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Freelancers May Gain New Protections In New York City

Freelance workers in the burgeoning gig economy would gain new pay protections under legislation passed by the New York City Council this past week.

If signed by Mayor Bill de Blasio, the legislation would be the first of its kind in the nation to protect independent freelancers and contract workers from being stiffed by employers, according to Brooklyn Councilman Brad Lander, who sponsored the measure.

Unlike other newly approved laws intended to help workers – such as a state minimum wage hike to $15 per hour and a city law mandating stable hours for food service workers – this legislation has not drawn criticism from employers. In fact, no one testified against it during the City Council’s hearing on the legislation.

De Blasio is expected to sign the legislation into law, although no formal announcement about the legislation has been made.

“As our economy continues to be shaped by 21st century technology and creative thinking, this administration, which worked closely with the City Council on this bill, supports laws that protect all New York workers,” Rosemary Boeglin, a City Hall spokeswoman, told AMI Newswire in an email. “Every person must be paid on time and treated fairly, whether their work is freelance or not.”

Freelance workers would be entitled to a written contract for work worth $800 or more under the legislation, and the employer would have to pay the worker no later than 30 days after completion of the assignment.

Failure to fulfill the contract in a timely manner would put the employer on the hook for damages, such as any outstanding payments plus attorneys’ fees and costs. If a company is found to have engaged in a series of nonpayment violations, it could be subject to a civil penalty up to $25,000.

Some entrepreneurs who are members of the Greater New York City Chamber of Commerce would benefit from the legislation, but only if it is administered and enforced wisely, said the chamber’s president and chief executive officer, Mark Jaffe.

“(Chamber) members most affected by the NYC freelance proposal would be start-ups and entrepreneurs who typically contract their services in support of larger businesses,” Jaffe told AMI.

The legislation should better clarify the responsibilities of all parties in the local gig economy and protect self-employed independent contractors from abuses, he said.

“The bill is designed to protect small businesses and entrepreneurs,” Jaffe said. “It’s not that big of a burden.”

Among the groups that supported the “Freelance Isn’t Free Act” is the Freelancers Union, a national group that promotes the interests of independent workers through education and advocacy. Nearly 10,000 people signed a petition on the organization’s website calling for other cities to follow in New York City’s footsteps.

About 54 million Americans currently work as freelancers, according to a Freelancers Union survey, and 71 percent of those surveyed reported having trouble getting paid at some point. The average nonpayment amount reported among freelancers in 2014 was nearly $6,000, the survey said.

With economists projecting an expansion of the gig economy – in which independent workers contract with employers to perform for short-term assignments – struggles by freelancers to get paid on time tends to hurt the overall economy, the Freelancers Union said in a 2014 report titled “The Costs of Nonpayment.” Nonpayments mean that the local, state and federal governments lose out on collecting income tax, fewer goods and services are purchased locally and some freelancers may become a burden on taxpayers by seeking government assistance, the report said.

If signed into law, the New York City proposal could have far-reaching effects on labor regulations, according to employment law attorneys Lisa Lupion and Jill Rosenberg in an article for the JD Supra website.

Traditionally, workers have been categorized as either hourly employees subject to legal protections, such as workers compensation and overtime pay rules, or independent contractors, who don’t have these legal protections. But the New York City legislation could point the way for the creation of a third category, a hybrid worker class that has some basic legal protections.

“Whether this type of protective legislation will gain momentum and whether this third category of worker will crystallize under the law remains to be seen,” said Lupion and Rosenberg, who advise employers in the city to prepare to update their contracting and payment procedures if the legislation is signed.

It’s uncertain if freelancers in New York City would gain protections under the proposal if they do contract work for employers located outside the city. That would depend on the facts of an individual case and what court is found to have jurisdiction over the case.