Freelancing Isn’t Free – New York City Council Passes Ordinance To Protect Freelance Workers

Cases involving unpaid or underpaid wages make up a significant portion of the employment lawyer’s caseload.  The federal Fair Labor Standards Act requires payment of minimum wage and overtime or most employees.  New York State’s Labor Law also provides strong wage protection to workers.  In addition to minimum wage and overtime protection, New York State Law allows most employees who have not been timely paid their regular wages to recover those wages, plus liquidated damages and attorneys fees.  As a result, employees are able to bring claims for non-payment of wages that would not otherwise be economically viable.

Freelance workers, by contrast, often have difficulty collecting payment for their services.  As independent contractors, they are not protected by the labor laws.  Their only resources is therefore an action for breach of contract.  Even if such an action is meritorious, it is often not worth pursuing for the relatively small amounts involved (both for the freelancer and the attorney).  According to a report prepared by the Freelancers Union in October of 2015, 70% of Freelancers have reported having trouble being paid for their work.

The New York City Council has taken a bold step to protect the rights of freelance workers.  On October 27, 2016, the Council unanimously passed the “Freelance Isn’t Free Act.” now gives many freelance workers similar protection to employees. The law protects most individuals who provide services for compensation as an independent contractor, although certain workers, such as lawyers and doctors, are excluded under the act.

The law requires written contracts with certain information in any freelance contract.  The law also allows freelancers to either file a complaint with the city’s Director of Labor Standards or to institute an action in a court of competent jurisdiction.  A freelancer who has not been paid pursuant to his or her contract can recover the unpaid compensation as well as liquidated damages equal to the value of the contract and reasonable attorneys fees.  The new law aims to give freelancers similar protection to employees for unpaid compensation.  By allowing unpaid freelancers to recover liquidated damages and attorneys fees, individuals or entities that contract with freelancers cannot withhold payment simply as a tool to require the freelancer to accept less money.

On a broader note, this law helps eliminate the “all or nothing” status of workers under the labor laws.  Often, employment lawyers representing workers will have to rely on claims that a worker has been misclassified as an independent contractor, when in fact the worker is an employee.  Although there are still plenty of cases where misclassification of workers will play a large role, laws like the Freelance Isn’t Free Act mean that a worker’s case will not be entirely dependent on whether they have been misclassified.  There has been much talk of protecting workers in the “gig” economy by giving them legal protection even if they are not “employees” in the traditional sense.  The Freelance Isn’t Free Act is one step in this direction.

The bill now goes to Mayor Bill DeBlasio for signature.  The Mayor’s Office has previously stated that it supports the act.