Legislators Give Boost to Status of Freelancers
Hiked penalties and new enforcement mechanisms for clients who don't pay their independent contractors on time are now enshrined in a bill passed in late October by the New York City Council. Mayor Bill de Blasio signed it in November. Self-employed workers who file 1099 tax forms, from writers to domestic workers, would fall under the city law. The bill requires employers to provide signed contracts to freelancers they hire for all but the smallest jobs.
More than 1 million independent contractors live in New York City. Late payment or nonpayment is common. The new law could bring more options and protections to freelancers stiffed by deadbeat employers. Any freelance work valued at more than $800 will require a written contract that spells out payment terms and deadlines. Employers are required to pay no later than 30 days after the contract deadline. Employers who don't pay up on time could be hit with fines, which may include attorney fees and double damages.
This new law may create a ripple effect to other localities: There is a perceived need for an updated social safety net for the common problems shared across a diverse and growing spectrum of workers nationally. Freelancers are becoming more the norm in today's workforce. The challenges facing these workers are real.
Under the approved bill, nonpaying employers can dispute whether work was completed, when it was completed and whether the work was satisfactory, according to DCA Deputy Commissioner Amit Bagga.
He suggested that his agency could create an online hub that would provide model contracts and examples of plain language of an employer's rights and responsibilities, listing legal resources to address labor disputes.
City Councilmember Brad Lander, who introduced the bill, believes that DCA involvement is crucial. It has been issuing licenses and mediating complaints against home improvement contractors: 70 percent of the cases reported to DCA are resolved without court proceedings. Most employers provide payment after receiving a warning letter from DCA, he says.
The Freelancers Union, a 20-year-old organization with 280,000 members, found in a survey that 70 percent of contractors have difficulty getting paid and the average loss per freelancer is $6,000. For many, late payments are often followed by settlement offers of smaller payments.
The bill's list of endorsers included many of the city's co-working spaces and tech schools. Nonpayment is as much of a problem for day laborers who get picked up for construction jobs and often aren't paid what they're promised. The National Domestic Workers Alliance counts as members housekeepers and nannies who sometimes work on contract and don't have the resources to sue when employers don't hold up their end of the deal.
For all kinds of employers, the bill's backers hope the new law will prompt the adoption of systems that can handle payments more smoothly. Nonpayment isn't a problem, for example, with on-demand services like Uber and Taskrabbit, where contractors are paid through an app. The contracting platforms LiquidTalent, Prompt.ly and Work Market — which create an easy way for companies to manage their freelancers — have also supported the legislation.
Of course, this is just one law in one city. But it could be a harbinger of things to come.