New York City Protects Freelancers in Wage Payment Law

New York City recently enacted legislation with freelancer protections that take effect May 15, adding a new twist to the "wage theft" laws that are popping up across the county.

At the signing ceremony, Mayor Bill de Blasio said the measure will "help hold people accountable if they're hiring freelancers if they try to stiff freelancers out of their hard-earned money."

The new ordinance requires employers that use freelance workers—a term that encompasses independent contractors—to have written contracts for work valued at $800 or more. Contracts must identify the parties, describe the services to be provided and their value, and specify when the employer will pay the individual for the work performed.

Employers looking to avoid the contract requirement by breaking work into smaller chunks be warned: the $800 threshold applies to the total value of services provided by the worker in the preceding 120 days. That means you’d have to have a written contract for a freelance worker providing $300 worth of services if you’d previously hired that same worker to perform more than $500 worth of services in the past four months.

The ordinance also requires that freelancers be paid no later than the date specified in the contract, or if no date is specified, within 30 days after work is complete. It prohibits employers from conditioning timely payment on freelancers’ willingness to accept less money than they were promised and prohibits employers from retaliating against freelancers who assert their rights under the law.

Violations could mean big penalties for employers, with fines up to $25,000 for pattern or practice violations. Individual violations of the contract requirement carry a penalty of $250, and violations of the timely payment requirements can carry a penalty equal to twice the amount owed on the contract. The law gives freelancers two years after contract violations occur to sue, and six years to make claims of untimely payment.

But what if nonpayment is just a mistake? Or the worker is late in sending an invoice? Too bad. The law doesn’t make any provisions for employer defenses, so if you operate in the Big Apple, it’s a good time to examine your existing procedures and make any necessary adjustments in anticipation of the ordinance’s May 15 effective date.

Although the law is the first directed specifically at freelance workers, it fits in with a larger trend of "wage theft" laws spreading in cities and states across the country. The trend generally includes legislation making it easier for workers to assert claims for unpaid wages and overtime, and more costly for employers that violate wage payment requirements.

Violations can be expensive for employers, so this ordinance should serve as a reminder: Make sure you’re paying your workers. It’s a good idea to review federal, state and local laws to understand and comply with wage payment requirements. Penalties can add up!

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