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New York State recently adopted a new law known as the Freelance Isn’t Free Act (the “NYS Act”), as Article 44-A of the General Business Law. The NYS Act follows in the footsteps of a New York City law by the same name. Both laws address independent contractor arrangements and offer protections to certain independent contractors or freelance workers, as defined in the NYS Act and the New York City law. However, the two laws vary in some aspects. Below is a description of the NYS Act’s requirements and provisions.
Who is a freelance worker under the NYS Act?
A “freelance worker” is defined as “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.”
Who is not a freelance worker under the NYS Act?
The term “freelance worker” does not include:
(a) sale representatives (defined in section 191-a of the NY Labor Law);
(b) attorneys;
(c) licensed medical professionals; or
(d) any person who is a construction contractor that offers or undertakes a construction project, which the Act defines as “the providing of any labor or services, and the use of any materials or equipment in order to alter, build, excavate, add to, subtract from, improve, repair, maintain, renovate, move, wreck or demolish any bridge, building, highway, road, railroad, land, tunnel, sewer, drainage or other structure, project, development, or improvement, or the doing of any part thereof, including the erection of scaffolding or other structures or works in connection therewith.”
Who is a hiring party under the NYS Act?
A “hiring party” is any person who retains a freelance worker to provide any service.
Who is not a hiring party under the NYS Act?
The term “hiring party” does not include any federal, state, local or foreign government, or any of its offices, departments, agencies, or other bodies.
What does the NYS Act require?
The NYS Act requires several actions by the parties to a freelancing arrangement, as follows:
What must the written contract include?
Under the NYS Act, all freelance contracts must include:
If the contract does not specify a due date for payment (or how to determine such date), then the contracted payment must be paid no later than 30 days after completion of services. Additionally, the hiring party cannot require the freelance worker to accept less than the contracted compensation as condition of timely payment, after the freelance worker has commenced the services under the contract. This does not prohibit the parties from agreeing in the written contract that hiring party can receive a discount for timely payment.
NYSDOL has prepared sample contracts for use by the public which are available at its website.
What are the penalties for not complying with the NYS Act?
Failure to comply with the NYS Act does not render any contract between a hiring party and a freelance worker void or voidable, does not otherwise impair any obligation, claim or right related to such contract, and does not constitute a defense to any action or proceeding to enforce, or for breach of, such contract. However, any waiver of the rights granted under the NYS Act in the contract is deemed void as against public policy.
The NYS Act grants freelance workers a private right of action to sue the hiring party for damages.
Additionally, the Attorney General may bring an action against a hiring party for violating the Act. Penalties include $1,000 for a first violation, $2,000 for a second, and $3,000 for any subsequent violations. If a hiring party is found to have a pattern of violating the NYS Act, then a fine of up to $25,000 may be imposed.
How does the NYS Act affect the New York City Freelance Isn’t Free law?
The NYS Act does not override the New York City Freelance Isn’t Free law (Chapter ten of Title 20 of the NYC Administrative Code), so both laws may apply to certain independent contractor arrangements in certain circumstances, which can lead to some confusion as to compliance with these laws.
If either party is located in New York City or the services are to be performed in the City limits, then the New York City Freelance Isn’t Free law applies, subject to its terms. Most importantly, unlike the NYS Act, the New York City law does not exclude construction contractors as covered freelance workers, so that a written contract is required if the New York City law applies (but is not required if it doesn’t).
On the other hand, the NYS Act has certain requirements that are not part of the New York City Freelance Isn’t Free law, such as requiring a date the freelance worker will provide a list of services actually performed). As a result, if either party is located or the services are to be provided in New York City but the matter does not involve construction, the hiring party must comply with the NYS Act (as doing so will also satisfy the New York City law). Alternatively, if either party is located or the services are to be provided in New York City and the matter does involve construction, the hiring party must comply with the New York City law (and may, if it so elects, comply with the NYS Act).
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For further information or guidance on how this law may affect your business, or for assistance in revising your policies and procedures in accordance with this law, please contact David Paseltiner or Rose Egan.
