New York: New Requirements for Independent Contractor Arrangements
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APPLIES TO All Employers with Freelance Workers in NY |
EFFECTIVE May 20, 2024 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
A new law in New York extends workplace protections to freelance workers. Titled the Freelance Isn’t Free Act, the law goes into effect on May 20, 2024 and imposes several requirements on employers who hire freelance workers in the state of New York (which is broader than New York City’s existing Freelance Isn’t Free Act). With a relatively broad scope, the law applies to almost all employers, defining a “hiring party” as any person who retains a freelance worker to provide any service. Notably, the law does not apply to federal, state, or local governments.
Under the law, a freelance worker is (1) any person or organization (of no more than one person), (2) that is hired or retained as an independent contractor, (3) to provide services valued at $800 or more (which can be met either through a single contract for service or the aggregate of all contracts between the parties). The law only provides for four narrow exemptions to the definition of freelance worker: (1) attorneys, (2) licensed medical professionals, (3) sales representatives, and (4) construction contractors (as defined under the law).
The four key employer requirements under the law include: (1) written contract requirements, (2) freelance workers compensation requirements, (3) recordkeeping requirements, and (4) anti-discrimination requirements.
Regarding the written contract requirement, any contract for service between a hiring party and a freelance worker must be reduced to writing and contain the following (at a minimum):
- The parties’ name and mailing address;
- An itemization of all services the freelance worker will provide to the hiring party;
- The value of those services;
- The rate and method of compensation for the services;
- The date on which the hiring party will issue payment to the freelance worker or the mechanism by which such date will be determined; and
- The date by which the freelance worker must submit to the hiring party a list of services rendered under the contract (for purposes of timely compensation).
All written contracts entered into with freelance workers must be maintained for a minimum of six years. A hiring party’s failure to maintain these documents creates a presumption that the terms the freelance worker presents as true and accurate are in fact the agreed-upon terms between the parties.
With respect to compensation of freelance workers, the law contains a specific provision requiring that the hiring party must pay freelance workers on or before the date specified in the contract (as discussed above) or—if the contract does not specify the timing of payment or the mechanism by which such date will be determined—no later than 30 days after the completion of the freelance worker’s services. The law prohibits the hiring party from requiring, as a condition of timely payment, that the freelance worker accept less compensation than the amount in the contract.
Lastly, the law prohibits any hiring party from harassing, discriminating, threatening, intimidating, disciplining, or denying work opportunities to a freelance worker for exercising, or attempting to exercise, any rights under the law.
Importantly, the law only applies prospectively to contracts for service entered into on or after May 20, 2024.
Action Items
- Consult with legal counsel on freelance worker contractual agreements.
- Have appropriate personnel trained on freelance workers requirements.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase