It's called the Freelance Isn't Free Act (FIFA) and as of May 15, 2017 it has changed the playing field for those who hire freelancers in New York City. Businesses using freelancers are well advised to review and revise their practices in light of the new rules.
Under FIFA, a freelancer is defined as any natural person or organization composed of no more than one person that is hired or retained as an independent contractor to provide services in exchange for compensation. Excluded from FIFA are salespersons working as independent contractors, practicing lawyers, and licensed medical professionals. Engagements with freelancers must amount to $800 or more calculated over a 120 day period in order to be subject to the new rules. FIFA requires that companies engaging freelancers to provide the qualifying amount of services must enter into a written contract.
FIFA provides $250 in statutory damages plus attorney's fees and costs to freelancers that can establish a violation of this new requirement. Those bringing the complaint must establish that an agreement in writing was requested. That request could be made via email, letter, advertisement, text message, or some combination, as long as the writing satisfies the New York requirements for a contract and contains the information required under FIFA.
The Minimum Requirements
FIFA requires the following be included in all written agreements:
On an unspecified future date, the Office of Labor Policy and Standards will post model contracts on its website at no cost. The model contracts will be in English and in six other languages.
FIFA prohibits paying compensation later than the agreed upon date. If no payment date is detailed in the written agreement, then the payment must be made within 30 days of completion of services. However, FIFA does not define the term "completion," so companies may want to require freelancers to provide an invoice upon finishing the specified services.
Once the freelancer begins to provide the contracted services, FIFA prohibits conditioning a timely payment on accepting less than the agreed upon amount. The penalty would be double damages, plus attorney's fees and costs, if the company fails to pay the freelancer on time in accordance with the written agreement.
FIFA enables the New York City Corporation Counsel to bring civil actions against businesses or individuals believed to have violated this statute. These actions do not preclude a freelancer from also bringing a claim and could result in civil penalties of up to $25,000. In addition, FIFA prohibits companies from retaliating against freelancers who have complained about violations of the new protections and provides for statutory damages in the amount of the value of the underlying contract for each violation. Prohibited retaliation would include refusing to provide further opportunities for work to a person that complained.
If you have questions about the new FIFA requirements and how they will be applied, please contact Wayne Berkowitz or your Berdon advisor.
Berdon LLP New York Accountants