Understanding the 'Freelance Isn't Free' Act: Key Protections for New York's Independent Contractors in 2024

Understanding the 'Freelance Isn't Free' Act: Breaking Down What The Changes Mean to Freelancers and Those Who Hire Them

Introduction

In the bustling economy of New York, freelancers have long navigated the tricky waters of client relationships, often facing challenges such as late payments, underpayments, or complete non-payments. This precariousness has led to the creation of a groundbreaking law, the Freelance Isn't Free Act, which protects the vast independent workforce across the state . The Act goes into effect on May 20, 2024

The Freelancer's Plight

Freelancing offers flexibility and freedom, but it's not without its pitfalls. A common grievance among freelancers is the unpredictability of income, primarily due to irregular or delayed payments from clients. This uncertainty not only affects their financial stability but also diminishes their bargaining power in client negotiations.

Several Key Protections

1. Written Contracts: For any freelance work exceeding a certain amount, a written contract is now a legal requirement, offering a clear outline of the work expectations and payment terms.
   
   
2. Timely Payments: The Act enforces timely compensation, ensuring freelancers are paid within a 30-day post the completion of their services or another date agreed upon in writing.
   
   
3. Double Damages for Violations: In instances of payment breaches, freelancers are entitled to receive double the agreed contract value – a significant deterrent against client non-compliance.

Understanding the Act

The Act introduces mandatory written contracts for freelance services exceeding $800. These contracts must detail the parties involved, the services to be provided, the compensation rate and method, and the payment due dates. The contract must include the following at a minimum: 

Contract Requirements

1. Identification and Contact Information: Both the freelancer and the hiring party must have their names and mailing addresses clearly stated.
   
   
2. Service Itemization and Valuation: The contract should list the services, their valuation, and the compensation arrangement.
   
   
3. Payment Schedules: Clear deadlines for payment and invoice submission are mandatory.

The hiring party is required to provide a copy of the contract to the Freelance worker. If these provisions are missing from the written contract, or the hiring party fails to provide a written contract, then payment is due within 30 days of completion of services. Any aggrieved Freelancer may file a complaint with the New York Commissioner of Labor regarding a violation of the Act.

The New York Independent Contractors test is a crucial legal framework used to determine whether a worker is classified as an independent contractor or an employee. 

The primary focus of this test is to assess the level of control a company has over the worker and the independence of the worker in performing their tasks. Key factors include:

• The degree of autonomy the worker has in deciding how to complete their work.
• The flexibility of their working hours.
• Their ability to work for multiple clients.

The test also considers whether the work performed is integral to the business's core operations and whether the worker is engaged in an independently established trade, occupation, or business.

The 2023 revisions to the New York Independent Contractors test were designed to address the complexities introduced by the digital economy and the growing gig workforce. One of the notable changes was the introduction of more stringent criteria to prevent misclassification of employees as independent contractors, a practice that can deprive workers of essential benefits and protections like health insurance, workers' compensation, and unemployment insurance. 

Here Are Some Examples

These scenarios are illustrative and not definitive. Individual circumstances vary—consult a professional to accurately determine your status:

Web Design Services

• Scenario: A freelance web developer agrees to create a website for a local business for $1,200.

• Under the Act: A written contract would outline the scope of the web development work, the payment of $1,200, and the deadline for the project's completion and payment. The Act ensures that the developer has a legal basis to demand timely payment, protecting them from potential exploitation and non-payment. 

Photography Services

• Scenario: A photographer is hired to cover a series of corporate events, with the contract totaling $5,000.

• Under the Act: The photographer and the hiring company must sign a contract detailing the event dates, the number of photographs, and the payment schedule. This contract under the Act provides the photographer with a clear legal framework to ensure they are paid as agreed and on time.

Consulting Services

• Scenario: A marketing consultant provides services to a start-up, amounting to $1,500 over a month.

• Under the Act: The contract should specify the nature of the consulting services, the hourly or project-based rate, and when the payment is due. This clarity and enforceability under the Act protect the consultant from delayed payments or scope creep.
  
  
  

TCWGlobal's Role in Ensuring Compliance

TCWGlobal has become increasingly pivotal in aiding companies to navigate the complexities of freelancer compliance. Our expertise in 1099 compliance and contingent workforce management is invaluable for both freelancers and hiring entities adapting to the evolving legislative landscape.

Final Thoughts

The "Freelance Isn't Free" Act is a milestone in recognizing and protecting freelance workers' rights in New York State. By mandating written contracts for freelance work over $800 in value, the Act fosters a more transparent, fair, and secure working environment for freelancers. As the freelance economy evolves, such legal frameworks are vital in maintaining balance and equity in the workplace.

Further Resources

For more information or assistance regarding compliance with the Act, you can contact TCWGlobal at hello@tcwglobal.com, or explore our comprehensive state-by-state 1099 Compliance Guide. More details about the Act can be found in the official announcement:

"Governor Signs Legislation to Protect Freelancers."

More information on the topic can be found here: Governor Signs Legislation to Protect Freelancers.