How Will the NYC Freelance Law Impact Your Small Business?

Freelancers in New York City just became the beneficiaries of a new law intended to protect their rights.

The “Freelance Isn’t Free Act (FIFA)” was passed by the city council in October and goes into effect in May 2017.

NYC Freelance Law Details

The law requires written contracts for freelance projects worth $800 or more over six months, allows freelancers to file complaints with the Department of Labor Standards against non- and late-paying clients and institutes penalties against those found guilty of nonpayment.

(By definition of the statute, a freelancer is an independent contractor or any other worker not in a traditional employee-employer relationship.)

A blog post, written by the Freelancers Union, an advocacy organization for independent workers, in response to the law’s passage, calls this a “historic moment,” “landmark victory” and a “testament” to what can happen when people come together around a common cause. (Freelancers Union members had been collectively campaigning for a year.)

“Today, 38% of workers in NYC freelance and it’s about time our labor laws were updated to protect freelancers,” the post said. “With 55 million Americans freelancing across the country, we hope to replicate this legislation in other freelance-friendly cities across the nation.”

FIFA is the first law of its kind in that country, but it’s reasonable to think other municipalities will follow suit, especially if pressured by labor advocacy groups like the Freelancers Union.

What This Means for Small Businesses In and Out of New York City

Carol Roth, a business advisor, writing for Entrepreneur, said that small business owners should consult with an attorney to review their existing contracts and practices concerning hiring independent contractors.

“It will also behoove any employer to visit the newly created New York City Office of Labor Standards before the law goes into effect,” she said. “The new law provides education resources with sample contracts.”

Roth suggested that businesses outside of New York City also review their hiring practices and adopt some of the new law’s provisions, to be prepared in the event their city or state passes similar legislation.

Advice for Freelancers

Roth advised freelancers based in New York City to acquaint themselves with the rights afforded by the law and, as they sign contracts, ensure the business owner is equally well aware of its stipulations.

She also stated that while it’s a good rule to put all collaborations into writing, laws can often have “unintended consequences.”

“[M]ake sure to keep an eye on this one as you proceed with running your business or freelance practice,” she said.

New York City Photo via Shutterstock

This article, "How Will the NYC Freelance Law Impact Your Small Business?" was first published on Small Business Trends