Wage hour cases are an everyday occurrence in New York. An employer fails to pay the agreed-upon wage or legally mandated overtime, and the employee sues to enforce his or her rights under the law. What about freelance workers who are not technically classified as “employees”? What rights do they have when a business fails to pay them on time?
What Does the Law Require?
Last year, New York City became the first municipality in the country to adopt a law specifically targeting freelance worker rights. The “Freelance Isn't Free Act” took effect on May 15 and applies to any private party that hires a freelancer in New York City. For purposes of the Act, a freelance worker is any self-employed individual retained to work as an “independent contractor,” except for sales representatives, attorneys, and medical professionals.
The Act requires a “hiring party” to sign a written contract with any freelance worker when the value of the services rendered is at least $800. This can be for a single project or a series of jobs with the same freelance worker over a period of 120 days. This requirement only applies to new freelance worker agreements made after May 15, 2017; the law is not retroactive.
The contract itself must specify:
- The services that the freelance worker will provide;
- The rate and method of compensation; and
- The date on which payment is required, or the mechanism for determining such a date; if no date is specified, the Act requires the hiring party to make payment in full no more than 30 days after completion of a project.
The Act also prohibits an employer from seeking a reduction in compensation after the freelance worker has already “commenced performance” on a project.
What Happens if a Business Does Not Comply?
If a hiring party violates any provision of the Act–i.e., fails to make a written contract or pay a freelance worker on time, the affected freelancer can either sue in civil court or file a complaint with the Office of Labor Policy & Standards (OLPS), which is part of the New York City Department of Consumer Affairs. The benefit to filing a OLPS complaint first is that if the hiring party does not respond to the city's investigation, that creates a “rebuttable presumption” in favor of the freelance worker in court. In simpler terms, the burden of proof shifts to the hiring party to prove it did not violate the Act.
If a judge determines a hiring party has violated the Act, it may award damages as follows:
- If the hiring party failed to enter into a written contract, but did not otherwise violate the law, it must pay the freelance worker $250;
- If there was no written contract and the hiring party committed any other violation of the Act, it must pay the freelance worker damages equal to the value of the agreement.
- If the hiring party fails to pay the freelance worker on time, it must pay double the amount owed in damages; and
- If the hiring party engages in any “retaliation” against the freelance worker for exercising his or her rights under the Act, it must pay damages equal to the value of the contract for each separate act of retaliation.
Want to Know How Employment Laws Affect Your Rights?
Given the new and unique nature of New York City's law, it will take some time for courts and businesses to figure out its application. If you make some or all of your income from freelance work, you may have questions about how this will affect your business. If you need assistance from an experienced New York employment attorney on this or any other matter, contact the Law Offices of Mahir S. Nisar in New York City today.