Freelance Isn’t Free Bill Passes in NYC

Nov 11, 2016 4:16:00 PM

The “”gig economy”” continues to have a dramatic effect on the contours of worker classification. The growth of freelance labor, ICs and other assorted 1099 workers has prompted government at all levels to put some standards around what it means to be this type of worker. That’s why on October 27, 2016, the New York City council passed the Freelance Isn’t Free Act, which now goes before Mayor Bill DeBlasio to be signed into law. What does the new law mean and what can freelancers in other cities do to get similar legislation passed in their locations?

New York City council member Brad S. Landers was the prime sponsor of the bill establishing and enhancing protections for freelance workers. Specifically, the law requires the clients of freelance workers to produce a written contract for the freelancer for any work expected to cost more than $800; something that had previously been the responsibility of the freelancer (if there was any written contract at all). Additionally, the law establishes the right of freelancers to be paid in a timely fashion (defined as payment in full within 30 days from the completion of work). The new law also protects freelancers from retaliation. Hiring parties will be prohibited from threatening, intimidating, disciplining, harassing, denying a work opportunity to, or discriminating against a freelance worker.
The new legislation also creates penalties to the client for violations of these rights including such restitution as:

• statutory damages
• double damages
• injunctive relief
• reimbursement of attorney’s fees

Individual causes of action must now be adjudicated in state court to ensure the rights of the freelancer are protected. Where there is evidence of a pattern or practice of violations by a single company, civil actions may be taken to recover civil penalty (of not more than $25,000 per instance). This bill will 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.

The new legislation is expected to have a large impact in NYC, where around 38% of workers are freelancers. Pressure to enact legislation to protect freelancers came after great effort by the Freelancer’s Union, which has wisely recorded the successful steps undertaken in this campaign. They intend to replicate them, helping freelance resources in other locations to enact this type of bill. Some of the actions the union supported include the compilation of stories from various freelancers to share with legislators, illustrating the need for legislative action. Once the initial group of stories was shared, the Freelancer’s Union was overwhelmed with additional stories indicative of the great need for such protection of this worker class
Proponents of the law also held events where hundreds of freelancers turned out in person to give a voice and face to the freelance workforce.

Their appearance helped illustrate the size and scope of the freelance workforce and underscored the swelling ranks of this class of worker. Other efforts included networking events, meetings with City Councils in multiple cities, the collection of more than 10,000 petition signatures and organized outreach to the media for positive coverage. Supporters are upbeat about the prospect for replicating the success they’ve demonstrated in NYC.

What can organizations do to prepare in NYC and other cities for this type of change? First and foremost, they can partner with a firm like nextSource to outsource the management of Independent Contractors and contingent workers. nextSource, as part of its typical IC process ensures self-identifying freelance workers actually qualify as Independent Contractors. They execute contracts including defined Statement of Work documents which contain terms of payment and stipulations regarding pay schedules (typically paying ICs within 10 days of invoice). nextSource contracts with freelancers typically indemnify clients against fines, penalties or back taxes based on the new laws in NYC or prior IRS, US Department of Labor and state agencies governing employment.

To determine if your organization is at risk or to learn more about what the risks are associated with using independent contractors please use either nextSource’s Risk Assessment Calculator or Classification Assessment.