commence an action in court against hiring parties who repeatedly violate the law, and a court may award civil penalties up to $25,000 for these types of violations.

The law also requires the OLS to establish a navigation program to provide information and assistance about rights provided under the act, including, but not limited to, model contracts in several different languages, general court information, and information about classification as an employer or contractor, along with outreach and education to the public.

The bill is pending before Mayor De Blasio, who is expected to sign it.

Elizabeth Cowit is Counsel in the Gibbons Employment & Labor Law Department.