The Freelance Isn’t Free Law


Effective May 15, 2017: NYC freelancers & businesses must comply with the Freelance Isn’t Free Law

The Freelance Isn’t Free Law provides basic protections for freelance work, including:

  • Mandatory Contracts — clients must use a contract when hiring a freelancer for over $800 of work and they can face fines if they refuse to provide one.
  • 30-Day Payment Terms — unless otherwise specified in a contract, clients must pay freelancers within 30 days of work completion.
  • Payment Agreement Protections — clients cannot require that freelancers accept less than they’re owed in exchange for timely payment.
  • Anti-Retaliation — clients cannot retaliate against a freelancer for pursuing payment.
  • Legal Assistance — a city agency will investigate, may try to collect on the freelancer’s behalf, and will provide court navigation services if needed.
  • Double Damages — freelancers can collect double damages and attorneys fees in court, and repeat offenders can face penalties of up to $25,000.

If nonpayment or late payment occurs:

Freelancers must be paid within 30 days of submitting work or the payment due date, as stipulated in the contract. If payment is not received or is received in an untimely fashion, then freelancers may take the following actions:

  • File a complaint with Department of Consumer Affairs (DCA) by using this form. There is no cost and an attorney is not required. OLPS will investigate and follow up with the freelancer and client. OLPS may then send a Notice of Complaint. Under the law, the client is required to provide OLPS with a written statement in response to the Notice of Complaint within 20 days that:
    • States the freelancer has been paid in full (including proof of such payment);
    • States the reasons why there has been a failure to provide full payment; and/or
    • Fully responds to any other allegations in the complaint related to either a written contract or retaliation.
  • File a court action and litigate against non-paying clients
    • If the court rules in the freelancer’s favor, the judge may award the freelancer:
      • Double Damages: the client will owe the freelancer twice the assessed damage.
      • Attorney fees: Judges may hold the client responsible for the freelancer’s attorney fees
      • No contract fee: Clients can face a $250 penalty if they refuse to work with a contract
      • Civil penalties: Clients with multiple judgements against them may also be subject to civil penalties up to $25,000.

Who does the law cover?

The legislation covers New York City freelancers who are:

  • Earning 1099 income
  • Owed over $800 of work in a 4-month period
  • Sole proprietors who:
    • Are not incorporated
    • Are incorporated as either an independent LLC, S-Corp or C-Corp
    • Do not have employees

The law does not cover:

  • W-2 income earnings
  • Businesses with employees
  • Partnership arrangements
  • Lawyers / sales people
  • City workers

How to be compliant with the law as a hiring party

Your contracts must include the following:

  • The name and mailing address of client and freelancer
  • A scope of work and schedule of services to be provided by the freelancer, the payment rate and method of compensation
  • The date upon which payment is due to the freelancer

As of May 15, individuals and businesses engaging freelancers for services valued at $800 or more must use a contract. Failure to comply with these requirements may result in a fine of $250, plus attorney’s fees and costs.

The law requires businesses to pay freelancers by the date in the contract, or, if the agreement does not mention time of payment, within 30 days of completion of services. Businesses may not condition timely payment on the freelancer’s agreement to accept less than the agreed-upon payment amount. The Act also prohibits businesses from retaliating against freelancers for exercising rights.

Finally, the provisions of the law include a 120-day look back period. Hiring parties should review all freelance contracts exceeding the $800 threshold for compliance with the law. Moving forward, businesses should train employees with authority to enter into freelance employment agreements on the tenants of the law.