(Updated from 10/05/2018)
Freelancing has been common in many industries for as long as most of us can remember. I am effectively a freelance arbitrator, attorney, coach, mediator, trainer, and more. Over the years, I have worked with freelance website designers and marketers. I have clients, friends, and family members who are freelance editors, photographers, and writers.
Domestic employees and freelancing
Can elderly companions, home health aides, housekeepers, and nannies be freelancers, too? Can they be paid as independent contractors and issued 1099-MISC forms, or is the “client” required to provide workers compensation (“WC”) and disability (“DB”) insurance? Is the client responsible for income tax withholdings, overtime pay, and payroll taxes? Can freelancers be putting their clients at risk of penalties and lawsuits? The answer to all these questions is maybe.
The gig economy and freelancing
Technology and the “gig economy” have made the distinctions between employees and independent contractors difficult to identify. No industry is immune.
New York State has been penalizing even “microbusinesses” and “solopreneurs” for misclassifying workers, and the costs can be in the tens of thousands–even when you’ve made an honest mistake and there was no actual harm.
Penalties for misclassification
- A freelancer files a claim under the Freelance Isn’t Free Act (“FIFA”)
- Your independent contractor begins to work beyond the scope of the original project, quits, and files for unemployment insurance (“UI”) benefits, listing you as an employer
- Your outside sales representative is involved in an accident while going to or from a sales meeting
- You register for an employer identification number and hire an employee
- You incorporate your business or form a limited liability company (“LLC”) and run your first payroll, even if you only pay yourself
We encourage you to consult an attorney with experience defending worker misclassification issues before you hire any individual worker who you are paying under their social security number. You are at especially high risk of having individuals deemed your employees.
This page and website contain attorney advertising and a general overview of employment conflicts that might arise when freelancing or hiring freelancers. It is not legal advice. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney experienced with the subject matter. Don’t rely solely on what you read on the Internet. Ever.
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Nance L. Schick, Esq. is an employment attorney, ethno-religious mediator, conflict resolution coach, and diversity trainer based in New York City. She keeps employers out of court and builds their conflict resolution skills so everyone has a better work experience. She is creator of the Third Ear Conflict Resolution process, author of DIY Conflict Resolution, and an award-winning entrepreneur, who has been acknowledged by Super Lawyers (ADR, 2018, 2019 & 2020), the New York Economic Development Corporation/B-Labs, U.S. Chamber of Commerce, and more.