(Updated from 04/24/2017)
On 05/15/17, the Freelance Isn’t Free Act (“FIFA”) took effect in New York City. I’m not a fan. I agree with Freelancers Union CEO Sara Horowitz that the gig economy is not going away. It has been here for decades, and many existing laws already address it quite well:
- Black Car Operators Injury Compensation Fund
- Construction Industry Fair Play Act
- Contract Law
- Domestic Workers Bill of Rights
- Fair Labor Standards Act
- General Business Law
- Internal Revenue Code
- Internal Revenue Service’s Consistency and Rational Basis Tests
- Other Labor and Employment Laws
- Wage Theft Prevention Act
- Workers Compensation Law
Yes. I want to see freelancers, independent contractors, and other self-employed people to get paid for their work. I am self-employed. (I am exempt from FIFA protections. So are doctors. But that is not why I don’t like the law.)
Like many freelancers, I spent far too much time begging a large, well-funded client for payment. That client gave me so much business that I couldn’t focus far beyond its work. Yet I wasn’t getting paid in a timely manner. I had to break my rule against credit card debt–often to cover travel expenses related to this client’s work. I occasionally had to borrow money for groceries. One year, I had to tell my loved ones there was no money for holiday gifts. It was awful.
But the FIFA is misguided. I don’t like it because:
The FIFA requires clients to draft contracts detailing the work to be done.
When clients come to me, I don’t expect them to tell me:
- what needs to be done
- how it to do it
- how long it will take
- how much it should cost
- how they will pay me
- when payment is due
They don’t typically have sufficient knowledge about the legal process as it applies to their cases. We discuss their circumstances. Then, I develop the strategy and draft the agreement.
Likewise, when I have hired website designers, search engine optimization experts, editors for my book, writers for my blog, bookkeepers, and other experts, they used their superior expertise to guide me through the terms of our agreement. They drafted the contracts. I reviewed them for accuracy and signed them, indicating my consent.
The FIFA requires the opposite. I am now required to know what my vendors require to perform their services. This makes me reluctant to hire outside workers. I often do the work myself.
The FIFA seems to create a new category of worker “misclassified with consent”.
True freelancers are typically experts in their respective fields. They are not new graduates who are having a difficult time finding jobs and doing side work to get by. They are not former employees who have been contracted to do the same work they used to do for their former employers.
There’s a good chance that the freelancers the FIFA intends to protect are misclassified workers who don’t mind being misclassified, as long as they are getting paid.
Rather than address the huge worker misclassification issues we have in NYC, the FIFA lures freelancers and their clients into thinking they can circumvent other laws by consent. This is grossly misleading, as the DOL, WCB, and other agencies are highly unlikely to waive their penalties when the misclassifications are eventually discovered.
The FIFA effectively redefines self-employment and places employer-like burdens on freelancers’ clients.
Under the FIFA, clients are required to pay freelancers in full on or before the date the contract requires payment. There is no provision for resolving performance issues, which is common in services contracts.
Instead, the FIFA appears to require payment for services, even if the work is unsatisfactory. This is far too similar to employment, where your employees get paid for the hours worked, even if they are underperforming.
It gets worse.
You’re required to know what the work will require, and you must draft the contract, despite your lack of expertise in the subject area. But if the work product isn’t what you wanted, you still have to pay what you agreed to under the contract, unless you can get the freelancer (who now has greater rights than you) to agree to corrections for the same costs.
Be careful how you handle any disputes because the FIFA also has an anti-retaliation provision. It just might not be worth it to hire a freelancer in NYC anymore, because you–the client–are presumed to be an abusive employer.
What a lot of freelancers don’t realize is that they are at risk of FIFA penalties when they subcontract work to other freelancers. This could get ugly fast.
This post is a general overview of the FIFA. This post does not contain legal advice. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney. Don’t rely solely on what you read on the Internet.
Concerned you’re at risk?
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, the U.S. Chamber of Commerce, Enterprising Women Magazine, and more.