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New York’s Freelance Isn’t Free Act: A Game Changer for Employers 

New York’s recently passed the Freelance Isn’t Free Act (FIFA); the law takes effect on May 20, 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 will provide model contracts on its website for freelancers and hiring parties to use with terms that comply with this new law. However, the timeframe in which these will be made available is currently unclear. 

Next Steps 

While the Act takes effect in May, contracts entered before that date are not directly affected. However, it is recommended to review existing practices and consider bringing them into compliance with FIFA to avoid future issues including: 

  • Ensuring that workers are properly classified as either employees or independent contractors under federal and/or state laws. 
  • Developing standardized contracts for freelance engagements or reviewing and updating contract templates, ensuring they meet all FIFA requirements. 
  • Implementing consistent and timely payment processes to comply with the Act’s pay frequency mandates. 
  • Consulting an employment attorney to ensure compliance with FIFA and navigate any potential challenges. 

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.