The Freelance Worker Protection Act (FWPA) will take effect on January 1, 2025, significantly impacting how employers engage with freelance workers (independent contractors) within the state. The FWPA mandates written contracts, specifies payment timelines, and establishes recordkeeping requirements.
The FWPA applies to nearly all private employers, with exceptions for individuals hiring services for personal use by themselves, family members, or homesteads.
Employers engaging freelancers for “professional services” (as defined by Section 2778 of the Labor Code) valued at $250 or more within a 120-day period must comply with the following requirements under the Act:
- Written Contracts: FWPA requires a written contract between freelance workers and hiring parties, which must include:
- The names and mailing addresses of both parties,
- An itemized list of services, including their value and method of compensation,
- A payment due date or a mechanism for determining it, and
- A deadline for the freelancer to submit an invoice or service list to facilitate timely payment.
Hiring parties must provide a copy of the contract to the independent contractor either in physical or electronic form.
- Payment for Services: Freelancers must be paid by the due date specified in the contract or, if no date is provided, within 30 days of completion.
- Recordkeeping Requirements: Hiring parties must retain copies of contracts and agreements for a minimum of four years.
- Non-Discrimination and Non-Retaliation: Hiring parties cannot discriminate against or retaliate against freelance workers for opposing practices that violate the FWPA, participating in related proceedings, or asserting their rights under the Act.
The Act also permits civil action for non-compliance, which may include recovery of attorney’s fees and costs, injunctive relief, and other remedies as deemed appropriate by the court, in addition to a $1,000 penalty.
Next Steps
Although the FWPA becomes effective in January, contracts entered into before that date are not directly impacted. Employers should consider the following actions to align with FWPA requirements and minimize potential issues:
- Ensuring proper classification of workers as either employees or independent contractors under federal and state laws,
- Developing legally reviewed standardized contracts for freelance engagements or updating contract templates to meet FWPA specifications,
- Implementing consistent, timely payment processes to adhere to the Act’s payment timelines,
- Consulting with an employment attorney to ensure compliance with FWPA and address any potential challenges.
HR Works will continue monitoring developments related to the FWPA and will share updates as they become available.
