What New York's "Freelance Isn't Free Act" Means for Employers

On November 22, 2023, Governor Kathy Hochul signed the “Freelance Isn’t Free Act” into law. The Act, which is similar to the New York City law containing the same name, is designed to provide protections for freelance workers (i.e., independent contractors). The Act will go into effect on May 20, 2024, and will apply to work contracts entered into on or after that date.

Definitions Under the Act

A freelance worker is “any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for an amount equal to or greater than $800, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days.”Accountant using a calculator

Not included as a freelance worker under this law is a sales representative, a practicing attorney, a licensed medical professional, or a construction contractor.

A hiring party is defined as any person who retains a freelance worker to provide any services other than:

  • United States government;
  • State of New York;
  • A municipality; or
  • Any foreign government.

Payment Requirements

The freelance worker should receive the agreed-upon compensation on or before the due date as specified in the contract. If the contract does not mention the date, then the compensation must be paid within 30 days of the freelancer worker’s completion of the services.

Once a freelance worker commences performance, the hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount contracted.

Written Contract Required

When a hiring party hires a freelance worker, the parties must enter into a written contract containing the following:

  • The name and address of both parties;
  • An itemization of all services to be provided by the freelance worker, the value of the services to be provided pursuant to the contract, and the rate and method of compensation;
  • The date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined; and
  • The date by which a freelance worker must submit a list of services rendered under such contract to the hiring party in order to meet any internal processing deadlines of such hiring party for the purposes of compensation being timely rendered by the agreed-upon date.

A hiring party must provide the freelance worker with a copy of the contract, either physically or electronically, and the hiring party must keep said contract for at least six years. The Department of Labor Commissioner may require additional terms to be included in the contract, and will make available model contracts on the Department’s website.

No Retaliation

A hiring party is prohibited from threatening, intimidating, disciplining, harassing, denying a work opportunity to, or discriminating against a freelance worker or taking any other action that penalizes a freelance worker from “exercising or attempting to exercise any right guaranteed under this [law], or from obtaining any future work opportunity because the freelance worker has done so.”

Violations and Remedies

1. Freelance workers may file a complaint against a hiring party with the Department of Labor Commissioner for violating this law. The Commissioner has the authority to:

  • Investigate the complaint;
  • Take assignments of claims from freelance workers for amounts owed to them;
  • Sue hiring parties on assigned wage claims;
  • Impose civil and criminal penalties;
  • Join in a single action any number of wage claims against the same hiring party; and
  • Enter into reciprocal agreements with authorities in other states to enforce the protections of the law.

2. In addition, a freelance worker can bring a civil action against a hiring party for damages. The statute of limitations for commencing a claim for violating the written contract provision of this law is two years, and the statute of limitations for violating the non-payment provision or for retaliation is six years.

3. A freelance worker who prevails on a claim of non-payment is entitled to double damages, injunctive relief, attorneys’ fees and costs, and other such remedies as may be appropriate.

4. A freelance worker who prevails on a claim of no written contract is entitled to statutory damages of $250. A freelance worker who prevails on a claim of retaliation is entitled to statutory damages equal to the value of the underlying contract for each violation.

5. Additionally, where reasonable cause exists to believe that a hiring party has engaged in a pattern or practice of violating this law, the Attorney General can commence a civil action on behalf of New York State and seek civil penalties up to $25,000, injunctive relief, and any other appropriate relief.

Next Steps for New York Employers

This Act continues New York’s emphasis on protecting freelance workers. Employers engaging in business with freelance workers must memorialize their agreements in writing, as well as ensure that they comply with the payment obligations under the Act.

While the Act does not address how to determine whether a worker is an employee or freelance worker, it is critical that employers properly categorize their workers. Employers who miscategorize their workers can be subject to severe penalties.