- Contracts Now Required for NYC Employers Using Freelancers
- May 24, 2017 | Authors: Caroline J. Berdzik; Christopher P. Maugans
- Law Firms: Goldberg Segalla LLP - New York Office; Goldberg Segalla LLP - Buffalo Office
With the Freelance Isn’t Free Act (FIFA) scheduled to go into effect May 15, New York City employers must now prepare contracts - under the threat of potentially stiff penalties for noncompliance - in order to utilize independent contractors, as many of them do for a broad range of services.
The New York City Council passed FIFA on October 28, 2016, to provide greater protections for freelancers by imposing specific requirements on hiring parties located in New York City. Under FIFA the term “hiring party” means any person who retains a freelance worker to provide any service, other than foreign, federal, state, and local municipalities.
The term “freelance worker” means any person or any organization composed of no more than one person that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation. Commissioned sales representatives (as defined by Labor Law § 191-a), attorneys, and licensed medical professionals are excluded from the definition of freelance worker.
FIFA requires a contract to exist between a hiring party and a freelance worker where the value of services is $800 or more, either by itself or when aggregated with all contracts, between the same hiring party and freelance worker during the immediately preceding 120 days. The contract must be reduced to writing and each party is required to keep a copy.
The written contract must include the following information:
- The name and mailing address of both the hiring party and the freelance worker;
- An itemization of all services to be provided by the freelance worker, the value of the services to be provided pursuant to the contract, and the rate and method of compensation; and
- The date on which the hiring party must pay the contracted compensation or the mechanism by which such date will be determined.
Frequent violators of FIFA risk even more severe penalties. The New York City Corporation Counsel is permitted to bring a civil action on behalf of the City alleging pattern or practice violations, with a potential penalty of up to $25,000.
Consequently, hiring parties that routinely contract with freelancers would be well advised to consult with an employment attorney to understand this new law and ensure compliance.