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November 1st, 2016
New York City Passes New Law Governing Freelance Workers
There's big news for employers with offices in New York City. On October 27, 2016, New York City became the first city in the country to pass a law providing legal protections against nonpayment to a group of workers who previously did not have them — independent contractors. The City Council passed the bill — the "Freelance Isn't Free Act" — unanimously, and it is expected to go into effect 180 days after it is signed by Mayor de Blasio. Here's what you need to know.
New York City is considered to be the hub of a rapidly expanding group of freelance workers, and recent surveys estimate that approximately 38% of New York City's workforce currently consists of independent contractors. Previously, independent contractors with potential nonpayment claims were left with the sole remedy of asserting a breach of contract claim in court.
The "Freelance Isn't Free Act" provides significant new protections, requiring that any "hiring party" (defined as a person who retains a freelance worker):
- Enter into a written contract if the value of services will be $800 or more including aggregated services within a 120 day period. The contract must itemize the services, state the value and rate and method of compensation, and identify a date of payment. If a contract does not state a payment date, payment will be due no later than 30 days after the contractor completes services.
- May not condition timely payment on a reduction of pay once the contractor begins work.
Contractors who have not been timely paid have two remedies. First, they will be able to submit a written complaint to the Director of the Office of Labor Standards. The Director will alert the hiring party of the complaint and ask for proof of payment or a written response. The Director will be available to provide contractors with information about court forms and procedures, and about organizations that can refer attorneys. Second, contractors will be able to file in court a claim for nonpayment or for retaliation. Significantly, prevailing contractors will be entitled not only to unpaid amounts due under their contract, but also to double damages and attorneys' fees. Contractors who can prove that they requested a contract and did not receive one, or that they were retaliated against for exercising their rights under the Act, may also be entitled to seek so-called "statutory damages" equal to the amount of the contract.
The Act will also empower the New York City Corporation Counsel to sue employers with a "pattern or practice" of violating the Act for additional penalties of up to $25,000.
With significant protections for independent contractors on the horizon, it's not too soon to review and, if necessary, revise your business practices to ensure the use of proper contracts, and to track payment deadlines and procedures.
If you have questions about the Freelance Isn't Free Act, or about other employment issues or disputes, please contact Wendy Stryker at (212) 705 4838 or firstname.lastname@example.org, Gavin McElroy at (212) 826 5541 or email@example.com, or any other member of the Frankfurt Kurnit Executive Compensation & Employment Group.
Other Employment Law Alerts
Overtime Rule Hang-Up Requires Careful Communication About Pay Decisions
December 2 2016
Federal Court Blocks Overtime Rules and New York Proposes a New Overtime Rule
A federal court in Texas has halted nationwide preparations for the new FLSA overtime rule set to go into effect on December 1, 2016. That rule raised the salary basis required to maintain federal overtime exemptions from $455 per week to $913 per week, and included a mechanism for automatically updating the salary limits every three years.
November 28 2016
New Trade Secrets Law Calls for Changes to Handbooks and Certain Employment Agreements
As we noted in an alert last week, the Defend Trade Secrets Act of 2016 ("DTSA") creates a private right of action to sue in federal court for trade secret misappropriation, and provides for remedies including actual damages and attorneys' fees.
May 25 2016