New York City Council Passes “Freelance Isn’t Free” Act

Lev Craig

Last week, we blogged about proposed legislation that would open up health insurance benefits to New Yorkers who are members of the so-called “gig economy,” an emergent employment sector that is moving away from traditional employer-employee relationships in favor of short-term, task-based work. The New York City Council recently passed the Freelance Isn’t Free Act, a new bill—the first of its kind in the country—which creates protections for gig economy workers and freelancers in the New York metropolitan area.

A “gig” is defined by the U.S. Department of Labor as a “single project or task for which a worker is hired, often through a digital marketplace, to work on demand. While gig jobs and career paths have always existed—music, for instance, or graphic design—technological developments in the past decade have made it unprecedentedly easy for companies and clients to connect with a network of freelancers via websites and mobile apps. Services like Uber and TaskRabbit allow workers to pick up individual gigs, like driving a client to a destination or cleaning a client’s apartment, at their discretion. Nontraditional employment arrangements constitute a rapidly growing share of the labor force: a 2014 survey found that 34% of U.S. workers were engaged in some type of freelance work. Freelance work is particularly popular in the New York metropolitan area, which is home to an estimated nearly 4 million freelancers.

Gig and freelance work has wide appeal because of its freedom and flexibility. Workers can choose projects that interest and excite them, set their own schedules, and gain varied experience that might be inaccessible to someone locked into a full-time career track. But the same autonomy that makes freelance work so attractive can also lead to major drawbacks. Freelancers often don’t enjoy the benefits—such as healthcare, as we wrote about last week—or the job security that a traditional employment relationship can provide, and they typically aren’t covered by the same legal protections that are extended to employees. According to a recent survey, half of freelancers experienced difficulty collecting payment for their work in 2014, and of those, over a third reported not getting paid whatsoever for some amount of the work they had performed, leading them to lose thousands of dollars in unpaid income.

The Freelance Isn’t Free Act, which the New York City Council passed unanimously on October 27, 2016, was enacted to enhance and establish protections for freelance workers. The bill was proposed in part by the Freelancers Union, an advocacy group dedicated to increasing legal protections for freelancers. The act adds a new chapter to New York City law which defines freelance workers and hiring parties and sets forth legal requirements for freelance relationships.

The act provides that anyone who hires a freelance worker for a contract of $800 or more must sign a written contract that includes the name and address of both the hiring party and the freelancer, an itemization and valuation of the freelancer’s services, the rate and method of compensation, and the date on which payment will be made. A hiring party’s failure to adhere to these requirements entitles a freelancer to $250 in statutory damages. The law also states that freelancers must be paid by the date stipulated in the contract—or, if there is no date specified, within 30 days of completing the project—and hiring parties cannot require freelancers to accept less than the agreed-upon payment as a condition of compensation. If a hiring party fails to pay a freelance worker, or pays the worker less than the agreed-upon amount, the worker can seek double damages and injunctive relief. Finally, the law prohibits a hiring party from retaliating against a freelancer for exercising their rights under the act; for this violation, a freelancer can seek statutory damages equal to the value of the underlying contract for each violation. The act takes effect 180 days after becoming law and only applies to contracts entered into on or after that date.

For now, New York City’s new protections for freelancers are unique in the U.S., but the passage of this legislation may signal a coming policy shift towards increased legal protections for this group. As the law has not yet gone into effect, we have yet to see how many of these new requirements will be interpreted; while the new law is a step in the right direction, independent workers still face many challenges, especially as courts work out the implications of the new statute. If you believe that you have not been compensated fairly for your work, contact The Harman Firm, LLP.