New York’s Freelance Isn’t Free Act (FIFA) took effect on August 28, 2024. FIFA significantly impacts how employers engage with freelance workers, also known as independent contractors, within the state by requiring written contracts, mandating when payment for services will be required, and establishing recordkeeping requirements.
Employers hiring freelancers for services valued at $800 or more within a 120-day period must comply with the Act’s new requirements, including:
- Written Contracts. FIFA mandates written contracts for all covered freelance engagements. These contracts must specify details including both parties’ names and addresses, the scope of work, payment terms, and the freelancer’s independent contractor status, with disclaimers regarding benefits and workers’ compensation.
- Payment for Services. Payment must be made to freelancers on or before the date due as per the contract, or no later than 30 days after completing the services.
- Recordkeeping Requirements. Employers must maintain records related to freelance engagements for at least six years. These records should include contracts, payment documentation, and communication logs.
Misclassifying employees as freelancers to avoid benefits and other obligations becomes riskier. FIFA empowers the New York Department of Labor (DOL) to investigate potential misclassification and impose penalties for violations.
Notably, the DOL has provided a model contract for freelancers and hiring parties to use with terms that comply with this new law. Contracts entered before August 28, 2024, are not directly affected.
Next Steps
It is recommended that employers review the model contract against any that they currently have in use to ensure that any contracts entered into on or after August 28 include all the applicable details under the law. Employers should make updates as needed and consider utilizing the state’s version of the contract to ensure full compliance.
Additionally, employers should ensure that workers are properly classified as either employees or independent contractors under federal and/or state laws; implement consistent and timely payment processes to comply with the Act’s pay frequency mandates; and consult with an employment attorney to ensure compliance with FIFA and navigate any potential challenges.
