New Rules on NYC Freelance Isn’t Free Act

As shared in our previous blog post, also known as Local Law 140 of 2016, the Freelance Isn’t Free Act enhances and establishes protections for independent contractors by creating and protecting their right to protection from retaliation, full and timely payments, and a written contract.

Final Rules Implementing the Act

The NYC Department of Consumer Affairs has since published final rules implementing the Act. With the final rules taking effect soon, it’s important to understand what’s new.

The related legal blog highlights the following final rules, including:

• The text of the Act states that it applies to “hiring parties,” defined as “any person who retains a freelance worker to provide any service” (with the exception of government entities). The rules expand upon the coverage of the Act to now apply to actions taken by “a hiring party, their actual or apparent agent, or any other person acting directly or indirectly on behalf of a hiring party.”
• The rules place significant limitations on the terms and conditions that may be included in a contract entered into between a freelance worker and a hiring party. Specifically, any such agreement may not include:
  • A prospective waiver or limitation of rights under the Act,
  • A waiver or limitation on the right of the freelance worker to participate in or receive any relief (monetary or otherwise) from a class or collective action lawsuit or proceeding,
  • A waiver of “any other procedural right normally afforded to a part in a civil or administrative action” (such as procedural rights under the federal or state rules of evidence or civil procedure), and
  • Confidentiality provisions that restrict a freelance worker’s ability to disclose the terms of the agreement to the Director of the NYC Office of Labor Standards.
• Under the Act, covered entities may not retaliate against freelance workers for exercising or attempting to exercise their rights under the law. The rules further define what constitutes an adverse action in violation of the anti-retaliation provisions of the Act, namely: “any action… that would constitute a threat, intimidation, discipline, harassment, denial of a work opportunity, or discrimination, or any other act that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right” guaranteed under the Act.
• The rules further state that retaliation “may be established when a freelance worker shows that the exercise or attempt to exercise any right under the [Act] was a motivating factor for an adverse action, even if other factors also motivated the adverse action.” Thus, the final rules establish a motivating factor causation standard for claims of retaliation, as opposed to a “but-for” standard where retaliation would need to be the sole factor underlying the reason for the adverse action taken.
• The rules clarify that freelance workers are entitled to the protections of the Act “regardless of immigration status” and that prohibited retaliation includes “any adverse action relating to perceived immigration status or work authorization.”
• For purposes of defining the value of a contract between a freelance worker and a hiring party (both to establish coverage under the Act and to calculate statutory damages for violations of the Act), the rules state that such value includes “the reasonable value of all services performed and/or anticipated, and the reasonable costs for supplies and other expenses reasonably incurred by the freelance worker.”

We will continue to share updates to the act. In the meantime, any client doing business in NYC, or utilizing the services of a contractor who lives in NYC, should consult with legal counsel to ensure they are operating within the confines of the new law.