New York Freelance Isn’t Free Act Enacted

What happened?

On November 22, 2023, Governor Kathy Hochul signed the Freelance Isn’t Free Act (SB 5026/AB 6040), which provides significant protections for freelance workers in New York State, mirroring similar protections already in place in New York City.

Quick Summary:

• The law defines freelance workers, mandates timely payment, requires written contracts, prohibits retaliation, and allows complaints to the NY Labor Commissioner.
• Contracts must be kept for 6 years, and proper worker classification is encouraged to avoid penalties.

What are the details?

• Freelance worker is defined. The law provides some exceptions to this law.

• Payment of Compensation: payment to freelancers should be made on or before the date such compensation is due, and no later than 30 days after the completion of the work if no date is specified in the contract. No conditioning can be made to accept less than the amount agreed upon.

• Written contracts are required and must comply with the minimum requisites mandated by the law.

• The labor commissioner will provide “model contracts” on the NYSDOL’s website “for use by the general public at no cost.”

• Retaliation is prohibited.

• Freelance workers can now file a complaint to the NY Labor Commissioner. The Attorney General will be authorized to bring civil actions against violators of the law.

• Recordkeeping: physical and/or digital copies of all contracts with freelancers must be kept for a minimum of 6 years.

• Proper classification of workers as freelancers or employees is encouraged to avoid penalties.

Business Considerations

• Employers should review their current usage of freelancers and their agreements or contracts; update them to have them comply with the new requirements if needed.
• Employers should ensure that such agreements clearly define the terms of the arrangement concerning the compensation and payment days. Take into consideration too that it is forbidden to condition the timely payment of compensation for less than the agreed amount.
• Employers should ensure that their workers are correctly classified as employees or freelancers, according to the correct legal relationship, to avoid penalties.
• Employers should establish clear and fair payment terms and mechanisms to ensure freelancers are paid on time. If nothing is said, by default, it would be 30 days after the contract due date.

Source References

• NY SB 5026 / AB 6040
• New York Governor Signs Freelance Worker Protection Bill (Ogletree Deakins)
• New York Enacts Sweeping Changes to Independent Contractor Arrangements (Littler Mendelson P.C.)
• New York State’s ‘Freelance Isn’t Free’ Act: What You Need To Know (Fox Rothschild LLP)
• What New York’s “Freelance Isn’t Free Act” Means for Employers (Hinshaw & Culbertson LLP)

Resources

• NY Freelance Isn´t Free Act Resources

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