Last month, the New York State Legislature passed the Freelance Isn’t Free Act (“Act”), a labor law ensuring protection for freelancers, contract workers, and independent contractors working in New York.[1] This Act is one of the strongest laws protecting “gig workers” and freelancers in the country and is an expansion of New York City’s 2016 Freelance Isn’t Free Act, which mandates certain contract requirements to protect freelance workers’ compensation.[2] Specifically, the Act entitles freelance workers the right to a written contract, timely and full payment, and protection from retaliation.[3] The Act defines freelance worker as, “any natural person or any 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” compensation.[4]
Like the city law, the state Act requires businesses to provide freelance workers with written contracts if the work is worth at least $800, including multiple smaller projects over a 120-day period.[5] Additionally, unless another time frame is agreed upon in a freelance worker contract, the bill sets a 30-day deadline for payment in full.[6] The state Act prohibits any retaliation against workers for exercising their rights under the bill and provides avenues for workers to report alleged violations to the State Department of Labor (DOL).[7]
Unlike the city law, the state Act explicitly includes within the definition of freelance workers, construction workers, contractors, and projects.[8] Further, the state Act requires hiring parties to retain freelance contracts for a period of no less than six years.[9] Finally, the state Act requires the state to conduct public awareness campaigns to inform hiring parties of the new law and its provisions.[10]
Failure to abide by the Act’s requirements when dealing with freelancers can result in significant penalties.[11] Apart from statutory damages resulting from violations of contractual requirements, freelance workers can recover double the amount owed in addition to reasonable attorneys’ fees in response to violations or retaliatory conduct.[12] Workers can also pursue civil action for damages, even if they have not completed the DOL’s complaint and investigation process.[13]
The state Act is currently pending approval from Governor Hochul.[14] This, however, will not be the first time that Governor Hochul has received this Act for her approval. In June 2022, a nearly identical version of this bill passed both houses of the New York State Legislature but was vetoed by Governor Hochul over funding concerns associated with passing the Act.[15] For example, Governor Hochul explained that the Act would require a significant increase in DOL staff which could cost the state several million dollars.[16] Despite this, as the Act is widely supported by the New York State Legislature, a legislative override is possible in the event that Governor Hochul vetoes the Act.[17]
If signed into law by the Governor, the state Act will take effect 180 days after Governor Hochul’s approval.[18] In terms of application, the Act will only apply to contracts entered into on or after the effective date and will not apply retroactively to contracts entered into prior to the Act’s approval.[19] Despite the newness of the Act, this litigation has the potential to create mass amounts of litigation.[20] Considering the potential damages available under the Act, small businesses should consider reviewing independent contractor and consultant practices with counsel.
[1] Richard I. Greenberg, et al., “New York State Legislature Again Passes the Freelance Isn’t Free Act.” Jackson Lewis, June 21, 2023, https://www.jacksonlewis.com/insights/new-york-state-legislature-again-passes-freelance-isnt-free-act [Hereinafter New York State Legislature].
[2] Adam L. Browser & Brian Passarelle, “Little Known Law Can Lead to Large Liability: The Freelance Isn’t Free Act.” New York Law Journal, March 30, 2023, https://www.law.com/newyorklawjournal/2023/03/30/little-known-law-can-lead-to-large-liability-the-freelance-isnt-free-act/?slreturn=20230610115649 [Hereinafter Little Known Law].
[3] New York State Legislature, Supra Note 1.
[4] A6040, 2023-2024 Reg. Sess. (NY. 2023). https://legislation.nysenate.gov/pdf/bills/2023/a6040.
[5] New York State Legislature, Supra Note 1.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Little Known Law, Supra Note 2
[12] Id.
[13] Id.
[14] New York State Legislature, Supra Note 1.
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Little Known Law, Supra Note 2
