Manhattan, NYC Enacts New Law Strengthening Independent Contractors’ Rights

On November 16, 2016, the New York City Mayor Bill de Blasio signed, into law, the New York Freelance Isn’t Free Act, Local Law 140 of 2016 (the “NYCFIFA,” the “Freelance Isn’t Free Act,” “Local Law 140,” or the “Act”), which, effective May 15, 2017, greatly strengthens the rights and remedies of independent contractors (also referred to in this article as “freelancers” or “freelance workers”) by, among other things, giving independent contractors the right to a written contract, allowing freelancers, in lawsuits against hiring parties for unpaid compensation, to recover double damages (and, in certain circumstances, treble damages) and attorneys’ fees, and barring hiring parties from retaliating against freelancers for exercising their rights under the Act.

On October 27, 2016, the New York City Council, by a vote of 51-0, had unanimously approved, by consent roll call, Local Law 140. The Act is codified as N.Y.C. Admin. Code §§ 20-927 – 20-936.

Under the NYCFIFA, a ” ‘freelance worker’ ” is “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.” The Act specifically exempts, from its definition of a freelance worker, sales representatives, lawyers, and licensed medical professionals.

In turn, under the Freelance Isn’t Free Act, a ” ‘hiring party’ ” is “any person,” other than federal, state, local and foreign governments, “who retains a freelance worker to provide any service.”

The Act requires a written contract whenever a contract for freelance services has a value of $800 or more, either by itself or when aggregated with contracts made between the same parties in the immediately preceding 120 days. The written contract must include, at a minimum, (i) the name and address of both parties, (ii) an itemization of services, (iii) the rate and method of compensation, and (iv) either the date on which the hiring party will pay the agreed-upon compensation or the mechanism to determine that date.

The second Committee Report on NYCFIFA observes that the requirement for a written contract is satisfied by any writing or writings, such as “an email, a letter, an advertisement or a text message, or some combination of those,” that meet New York State law requirements for a contract and contain the above-mentioned terms.

The Freelance Isn’t Free Act requires the hiring party to pay the freelance worker either (i) on or before the date compensation is due under the terms of the contract or (ii) if the contract does not specify such date, no later than 30 days after the freelancer has completed his or her services under the contract.

Once a freelance worker has begun performing services under the contract, the Act prohibits the hiring party from requiring, as a condition of timely payment, that the freelancer accept less compensation than the contract requires.

The NYCFIFA renders it unlawful for a hiring party to threaten, intimidate, discipline, harass, deny a work opportunity to, or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelancer from, exercising or attempting to exercise any right guaranteed by the Freelance Isn’t Free Act, or from obtaining future work opportunity because the freelancer has done so.

The second Committee Report on the Act explains that the practices prohibited by the Act’s broad anti-retaliation provision include, among other conduct, “blacklisting a freelance worker from an industry, discrediting a freelance worker to other potential hiring parties or canceling a multipart contract after the contracted work has begun.”

The Freelance Isn’t Free Act authorizes independent contractors who are aggrieved by a violation of the Act to file an administrative complaint with the New York Office of Labor Standards (the “Office of Labor Standards”). The Office of Labor Standards is intended to be a division of the New York of Consumer Affairs. However — even though the New York City Mayor Bill de Blasio signed legislation creating the Office of Labor Standards in November 2015 and allocated $180,000 for two staff members, including a director — the Office of Labor Standards, to date, does not exist.

Even at such time as the Office of Labor Standards comes to exist, that Office is not authorized, under the NYCFIFA, to issue penalties to hiring parties for violating the Act. Rather, the primary importance of a freelance worker filing an administrative complaint with the Office of Labor Standards alleging violations of the NYCFIFA is that if, upon notice from Office of the Labor Standards, the hiring party fails to respond to the freelancer’s complaint, that failure creates a rebuttable presumption, in any lawsuit brought under the Act, that the hiring party committed the violations alleged in the administrative complaint.

The Freelance Isn’t Free Act authorizes freelance workers to bring lawsuits against hiring parties for violating the Act. A freelance worker who, in a lawsuit against a hiring party, prevails on a cause of action for unpaid compensation is to be awarded double damages, reasonable attorneys’ fees and costs.

An independent contractor who, in a court action against a hiring party, proves that the hiring party unlawfully retaliated against him or her for exercising rights guaranteed by the NYCFIFA is entitled to damages equal to the value of the underlying contract, reasonable attorneys’ fees and costs.

A freelance worker who, in a lawsuit against a hiring party, prevails on a stand-alone claim of failure to provide a written contract as required by the Act is to be awarded damages of a mere $250, plus reasonable attorneys’ fees and costs.

If, however, in a court action against a hiring party, a freelance worker, in addition to winning a claim of failure to provide a written contract as required by the NYCFIFA, also prevails on one or more claims under other provisions of the Act, then damages for the claim of failure to provide a written contract are no longer $250, but instead are equal to the value of the underlying contract.

So, for example, a freelance worker who, in a lawsuit, prevails both on a claim of failure to provide a written contract and on a claim for unpaid compensation is to be awarded what amounts to treble damages. Specifically, under the NYCFIFA, such a freelance worker is entitled to recover, from the hiring party, both double the amount of unpaid compensation and the value of the underlying contract.

If your company needs assistance or guidance on a labor and employment issue and your company is located in the Manhattan, NYC area, call Attorney David S. Rich at (347) 472-1026.