Author: Kara Hertzog is the President at Innovative Employee Solutions
Key Takeaways:
- The Freelance Isn’t Free Act mandates written contracts for freelance work exceeding $800 and ensures freelancers are paid within 30 days to address longstanding issues.
- Noncompliance with the law can lead to significant penalties, making it critical for businesses to understand and adhere to these new requirements.
- To comply, businesses must audit processes, update contract templates, train staff, and leverage technology for efficient contract management and timely payments.
- Partnering with experts like IES can help businesses navigate these legal changes, streamline compliance, and maintain strong relationships with freelance talent.
The Freelance Isn’t Free Act, effective August 28, 2024, represents a significant milestone in protecting the rights of freelance workers in New York. Freelancers are any individual hired or retained as an independent contractor by a hiring party to provide services for compensation and are commonly referred to as contractors, subcontractors, contingent workers, gig workers, consultants, self-employed, etc.
With new legal requirements mandating contracts for freelance projects exceeding $800 and ensuring timely payments, the law directly addresses longstanding challenges faced by freelancers. However, this legislation isn’t just about safeguarding freelancers—it also holds critical implications for businesses.
Understanding and complying with this New York City freelance law isn’t optional. If your company relies on freelance talent in New York, staying informed is essential to maintain strong relationships, uphold legal obligations, and avoid costly penalties.
Understanding New Legal Requirements for Freelance Work in New York
Freelancers are an essential part of today’s workforce, yet they’ve historically faced challenges such as inconsistent pay and lack of legal protections. The Freelance Isn’t Free Act acknowledges these issues by establishing clear rules to assure payment security and legal recourse against delayed or unpaid invoices for freelance workers engaged in New York state. This clarity empowers freelancers to focus on their work without worrying about payment uncertainties.
For businesses, understanding this law is critical to maintaining a compliant and respectful working relationship with freelance talent. Ignoring or misunderstanding these legal obligations can lead to reputational harm, strained relationships, and financial penalties. On the other hand, embracing the New York freelance law builds trust and demonstrates your company’s commitment to fair business practices. It also sets clear guidelines that reduce misunderstandings and conflicts. When contracts explicitly outline terms like payment schedules and deliverables, both parties have a shared understanding, minimizing disputes. These structured agreements build trust, leading to more stable and productive relationships with freelance talent.
Adapting to this legal framework doesn’t just benefit freelancers; it also positions your business as an ethical and reliable partner, which is increasingly vital in a competitive and values-driven marketplace. Recognizing and respecting these protections ensures smoother collaborations and long-term success in working with freelancers.
Key Impacts on Businesses
The Freelance Isn’t Free Act introduces substantial changes for businesses that engage freelance talent in New York, especially those that depend heavily on contractors for flexibility and expertise. One of the law’s cornerstone provisions mandates written contracts for all freelance work exceeding $800. These contracts must outline the scope of work, payment terms, and other critical details to maintain transparency and accountability.
Another crucial requirement is the timely payment clause, which obligates businesses to pay freelancers within 30 days of completing their work unless otherwise specified in the contract. Failure to meet this deadline can result in legal action, including double damages, attorney’s fees, and fines. For businesses operating in fast-paced industries, delays in adapting to these requirements could lead to significant operational and financial risks.
To comply, you may need to adjust workflows, update budget forecasting to account for timely payments, and train staff on new protocols. These changes, while initially resource-intensive, are necessary to avoid penalties and safeguard relationships with freelance talent. Companies that proactively embrace these requirements can minimize disruptions and align their practices with evolving legal and ethical standards.
Compliance Challenges and Overcoming Them
Navigating the Freelance Isn’t Free Act can be complex, especially for businesses with high freelance engagement or intricate workflows. One of the primary challenges lies in making sure all contracts meet the law’s requirements. For many companies, this involves revising existing templates or creating new ones that include clear terms regarding payment, scope of work, and deadlines.
Timely payment compliance is another area that demands attention. Businesses accustomed to more flexible payment timelines may find it challenging to adapt to the law’s 30-day requirement. Delays or missteps in processing payments could result in costly penalties and legal disputes.
To remain compliant when engaging freelancers in New York, follow these steps:
- Audit current processes: Review how freelance contracts and payments are managed.
- Update contract templates: Check that contracts are compliant with the law’s stipulations.
- Train relevant staff: Equip teams with the knowledge to manage contracts and payments effectively.
- Leverage technology: Use tools to automate invoicing, tracking, and timely payments.
By proactively addressing these challenges, your organization can meet compliance requirements while also enhancing efficiency and building stronger partnerships with freelance talent.
How IES Can Help Businesses Navigate the Freelance Isn’t Free Act
For businesses grappling with the intricacies of the Freelance Isn’t Free Act, partnering with experts to compliantly engage any workforce, including freelancers, can make all the difference. Innovative Employee Solutions (IES) specializes in navigating complex employment laws and compliance requirements with Employer of Record and Agent of Record solutions.
IES helps businesses adapt to new legal landscapes by providing tailored solutions that integrate smoothly into existing processes. From updating contract templates to streamlining payment systems, IES offers the tools and expertise needed to meet the law’s requirements. Additionally, IES’s comprehensive contingent workforce management services ensure that businesses remain compliant while maintaining focus on their core operations.
As labor laws continue to evolve, particularly with the possibility of new regulations under the new presidential administration, staying ahead of compliance challenges is more critical than ever. By partnering with IES, companies can confidently navigate the challenges introduced by the Freelance Isn’t Free Act, safeguard their relationships with freelance talent, and minimize risks of noncompliance. Reach out to IES today to learn how we can help your business thrive under New York’s evolving legal framework.
Kara Hertzog is president of Innovative Employee Solutions (IES), a leading provider of remote and contingent workforce solutions specializing in U.S. and global Employer of Record, Agent of Record, and Independent Contractor compliance services in 150+ countries. Founded in 1974, IES is a woman-owned business, certified by the WBENC, and partners with companies to provide compliant employment solutions that empower people’s lives.
