New York has enacted legislation (Senate Bill S5026: The Freelance Isn't Free Act, or "the Act"), requiring businesses in New York state to enter into written agreements with certain independent contractors. Senate Bill S5206 takes effect on May 20, 2024.
The details
The Act will require businesses in New York state to enter into a written agreement with a freelancer (independent contractor).
Covered Employers
The law defines a hiring party as a person who retains a freelance worker to provide a service (except federal, state, local or foreign government entities).
Covered Workers
The law defines a freelancer as a person or organization of no more than one natural person who a hiring party hired or retained as an independent contractor (freelancer) to provide services in exchange for an amount equal to or greater than $800 (either by itself or when combined with every contract for services between the same hiring party and freelancer during the preceding 120 days).
Note: The Act does not apply to services provided by attorneys, construction contractors, licensed medical professionals or sales representatives.
Written Agreement Requirements
Under the law, an employer must furnish the freelancer with a physical or electronic copy of the required written agreement. The written agreement must include the following:
- The name and mailing address of the hiring party and the freelancer;
- An itemization of all services (and their value) to be provided;
- The rate and method of compensation;
Note: Once a freelancer begins working, a hiring party cannot require a freelancer to accept less compensation than was specified in the written agreement.
Note: If a payment date is not specified, a freelancer must be paid no later than 30 days after they complete their contracted services.
Nonretaliation
Under the law, employers may not threaten, intimidate, discipline, harass or discriminate against a freelancer, deny a work opportunity to a freelancer, or take any other action that penalizes a freelancer for exercising their rights under the law.
Recordkeeping
A hiring party must provide a copy of the written agreement to the freelancer and keep a copy of the agreement for six years.
Note: If a dispute arises and a hiring party cannot present the written agreement, the freelancer's terms will be used.
Enforcement
Freelancers have six years to file a complaint with the Commissioner of Labor or in court and may be entitled to the amounts owed for services provided to the hiring party and other penalties.
Employers may face fines of up to $25,000, provided there is reasonable cause to believe that the hiring party engaged in a pattern or practice of violating the Act.
Next steps
- Watch for model contracts in English and 12 other languages to be released on the New York Department of Labor's website.
- Review business relationships with independent contractors and evaluate which ones will likely cross the $800 threshold that requires a written agreement.
- Consult with legal counsel on developing freelance agreements pursuant to the Act.
- Ensure written agreements are entered into by May 20, 2024.