LEGAL UPDATES - FREELANCE ISN'T FREE ACT IN NEW YORK

Overview of the Freelance Isn't Free Act in New York

The Freelance Isn't Free Act (FIFA) is a groundbreaking labor protection law in New York aimed at safeguarding freelance workers from nonpayment, late payments, and other exploitative practices. Originating from advocacy by groups like the Freelancers Union, it addresses the vulnerabilities of independent contractors in a gig economy where delayed or withheld compensation is common. The law ensures freelancers receive written contracts, timely payments, and protections against retaliation, marking a significant shift toward equitable treatment for non-traditional workers.

History and Evolution

The initiative began in New York City with Local Law 140 of 2016, which took effect on May 15, 2017. As the first such law in the U.S., it was pioneered by the Freelancers Union to combat widespread nonpayment issues, serving as a model for similar protections nationwide. Building on this, New York State expanded the framework statewide. Governor Kathy Hochul signed the state version into law on November 22, 2023, with amendments shifting enforcement from the Department of Labor to the Attorney General under Article 44-A of the General Business Law. The state law became effective on August 28, 2024, applying to contracts entered after that date. This evolution reflects growing recognition of freelancers' economic contributions, with the state law mirroring much of the city's but extending coverage beyond urban areas.

Key Provisions

FIFA applies to "freelance workers"—natural persons or single-person entities hired as independent contractors for services valued at $800 or more, either for a single project or aggregated over 120 days. Hiring parties (any person or entity retaining freelancers, excluding governments) must provide a written contract outlining parties' names and addresses, itemized services, compensation value and method, payment due date, and invoice submission deadlines. The Department of Labor offers a model contract to simplify compliance.

Payment must occur no later than 30 days after services are completed, unless the contract specifies otherwise. The law prohibits hiring parties from requiring freelancers to accept reduced compensation for timely payment or waive rights under the Act. Additionally, it bans discrimination, harassment, and retaliation against freelancers exercising their rights. Hiring parties must retain contract copies and payment records for six years.

Exclusions include sales representatives, licensed attorneys, medical professionals, and construction contractors, narrowing the scope compared to the NYC version.

Enforcement and Penalties

Violations can be reported to the New York State Attorney General or pursued in court within specified timelines: two years for contract issues, six years for payment disputes. Remedies include statutory damages ($250 for lacking a contract), double damages for late or nonpayment, injunctive relief, and attorney's fees. Pattern-or-practice violations may incur civil penalties up to $25,000. A notable enforcement example is the recent settlement by NYC's Department of Consumer and Worker Protection with BuzzFeed for late payments to freelancers between 2019 and 2024, highlighting the law's teeth.

Impact and Broader Implications

Since its NYC inception, FIFA has empowered freelancers, with thousands filing claims and recovering millions in owed wages. The statewide expansion, effective amid a post-pandemic surge in gig work, could influence other jurisdictions. Critics argue it adds administrative burdens for small businesses, but proponents emphasize it levels the playing field, reducing exploitation in industries like media, tech, and creative services. For employers, compliance involves updating contracts and payment processes; for freelancers, it provides robust tools to enforce fair dealings. Overall, the Act underscores New York's commitment to worker rights in an evolving economy.