There are many benefits to working with independent contractors / freelancers instead of hiring full time employees: flexibility, reduced legal risk, no payroll costs, no commitments, no benefits, and no hassle. As an added bonus, you can likely haggle them down to accept less on an invoice because, after all, they likely need the money, right? Not exactly. Business owners beware of the stringent protections in place to protect freelancers in New York City. This article briefly discusses the New York City Freelance Isn’t Free Act (“FIFA”).
The Freelance Isn’t Free Act
- All contracts worth $800 or more must be in writing. This includes all agreements between you and a freelance worker that total $800 in any 120-day period.
- Written contracts must spell out the work to be performed; the pay for the work; and the payment date.
- You and the freelance worker must keep a copy of any written contract.
- You must pay a freelance worker for all completed work.
- You must make payment on or before the date that is in the contract.
- If the contract does not include a payment date, you must pay the freelance worker within 30 days after the work is completed.
You must respond to the notice of complaint in writing within twenty (20) days. If you fail to do so and if the freelance worker files a civil action in court, the judge will presume that you committed the violations.
Under FIFA, it is illegal to penalize, threaten, or blacklist freelance workers because they exercised their rights. The law establishes severe penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees. That means your business could potentially owe the freelancer twice the amount of the unpaid invoice!
Where there is evidence of a pattern or practice of violations, the New York City Corporation Counsel–New York City’s “in-house” lawyers–may bring civil action to recover a civil penalty of not more than $25,000. FIFA also requires OLPS to receive complaints, create a court navigation program, and gather data and report on the effectiveness of the law.
If your business regularly utilizes freelancers, take the time to understand the Freelance Isn’t Free Act and its potentially draconian punishments. Of course, paying your undisputed invoices in a timely fashion is the simplest way to avoid the crosshairs of the Freelance Isn’t Free Act. But if you do become involved in a dispute over a freelancer’s unpaid invoices be certain that any such settlement agreement you enter into to resolve it accounts for these rights and is drafted accordingly.
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