New Law Gives Freelancers Legal Recourse for Payment Problems

New Law Gives Freelancers Legal Recourse for Payment Problems

Similar laws may pop up across the country to address needs of “gig economy”

In today’s so-called gig economy, more people than ever are self-employed. While many individuals enjoy the freedom that comes with being their own boss, being a freelancer can quickly lose its luster when clients don’t pay on time – or at all, in some cases.

Unfortunately, the self-employed are often on their own to address compensation disputes. All too often, workers end up forgoing payment rather than face the hassle of going to small claims court.

However, New York City has recently passed a law to give freelancers some legal recourse if clients refuse to pay.

With nearly 54 million people freelancing as of last year, don’t be surprised if other cities or states follow New York’s lead in protecting solopreneur businesspeople.

Freelance isn’t free

The Freelance Isn’t Free Act, which goes into effect in May of 2017, is the first law in the country to address freelance compensation.

The law protects freelancers who work as independent contractors (or people who work in any capacity other than a traditional employer/employee relationship) who provide services in exchange for compensation.

Some of the provisions of the law include:

• Written contracts must be in place for freelance projects that are worth $800 or more over a six-month period. Contracts must include a description of the services provided, the value of those services, the rate and method of compensation, and payment due dates.
• Payments must be made within 30 days of the services-rendered date.
• Freelancers may file complaints with the city’s Office of Labor Standards in cases of non-payment or late payment. If the office is unable to come to a resolution with the company, the freelancer may be permitted to pursue legal action.
• Companies may not retaliate against workers who file complaints.
• Parties found guilty of non-payment may be subjected to penalties, including damages, injunctive relief, and attorney’s fees.

What it means to freelancers

Because this is the first law to address freelance compensation, there are likely to be some “kinks” that will need to be worked out in its implementation.

For example, the anti-retaliation provision may prove to be tricky, as companies may attempt to duck accountability by ending a project or changing the scope of work. Freelancers who feel they have been retaliated against should definitely seek legal counsel as soon as possible.

On the flipside, workers who are given the green light to sue after being unable to achieve resolution through the city may have stronger credibility in the courts.

Contact us today

If you’re a freelancer who hasn’t been appropriately compensated based on your agreement, it’s a good idea to speak to an attorney to find out about your rights.