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.
During the final days of its most recent legislative session, the New York State Legislature passed a bill (S8369B) that would mandate contractual forms and terms for businesses that use “freelance workers.” Building on New York City’s Freelance Isn’t Free Act (discussed here and here), the bill, if it becomes law, will impose additional requirements on businesses engaging certain types of independent contractors. The bill will be delivered to New York Governor Kathy Hochul by the end of the calendar year. If Governor Hochul signs the bill into law, it will take effect 180 days thereafter and will apply to contracts entered on or after the effective date. Governor Hochul has not yet opined on whether she will sign the bill.
The bill would amend Article 6 of the Labor Law to include statutory provisions and requirements related to the payment of “Freelance Workers” engaged as independent contractors. Under the bill, “Freelance Worker” is broadly defined as an individual engaged as an “independent contractor by a hiring party to provide services.” The bill would cover only individuals providing services for more than $800 during the preceding 120 days. It also excludes certain occupations and trades, for example, “construction contractors,” medical professionals, commissioned salespersons, attorneys and governmental entities. The bill would amend the Labor Law to require written contracts for such “services,” but does not define what constitutes “service.” The bill would require that independent contractor agreements specify certain terms in writing, such as contact information, itemization and valuation of all services, and the rate of compensation. Independent contractor agreements would also have to itemize all services to be provided under the agreement.
The bill would require that payment to covered freelance workers be made as specified by the contract and would impose a default payment term of 30 days if the contract does not specify other payment terms. The bill would prohibit an entity from attempting to negotiate costs after services are rendered “as a condition of timely payment,” and would protect freelance workers against retaliation for exercising rights under the bill. Administrative guidance concerning interpretation of the law may be expected in the future, given the lack of detailed definitions in the bill.
The bill would be enforced through civil actions brought by aggrieved freelancers or through administrative action by the New York State Department of Labor. The Commissioner of Labor would be required to produce model templates of contracts and be required to investigate freelance worker claims (termed “wage claims”). No specific provision is made for enforcement by the Commissioner of Labor, and it is expected that enforcement will follow, mirror or closely resemble the Department’s Division of Labor Standards enforcement process. The New York City Law would not be affected by the bill, and would presumably continue to be enforced by the City Department of Consumer Affairs.
If adopted, the bill would allow plaintiffs in civil litigation to recover double the amount of the alleged underpayment, injunctive relief, attorneys’ fees and costs, and other remedies, as well as $250 in damages for failure to provide a contract in writing. The bill sets a two-year statute of limitations on actions for failure to provide written contracts (or a contract containing the required provisions noted above), and a six-year limit for actions claiming failure to make full and timely payment or retaliation.
Littler will continue to track developments on this pending item.