What Employers should Understand about the Freelance Isn’t Free Act

Freelance isn't Free Act NYC
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Freelance Isn’t Free Act Took Effect May 15, 2017

New York City passed the Freelance isn’t Free Act (FIFA), which went into effect on May 15, 2017. The new act provides protections to freelancers and independent contractors and is the first of its kind. Typically, employees are provided greater protections under employment law.

Employees and Independent Contractors cannot be Interchanged

As a flurry of lawsuits continues to follow companies who regularly classify workers as employees, businesses should be mindful of what constitutes an employee. They should also be aware that employees cannot be interchanged with independent contractors for the purpose of reducing expenses.

The Department of Labor aggressively investigates industries and companies suspected to utilize the independent contractor classification to save on expenses.

Employers have many labor laws and other employment regulations imposed on them by the Federal Government, State and Local government including sick leave laws, local FMLA laws, and advanced scheduling laws. However, independent contractors are almost always excluded from these rights.

Additionally, employers don’t have to pay employment tax for contractors.

But, employees cannot simply be named an independent contractor to avoid employment regulations and associated costs. The Department of Labor (DOL) uses a series of criteria to determine if a worker should be considered an independent contractor or an employee.

Among those tests, the level to which a worker has control over their work, the risk a worker takes, and the degree of control and employer exercises over the worker.

Parties included under Freelancer Act

Freelancers can come from all different industries but are most common in certain artistic and skilled industries. Common industries include graphic and web design, film, video, media, photography and other creative pursuits. It also includes home design and contracting.

The law can include, with specific circumstances, to workers in home care, day care, cleaning, maintenance, and construction. Under the Act, freelancers can be “any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name.”

The Act covers all freelancers in New York City, but could also apply to work done outside of NYC depending on if some work was done in the city, if the worker was hired or retained in NYC, or if the hiring company is based in NYC.

Hiring parties, not employers are held accountable under the act. This means that individuals, families, and organizations who hire freelancers in NYC fall under the act.

Exclusions under the FIFA

There are few exceptions under the Act. Exceptions include certain sales representatives, attorneys, and licensed medical professionals.

The other exception includes freelance businesses with more than 1 employee.

Freelance isn’t Free Act Provides Rights to Independent Contractors

There are three main rights that the new Act provides to freelancers.

First, anytime that work totals more than $800 in a 120 day period, the freelancer has a right to a written contract.

Second, the contractor has a right to a timely and a full payment. The contract should spell out and itemize the work done, the pay and a due date. If no payment date is specified, then companies have 30 days after the work is completed to issue payment.

Third, the contractor has the right not to be retaliated against. Companies cannot blacklist, penalize, or threaten contractors who exercise their rights under the law.

  • A written contract
    • Name and address of both parties
    • Itemization of services to be provided
    • Value of services provided
    • Rate and method of compensation
    • The date which payment must be paid
  • Timely and full payment
  • Protections from retaliation

Penalties for Non-Compliance of the Freelancers aren’t Free Act

If only the contract requirement is violated, then a freelancer may recover $250 in damages.

However, if other violations are found then companies will be responsible for damages double the value of the contract.

They will also be responsible for attorney’s fees and can face maximum penalties of $25,000 for pattern-and-practice cases.

Let SwipeClock Help

One of the reasons that companies are often tempted to misclassify employees is because of the additional costs and expenses typically related to employees.

However, willfully misclassifying employees leaves the employer open to litigation, reputational risk, and costly fines.

Fortunately, SwipeClock software exists to help minimize much of the administrative and regulatory expenses. Businesses often have to comply with multiple conflicting City ordinances defining Sick leave accrual and usage laws.

Additionally, these businesses have to also comply with Federal Overtime Laws, the Family Medical Leave Act and any other national or local laws that are enacted. SwipeClock provides a comprehensive array of workforce management and time tracking tools that can help businesses to more easily stay in compliance with local and national laws.

Records are effortlessly kept for years and accrual is automatically tracked and reported to employees according to the state and city laws. Additionally, with geo-timekeeping clocks, businesses can effortlessly track time worked in specific cities to ensure compliance.


NYC Freelance isn’t Free

Rules of FIFA

Full Bill

Written by Annemaria Duran. Last updated on November 14, 2017

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