New York City Council recently took much-needed steps to protect freelancers and other independent contractors with a law that aims to reduce wage theft through penalties – including jail time — for late payments and other abuses.

The Freelance Isn’t Free Act passed unanimously and was signed into law by New York Mayor Bill deBlasio on November 16, 2016. It takes effect May 15, 2017. The Act stipulates written contracts for standalone freelance projects worth $800 or more, or for work done for a single client over 120 days that meets the same monetary threshold. The agreement must list the name and address of the independent contractor and client, itemized details of the work being contracted, the rate of pay, and required payment date. If no payment date is listed, a freelancer must be paid within 30 days of completing work.

The law also ensures freelancers in New York City have many of the same protections afforded to other workers. It prohibits hiring parties, for example, from reducing payment in exchange for the on-time payment. Freelancers who file a complaint against a client under the bill are also protected from harassment, intimidation, and other threatening behavior.

The Freelance Isn’t Free Act also has teeth. It establishes a complaint process with New York City’s new Office of Labor Standards (OLS) and gives independent contractors two years to file a claim. Complaints would be adjudicated by a “court of competent jurisdiction.” Hiring parties found to have breached a written contract would be fined $250, and could also be liable for statutory damages for other concurrent violations of the statute. Repeat offenders could face legal action from the city and OLS, and civil penalties up to $25,000. There is also the possibility that those found to have committed serious wage theft and other abuses against freelancers could be sentenced to up to three months in jail.

Independent contractors and freelancers represent a swiftly growing segment of the American workforce. While this type of work offers great flexibility, it also leaves many freelancers in a precarious position and at the mercy of clients. In fact, the New York Freelancers Union that supported the Freelance Isn’t Free Act estimates most independent contractors lose an average $6,000 a year due to non-payment. Nationally, nearly 80 percent of freelancers say they haven’t been paid by a client at least once.

No matter how work is done, those doing it deserve to be compensated fairly and in a timely fashion. Anything less is simply wage theft. It is heartening to see New York City take this step. Hopefully other jurisdictions in the U.S. will follow its lead.

Kevin J. Stoops

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Kevin J. Stoops

Kevin Stoops is an experienced trial attorney who appears frequently in Michigan state courts and federal courts across the United States, representing clients in complex business litigation. He has vast experience and a track record of successful outcomes high-dollar matters involving trade secret, business tort, intellectual property, executive employment, and class action claims.