Don’t Stiff That Freelancer! Council to Pass First-Ever 'Gig Economy' Wage Theft Bill
Freelancers Union member Carolina Salas with documents she brought to small-claims court this morning to recover $5,000 in unpaid bills. She has incurred $1,500 in legal fees.
New York City is about to approve first-of-its-kind legislation protecting freelancers and "gig economy" workers against wage theft.
Nearly three-quarters of independent contractors have struggled to collect payment during their career, according to the Freelancers Union. "There are inherent risks in freelancing, but getting paid should not be one of them," said graphic designer Melissa Thornton at a City Hall rally on Thursday morning. She’s trying to collect $2,400 from four clients who either didn’t pay or are trying to get out of paying the full bill.
Until now, stiffed freelancers had to go to small-claims court, which caps judgments at $5,000 and offers a Pyrrhic victory at best. “Often, the cost of hiring that lawyer is more than the claim itself," Councilmember Brad Lander told the Voice. "It makes it hard to go to court." It also makes it easy for companies to avoid paying.
To fix this problem, Lander introduced the Freelance Isn’t Free Act, taking inspiration from existing state-level protections for workers classified as employees. It sets standards for freelance contracts, allows the city to handle complaints of non-payment, and makes it worthwhile for independent contractors to go to court, allowing judges to award them double damages and attorney’s fees.
"It will become really attractive for private lawyers to take this on," said Freelancers Union founder and executive director Sara Horowitz.
Under the bill, freelance work worth at least $800, including multiple smaller projects over a four-month period, must have a written contract. If terms aren’t outlined in the agreement, which could be as simple as an email, payment must be made within thirty days after work is completed. The Office of Labor Policy and Standards, a unit of the Department of Consumer Affairs, must provide model contracts, information on when a worker should be considered an independent contractor or employee, and court resources.
If a worker files a complaint with the city, the Office of Labor Policy and Standards will send a notice to the company accused of skipping its bills. If the company doesn’t respond, it would create a "rebuttable presumption" in court that the company violated its contract. As Lander explains it, that means the burden is not on the freelancer to prove her case; it’s on the hiring party to prove they shouldn’t have to pay — a significant change from the current legal standard.
The city would also be required to report on the complaints it receives from independent contractors. If there’s a company that regularly fails to pay its freelancers, the city could file suit and receive an award, a provision Lander says is modeled on how the city enforces its Human Rights Law.
Lawmakers in other cities, including Seattle and Chicago, are interested in the bill, Lander said, calling it "the first legislation of its kind."
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An earlier version of the bill had a hearing in February, but progress stalled until the summer, Lander says. In August, Liz Vladeck was named commissioner of the Office of Labor and Policy and Standards. The office, created after de Blasio signed a Council bill late last year, also administers city requirements for paid sick leave, transit benefits, and paid caregivers.
“When budget time comes, I think it will be important for us to put some resources there,” Lander said.
“This administration, which worked closely with the City Council on this bill, supports laws that protect all New York workers,” said mayoral spokesperson Rosemary Boeglin. “Every person must be paid on time and treated fairly, whether their work is freelance or not.”
Horowitz, the Freelancers Union founder, expects de Blasio to sign the bill after the Council passes it this afternoon. “I work out at the Y with him,” she said, referring to the Park Slope YMCA in Lander’s district, before contemplating interacting with the mayor if he fails to approve the legislation: “Boy, wouldn’t that be terrible!”
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