Introduction to the Freelance Isn’t Free Act (FIFA)
Commencing on August 28, 2024, the Freelance Isn’t Free Act (“FIFA”) will go into effect in New York State and will protect all freelancers/independent contractors (who are either an individual or an organization comprised of a single individual) hired by a “hiring party” on or after August 28, 2024 for services in exchange for an amount of $800 or more (hereinafter, a “freelancer”). FIFA mirrors protections already enacted in New York City. The FIFA will not apply retroactively to arrangements entered into prior to August 28, 2024. The FIFA’s definition of a “hiring party” is any person/organization (regardless of size) that retains a freelance worker to provide any service. The FIFA likely covers all hiring parties, regardless of their location or state of organization, that contracts with freelancers in New York State, as the FIFA is silent on jurisdictional requirements of the hiring party.
Requirements for Hiring Parties Under FIFA
Under the FIFA, a hiring party must (i) memorialize freelancer agreements in writing (which need to contain certain provisions, including, without limitation, an itemization of the freelancer’s services, the agreed-upon value of the freelancer’s services, the rate of pay and the payment date), (ii) unless otherwise specified in the agreement, pay freelancers no later than thirty (30) days after the completion of the freelancer’s services, (iii) maintain the freelancer’s contracts and records for a minimum of six (6) years, and (iv) not engage in discrimination against, harassment of or retaliation against freelancers in connection with exercising their rights under the FIFA. Attorneys, licensed medical professionals, sales representatives (as defined by law) and construction contractors (as defined under the FIFA) are explicitly exempted as covered freelancers under the FIFA.
Penalties and Remedies for Violations
The FIFA permits aggrieved freelancers to collect (i) recovery of double damages (i.e., 200% of the underpayment), injunctive relief, attorneys’ fees and costs, and other remedies as may be appropriate, for failing to make payment to the freelancer by the agreed-upon date in the written contract or within thirty (30) days of completing the agreed-upon services; (ii) $250 in statutory damages for failing to procure a written freelance agreement; and (iii) statutory damages equal to the contract price for violating the FIFA.
Enforcement and Civil Penalties
The New York State attorney general is empowered to assess civil penalties in connection with purported violations by the hiring party in an amount not to exceed $1,000 for a first violation, $2,000 for a second violation, and $3,000 for a third or subsequent violation. The FIFA also allows for a civil penalty in an amount not to exceed $25,000 for a finding that the hiring party has “engaged in a pattern or practice” of violating the FIFA, to be paid to the “general fund.”
Stay Compliant with New Freelance Regulations—Partner with Kona HR Today!
Are you ready for the upcoming changes to New York State’s freelance regulations? At Kona HR, we help businesses navigate the complexities of compliance. Contact us today to ensure your company is prepared for the Freelance Isn’t Free Act and avoid costly penalties. Let’s work together to protect your business and maintain a positive working relationship with your freelancers.
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