Freelancers to Enjoy Fee Payment Protections in New York City, But Bill Passed by City Council Has Major Defects 

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From the Independent Contractor Misclassification and Compliance Legal Blog, Richard Reibstein, Lisa Petkun and Andrew Rudolph discuss the key features and drawbacks of a recent bill passed by the New York City Council to protect freelancers.  They write:

 The Mayor should send it back to the City Council to cure its flaws, which would otherwise lead to adverse consequences to both independent contractors and those companies to whom they provide services.

The Main Features of the Bill and Its Principal Defects

Who is covered?

The Freelance Isn’t Free Act defines a “freelance worker” as “any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.” See Section 20-927 of the Administrative Code of the City of New York.

While some independent contractors hold themselves out as individuals, many individuals operating as limited liability companies (LLCs) or under trade names do not disclose that they are actually only single-individual operations. Without a requirement that the freelancer disclose that he/she is a one-person operation, many companies that retain the services of such individual freelancers operating as LLCs or under trade names may have no idea they are or may be covered by this bill, should it become law. The bill should have required that an individual is only a “freelance worker” under this law if he/she makes this disclosure.

Another defect is that the bill does not make clear if a freelance worker who has one or more employees or helpers, or uses subcontractors, is considered an “organization of no more than one natural person.”

There is no language in the bill as to whether it covers freelance workers who reside in New York City but provide or deliver services to a service recipient outside the City; whether it covers work performed in New York City by a contractor using a business or mailing address outside of the City; or if it covers contracts where the only connection to the City is that the services are used or deployed in New York City in whole or in part.

What must the contract provide?

The bill covers any contract between freelance workers and a non-governmental “hiring party” that has a value of $800 or more, by itself or when aggregated with all contracts between the parties over the prior 120 days. The bill requires the parties’ contract to be “reduced to writing” and the “written contract” to include:

  • the parties’ names and mailing addresses,
  • an itemization of services to be provided,
  • the “value of services to be provided,”
  • the rate and method of compensation, and
  • the date when the “hiring party” must pay the contracted compensation or the “mechanism by which such date will be determined.”

Read the full story at Freelancers to Enjoy Fee Payment Protections in New York City, But Bill Passed by City Council Has Major Defects | Independent Contractor Misclassification and Compliance Legal Blog

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