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6 Things to Know About the "Freelance Isn't Free Act"

 
 

7 out of 10 freelancers will be forced to face nonpayment at some point in their careers, a statistic that amounts to an average of $6,000 a year in unpaid income, according to a report by the Freelancers Union.   On October 28, 2016, New York City became the first city to pass a bill protecting the rights of freelancers to be paid.  Freelancers, as independent contractors, are not as protected as employees are under the law.  While being a freelancer comes with many benefits, such as being one's own boss, having the ability to determine one's rate of pay, and being able to be selective in the types of projects one takes on, there are many drawbacks.  Not receiving benefits, dealing with doubt as to where the next paycheck is coming from, and not being protected by employment laws are just a few of these negatives.  The inability to take advantage of employment laws has a major impact on freelancers, since these regulations protect employees from discrimination, harassment, late payment of wages, and wage theft.  The Freelance Isn't Free Act (the Act), a law that makes it illegal for individuals and businesses hiring freelancers to refuse to pay them, is a major step towards providing increased protection to freelancers.  Highlights of the law are below:

1.  The Act requires a written contract for any engagement of $800 or more.  The $800 threshold can be aggregated to cover all projects engaged within a 120-day period.  The contract must (1) identify the parties; (2) spell out the scope, rate, and payment method for the freelancer's services; and (3) specify the date when payment must be made.  If the agreement does not have a payment due date, the default will be within 30 days of completion of the project.  

2.  Hiring parties must pay freelancers on time, and cannot retaliate against a freelancer for pursuing his/her rights under the Act.  Hiring parties cannot harass, intimidate, or threaten freelancers who ask for written agreements or demand timely payment by threatening not to give them future work, a tactic that such workers are all too familiar with.

3.  Freelancers have the support of the New York City Office of Labor Standards.  Via the Act, freelancers can now file complaints of non-payment with the Office of Labor Standards (the Office).  This provision provides freelancers with an alternative route other than going to court, which is both stressful and expensive.  In addition, the Office will create a program for legal assistance for freelancers which will provide free contract templates on its website, as well as a directory to assist in locating attorneys.

4.  There are heavy penalties for hiring parties who are found to be in violation of the Act.  These fees include statutory damages, double damages, and attorney's fees, which should act as a deterrent for would-be violators.

5.  The City may bring suit against repeat offenders for up to $25,000.  This serves as another strong deterrent for hiring parties, since they would be going to battle directly with the New York City government.

6.  The Act goes into effect in 178 days.  Mayor de Blasio signed the Act into law on November 16, and as per its requirements, it is effective 180 days after this date.  Unfortunately, this means that previous instances of nonpayment cannot be assessed under this Act, but freelancers are now equipped with the backing of the law and the City of New York to ensure they receive full and timely payment for their services.  

Full text of the bill can be found here.

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