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NYC Employment News: First-of-Its-Kind Freelance Rights Bill Becomes Law

As the gig economy continues to surge throughout the United States, New York City has emerged as one of the first municipalities to protect freelance workers. The New York City Council recently passed the Freelance Isn’t Free Act (FIFA), and on November 16, 2016, it was signed into law by Mayor Bill de Blasio. FIFA establishes and enhances protections for freelancers, independent contractors and other workers not routinely covered by labor laws focusing on the employer-employee relationship. FIFA takes effect on May 15, 2017. New York City employers that rely on freelancers to any degree should immediately take notice of these new regulations, and consult experienced labor and employment counsel regarding how to maintain full compliance.

Members of the national Freelancers’ Union helped draft the bill, which requires a written contract be created when a freelancer completes $800 or more worth of work (over a 120-day period) for a hiring party. Additionally, it provides freelancers with additional monetary remedies if a hiring party tries to avoid paying the freelancer, which would be in violation of the agreement.

The new law creates penalties for violations of freelancers’ rights, including statutory damages, double damages, injunctive relief and attorney’s fees. An individual cause of action would be adjudicated in state court. Further, where there is evidence of a pattern or practice of violations, the Corporation Counsel may bring a civil action to recover, on behalf of the City, with a civil penalty of not more than $25,000. The bill would also require the Office of Labor Standards (OLS) to receive complaints, create a navigation program, and to gather data and report on the effectiveness of the law. Notably, while the rule applies to most private work contracts, the city government is exempt.

Freelancers who file a complaint with the city's Department of Consumer Affairs will receive another significant advantage: The agency could inform the employer of the complaint, and if the employer fails to respond, the burden of proof in a subsequent civil action would shift to the employer.

The Freelancers Union notes that 38 percent of the New York metro area workforce is currently freelancing, earning an estimated $230 billion annually in freelance income. Mayor Bill de Blasio said, in a public statement, that "Freelance workers play a critical role in the economic strength and vitality of this city. With these new protections, freelance workers will have more confidence that they will be paid in a timely manner for their work, and if they are not paid, they will have a path to pursue full reimbursement for their labor. This is just one of many steps we are taking to ensure that workers' rights are enforced and respected in this city."

If you are an employer that utilizes the freelance workforce in New York City, the time is now to review your procedures and policies relative to independent contractors, and to be diligent in ensuring that all documentation is in full compliance, and freelancers are paid in a timely fashion. New York will serve as the proving ground for this type of legislation, but if successful, we may begin to see it spread throughout the nation.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.