Kovel Law Chronicle Vol. 3: What is the New York City Freelance Isn't Free Act and How Can it Help Your Solo-business?
So you decided to go out on your own and be your own boss. Amazing! Me too. I hope business has been booming for you. However, if you are reading about the New York City Freelance Isnâ€
t Free Act here, I can safely assume that you have also managed to secure some clients and at least one of them has given you a difficult time about paying your fee for your work. Not so amazing….
Hereâ€s the bottom line: this happens all the time to solo-entrepreneurs. In fact, in New York City, this situation started to occur at such a high rate that in 2017 the New York City government decided that the protections afforded to solo-entrepreneurs, freelancers and independent contractors needed to be tightened up. Along with a push from an awesome organization called the Freelancers Union, the New York City Freelance Isnâ€t Free Act (also known as Local Law 140) was passed. The precise wording of the act can be found here, but the teeth of the law provides that:
any agreement to perform services in New York City between a solo-entrepreneur and another person (or any type of business) for more than $800 (even if it isnâ€t $800 all at once but totals more than $800 over 120-day period) HAS TO BE IN WRITING;
if the agreement is NOT in writing, then the person or business paying for the services of a solo-entrepreneur is considered the party to have broken the law requiring a written contract;
regardless of whether there is a written contract or not, the services MUST be paid for as agreed within either a specified term in the contract or no more than 30 days; and
enforcing rights under the Freelance Isnâ€t Free Act is a “protected activity,†meaning that if the solo-entrepreneur is retaliated against (by threats, acts of blacklisting, etc.) for using the Act to seek payment, then the business has broken the law AGAIN and the solo-entrepreneur can seek compensation for both/either of the offenses.
These are serious protections for solo-businesses that line up with some of the rights employees of a business are given under other laws and statutes. The penalties for breaking the various aspects of the Freelance Isnâ€t Free Act differ, but suffice it to say that in general the penalties are onerous enough to encourage the parties to resolve their dispute as early as possible.
So what does this mean for your solo-business? Well, for starters, it means that your business should be in the practice of entering into written contracts that protect your rights. Here are some resources, also available in Spanish, to handle straight-forward agreements. However, many businesses that utilize the services of solo-entrepreneurs prefer to use their own agreements. Here you should proceed with caution before signing on the dotted line, as these agreements are often one-sided (and I donâ€t need to tell you who they benefit). Also sometimes service agreements require additional thought and tailoring to meet the needs of the specific scope of work. In these cases, our firm is regularly called upon to review, negotiate and participate in drafting these agreements.
Second, it means that if you get into one of these situations where a client disputes your fee, you should speak to legal counsel about what rights you might have to enforce the terms of the agreement. Obviously there are a lot of other considerations to go over before using the Freelance Isnâ€t Free Act to enforce payment, which should be discussed with savvy legal counsel.
Third, it means that in general you should review this body of law with your legal counsel. If your business is protected by the Freelance Isnâ€t Free Act, you should go to work in New York City knowing that you are ready to handle most issues that may arise with getting paid for your services. And of course Kovel Law is ready to help, as needed. Youâ€re important. Your business is important. Letâ€s get you paid fairly!
