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Taking the “Free” out of Freelance – Part 2

As we recently blogged [link], the New York City Council has passed the Freelance Isn’t Free Act (“FIFA”), which will take effect on May 15, 2017.  This law protects freelancers by requiring that they receive written contracts and timely payment.  Someone who fails to pay a contractor in violation of this law will be liable for double damages, the freelancer’s attorneys’ fees and more.  In this continuing post, we discuss how freelancers can enforce their rights.

Freelancers can complain to the New York City Office of Labor Standards, which is within the NYC Department of Consumer Affairs.  Freelancers can also enforce their rights by going to court and seeking damages, penalties and legal fees.

Complaining to the NYC Office of Labor Standards

Anyone whose rights under this law were violated can file a complaint with the Director of the NYC Office of Labor Standards (“OLS”) within two years of the violation.  The law provides simple procedures for complaining and describes how complaints will be handled.

The law does not appear to give OLS any enforcement power, but if the hiring party fails to respond to the notice it receives from OLS, the freelancer gains an important weapon to protect their rights:  the hiring party’s failure to respond creates a rebuttable presumption that they violated the law.  A rebuttable presumption means that if the freelancer takes the claim to court, the hiring party will be presumed to have violated the law.  So, if a hiring party ignores a complaint from OLS, the hiring party will be required to prove that it did not violate the law instead of the freelancer having to prove that the hiring party did violate the law.  This is significant, because in close cases, the burden of proof can end up determining who wins the case.

The law also requires the Director of OLS to set up an information and assistance program that will offer help by phone, email and online.  The Director will also make model contracts available on its website at no cost and in six languages in addition to English.

The FIFA further requires OLS to keep statistics on the success of the complaint procedures, which will be sent to the City Council and published on its website one year after the effective date of the law and every fifth year thereafter on November 1.

Bringing a Lawsuit

The law permits freelancers whose rights have been violated to sue in court. The remedies vary depending on the nature of the violation.

Failure to Provide a Written Contract

A freelancer who only complains about a hiring party’s failure to provide a written contract must prove that the freelancer requested a contract before they started the work.  If the freelancer proves their case, then the hiring party will be liable for $250 in damages plus the freelancer’s reasonable attorneys’ fees and costs.  While $250 may not incentivize hiring parties to obey the law, the risk of having to pay the freelancer’s attorneys’ fees may be a significant deterrent to hiring parties who are considering not respecting freelancers’ rights.

If the lawsuit also complains about other violations of the statute, then in addition to the $250 in damages, the freelancer can recover damages in the amount of the underlying contract, plus the remedies available for the other violations of the FIFA.

If the lawsuit complains solely about failure to provide a contract, the freelancer has two years to sue.

Failure to Timely Pay Freelancer’s Wages

A freelancer can sue for any violation of the required payment practices described in our earlier post [link], i.e. failure to timely pay or trying to negotiate a smaller sum in exchange for timely payment.  Successful plaintiffs will be awarded double damages, along with injunctive relief, attorneys’ fees and other appropriate remedies.

Lawsuits for violations of this section must be brought within six years of the violation.

Retaliation 

A freelancer can sue for retaliation and, if successful, will be awarded damages equal to the value of the underlying contract for each violation, i.e. each act of retaliation, along with attorneys’ fees.

Lawsuits for violation of this section must be brought within six years of the violation.

Pattern or Practice Lawsuits

If the jury or judge who tries the case finds that the hiring party engaged in a pattern or practice of violating this law, they can impose a penalty of up to $25,000, which is payable to the city’s general fund, along with injunctive relief.

New York City’s lawyer, the Corporation Counsel, may also sue for pattern or practice violations of this law.

No Waiver of Rights

The law expressly prohibits any contractual waiver of rights under this law.  In other words, if a hiring party puts in a contract that the freelancer gives up their rights under this law, that release of rights is not valid.

The FIFA does not replace or diminish a freelancer’s rights under any other law.  In addition, failure to comply with this law will not give a hiring party a defense to enforcement of the underlying contract or in any way impair the underlying contract.

Conclusion

The Freelance Isn’t Free Act is a big step forward in protecting freelance workers from hiring parties who fail to pay and gamble that it won’t be worth it for the freelancer to sue. Now, hiring parties who violate freelancers’ rights can be at risk for significant damages, attorneys’ fees and penalties.  Freelancers should be diligent about requesting a written contract before they start the work and can cite this law in support, knowing that they are protected from retaliation.  Employers should promptly get up to speed to make sure that they are not at risk for violations.