By: Leah Norod
If you live in New York City, you may have heard about a new regulation dealing with the hiring of freelancers. Whether you’re a freelancer or a business that relies on independent contractors, you may be asking yourself…
- What even is this?
The Freelance Isn’t Free Act, or Local Law 140 of 2016, is a New York City regulation designed to help protect freelancers and grant them the right to a written agreement for the work they do. It took effect on May 15, 2017, and applies to work that’s valued at $800 or more (this can be one job or multiple ones that take place within 120 days).
- Who does it apply to?
Most people think of writers or graphic designers when they hear the term “freelancer,” but it can actually refer to just about anyone who’s working as an independent contractor, including companies made up of no more than one person (such as a loan out for personal services). There are a few exceptions, such as certain sales representatives, lawyers, and doctors. As always, it’s also important to make sure you’re categorizing your workers properly – maybe your hire isn’t even an independent contractor!
- I have a template agreement that I use for independent contractors. Do I need a new one?
This really depends on how robust your form is. To comply with Freelance Isn’t Free, your contract must contain:
I) the name and mailing address of both parties;
II) the specific terms of the work to be done;
III) the value attributed to the services (how much money?); and
IV) the rate and method of payment (when and how often?).
This is the bare minimum, and in the absence of some of these terms, the law will provide a default. For example, payment will be due within 30 days of the job’s completion unless specified otherwise. Of course, it’s recommended you flesh out the agreement as much as possible to avoid ambiguity or fights in the future.
- Is it retroactive?
Nope – the law only applies to contracts entered into on or after May 15, 2017. Still, you’ll want to make sure you comply going forward.
- I’m a freelancer and can’t afford to risk this job. What if they go with someone else because I insisted on a written agreement?
Luckily, the regulation provides for this exact situation. The act makes it illegal for a hiring party to deny you an opportunity, or not provide you with others, simply because you tried exercise your rights. So have no fear! If the hiring party violates the regulation, you can file a complaint with the director or lodge a formal a civil action – just make sure to do so within two years.
- What if I work with freelancers and I ignore this? Can I get in trouble?
Absolutely you can get in trouble. In addition to claims being brought by freelancers, if a company is found to have repeated violations enough to establish a “pattern,” it can be subject to a civil action on behalf of the city. Bottom line: you can be hit with a penalty of up to $25,000. I’d qualify that as “trouble.”
More and more people are opting to be freelancers, and more companies are hiring them, especially in a transitory place like New York City. Regardless of what side of the coin you’re on, make sure to have a written agreement. In a nutshell: follow the rules.