For those independent contractors and gig economy aficionados with New York City-based clients, the “Freelance Isn’t Free” Act was a godsend.
In May, the Act was passed in New York City thanks to a council member in NYC’s borough of Brooklyn. In a nutshell, the Act states that if a freelancer is contracted by a company for compensated work in excess of $800, then they must be paid on or before either the proposed payment date in the contract or within 30 days of the completed work. It doesn’t stop there. The contracting company can’t retaliate against the freelancer for exercising their rights under the Act, and complaints are valid for two years from the date of the alleged violation of the Act. The punishment? A series of fines up to a maximum of $25,000 in civil penalties for businesses that regularly violate the Act. The New York City Department of Consumer Affairs in July adopted regulations to implement the Act.
In recent years, the gig economy has become a burgeoning employment market for those who are willing to trade off traditional full-time jobs for seek a less structured work life as a freelancer. Last year, nearly 53 million Americans sustained a viable income through the gig economy; roughly 34% of the working population in this country. That number is projected to jump to 43% by 2020.
The gig economy fell under the microscope in recent years, following the numerous Uber lawsuits regarding employee misclassification. With factors like Affordable Care Act mandates and anti-discrimination laws that can encompass workers with mobile offices, the rules are tightening up when it comes to how independent contractors are treated. It’s more than just choosing the W-9 over the W-2, especially when the scope of work for a freelancer may be in line with that of a salaried employee. From this viewpoint, the Freelance Isn’t Free Act, can make sense, especially when in the past employers could conveniently point to contracts for everything except when it came to timely payment. It should be a no brainer to pay your freelancers on time. However, that wasn’t always the case. And now rules are coming into play to address that issue, and in recognition of the emerging importance of a healthy gig economy to the financial health of communities. Rest assured that other metropolitan cities and states with burgeoning gig economies are watching what happens in the Big Apple.