A strict new law in New York City imposes new requirements on anyone who hires freelancers to perform work as independent contractors. The law, known as The Establishing Protections for Freelance Workers Act or “Freelance Isn’t Free Act” (“FIFA”), imposes two significant requirements effective from May 15, 2017:
- All freelancers must have a written contract (see below for mandatory elements).
- Any work valued at $800 or more must be paid in full within 30 days of completion.
FIFA imposes double damages and attorney’s fees for any freelancer who successfully sues for a breach. Additionally, if there is evidence of a pattern or practice of violations, the NYC Corporation Counsel may bring civil action to recover a civil penalty of up to $25,000. Compliance monitoring is through the Department of Consumer Affairs’ Office of Labor and Protective Services, with ultimate resolution of disputes left up to the courts. Note that lack of a contract – or having a contract without the required elements – does not relieve hiring parties of responsibility under FIFA.
Definition of Freelancer
- Any natural person
- May be a corporation or not
- Hired as an independent contractor
- Provides a service in exchange for money
Required Contract Elements
- A written contract for a freelancer must have:
- Name and mailing address of both parties
- Itemization of services
- Value of services
- Compensation rate and method
- Payment due date or means for determining payment due date, BUT payment must be made within 30 days of completion of the work
If you have any questions or concerns, please contact your AKM CPA.
Additional Information from NYC, please click here.