New Rules Applicable to NYC’s Freelance Isn't Free Act Prevents Covered Employers from Utilizing Arbitration Provisions and Class Action Waivers

Anticipated rules to “clarify” New York City’s Freelance Isn’t Free Act, which amend Title 6 of the City’s Rules by adding a new chapter 12, have now been promulgated by the Department of Consumer Affairs and go into effect on July 24, 2017.1

Of particular significance, Rule 12-05 provides, in relevant part, that:

  • “If a contract includes language that waives or limits a freelance worker’s right to participate in or receive money or any other relief from any class, collective, or representative proceeding, said waiver or limitation is void.”
  • “Wherever a hiring party asks a freelance worker to waive or limit, via contract, any other procedural right normally afforded to a party in a civil or administrative action, any such contractual waivers and limitations are void under section 20-9352 of the Administrative Code. . . .”
  • “A freelance worker has the right to disclose the terms of a contract with a hiring party to the director [of NYC’s Office of Labor Standards]. Any private contractual agreement that purports to waive or limit a freelance worker’s right to communicate the terms of such a contract to the director is void as against public policy.”

Subsection (b) explicitly prevents employers from including collective/class action waivers in their independent contractor agreements. Subsection (c) reflects an apparent attempt to prohibit arbitration provisions and provisions that shorten the Act’s statute of limitations.  Subsection (d) voids confidentiality provisions that do not carve out disclosure to the Director of NYC’s Office of Labor Standards.

The new rules also:

  • Expand the coverage of those who can violate the Act from the “hiring party” to the “actual or apparent agent [of the hiring party] or any other person acting directly or indirectly on behalf of a hiring party”;
  • Provide that the Act applies regardless of a freelancer worker’s immigration or work authorization status;
  • “Clarify” what the term “value” means when establishing jurisdiction and defining what damages are owed to include the “reasonable” value of services, supplies, and expenses; and
  • Establish a “motivating factor,” rather than a but-for standard, applicable to retaliation claims under the Act.

Employers need to consider these new rules when drafting both independent contractor agreements with freelance workers performing services in New York City and agreements that terminate such services in exchange for a general release.3

See Footnotes

1 In the Statement of Basis and Purpose of the Rules, the Department acknowledges that the Rules go beyond “clarification” by establishing “requirements to implement and meet the goals of the law” that do not appear in the law itself.

2 Section 20-935 states, in relevant part, that “Except as otherwise provided by law, any provision of a contract purporting to waive rights under this chapter is void as against public policy.”

3 For additional information about the Freelance Isn't Free Act, please see María Cáceres-Boneau and David M. Wirtz, New York City to Pass Protections for Freelance Workers, Littler ASAP (Nov. 7, 2016).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.