Vetoed in 2022, subsequently signed into law by Governor Kathy Hochul last year, and rolled out with a delay, New York State's Freelance Isn't Free Act (FIFA) finally goes into effect on August 28, 2024. The legislation is intended to expand protections for freelancers and independent contractors and imposes new requirements on employers that engage them. Given the breadth of the law and the frequency with which employers work with freelancers, the implications for compliance are significant.
FIFA is the latest example of the state extending protections already enacted in New York City. The new state law will mirror a similar city law passed in 2016. Accordingly, now all freelancers working in the state will be covered.
Who Is a Freelancer?
FIFA defines "freelance worker" broadly as "any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for an amount equal to or greater than $800, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days." Critically, the $800 threshold requirement can be met all at once or over several small-dollar agreements.
Several freelance workers are excluded under the law, including practicing attorneys, sales representatives, licensed medical professionals, and construction contractors.
What Is a Hiring Party?
FIFA's scope is extensive. Practically any person or company is considered a "hiring party" and thus is covered under FIFA, including small, medium, and large organizations.
Federal, state, and local governments are exempt.
FIFA's Requirements
Written contract
Once a hiring party engages a freelancer, there must be a written contract between them, including the following essential terms:
- Parties' names and mailing addresses
- A breakdown of all services the freelance worker will provide to the hiring party
- The value of those agreed-upon 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)
After contracting, the hiring party must provide a physical or electronic copy of the contract to the freelancer and then retain one themselves for at least six years, a practice that had long been advised, but never required. If a hiring party fails to retain an agreement, the terms presented by a freelance worker will be presumed true, which will likely adversely affect the hiring party.
The Commissioner of the New York State Department of Labor (DOL) can also impose further requirements on the terms of the contract and will provide model contracts for the public at large to use. Those templated agreements have not yet been shared by the DOL.
Payment
The freelancer must be paid on or before the date specified in their contract. If the contract is silent regarding the date, then the hiring party must pay the freelancer within 30 days of completion of service. FIFA also bars a hiring party from forcing a freelancer to accept less compensation than originally contracted to receive their compensation in a timely manner.
Anti-retaliation
FIFA prohibits any hiring party from harassing, discriminating against, threatening, intimidating, disciplining, or denying work opportunities to a freelance worker for exercising, or attempting to exercise, their rights.
Enforcement and Prospective Penalties
In addition to the freelancers themselves, who can bring a civil action or file a complaint with the Department of Labor against hiring parties for failing to adhere to the requirements set out by the new law, New York's attorney general can also pursue a claim civilly.
- Freelancers can sue for damages for non-payment or retaliation within six years of the act in question. If successful on a non-payment claim, the freelancer can be entitled to the amount owed, double damages, injunctive relief, and attorneys' fees. For a successful retaliation claim, a freelancer can receive damages equal to the value of the contract for each violation.
- Freelancers can file a complaint with the DOL, which can assess civil and criminal penalties. The DOL can also join any number of wage claims in a single action against an offending hiring party.
- The New York attorney general can seek fines of up to $25,000, injunctive relief, and any other relief he/she deems appropriate.
Questions to Consider
- Have you reviewed your workers' classifications?
- Do you have a process in place to categorize new workers as employees or freelancers?
- How will you ensure timely payments for freelancers?
- Do you have a recordkeeping and retention system for six years' worth of freelancer agreements?
- Have you updated your agreement templates for freelancers?
Key Takeaways
Employers should begin planning now, ahead of FIFA's August effective date. If you do business in New York and have questions about the law's implications and about compliance efforts, please contact the authors of this article or any other attorney in Venable's Labor and Employment Group.