New Law Protects Independent Contractors From Delinquent Clients
Today the New York City Council passed a bill that gives a new weapon to freelancers who have been stiffed by their clients. The new legislation (passed unanimously by the Council, and now awaiting the Mayor's signature) imposes civil penalties for those who don't promptly pay, or who treat their freelancers unfairly.
Among the bill's provisions:
A written contract is required for contract jobs of $800 or more, setting forth the parameters of the job and the time for payment. An employer who fails to provide a written contract can be held liable for statutory damages and the value of the contract. Notably, failure to reduce the agreement to writing expressly does not void the contract or render it unenforceable.
It is an unlawful payment practice (i) to fail to pay within the agreed period, or within 30 days, if the date for payment is not specified by agreement; or (ii) to demand that a contractor accept less than full compensation for the work provided.
An anti-retaliation provision makes it a violation to "threaten, intimidate, discipline, harass, deny a work opportunity to or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelancer worker from, exercising or attempting to exercise any right guaranteed under this chapter, or from obtaining future work opportunity because the freelance worker has done so."
The bill contains a number of additional sections, including provisions for administrative oversight, and to give the City a right to proceed against habitual offenders. Perhaps most importantly, however a plaintiff may obtain double damages and an award of attorneys fees for violations of the law.
The effect of the double damages and attorneys fee provisions is to alter the balance of power between the freelancer and the non-paying client. On smaller contracts -- the kind that freelancers often live off of -- the cost and inconvenience of asserting rights has often exceeded the value of the disputed amount to be recovered. As a result, freelancers have been discouraged from seeking any recourse. The combined effect of the attorney's fees, double damages, and anti-retaliation provisions, however, is to make it more attractive for freelancers to assert themselves, with the assistance of an attorney to both minimize the inconvenience, and to assure fair play.
One note on the limits to this new legislation: it only protects individual "natural persons" and organizations "composed of no more than one natural person." Small businesses of more than one person relying on micro-contracts are still vulnerable to those who would cheat them through non-payment, cramming down invoices, or retaliation in seeking prompt payment. Perhaps if this legislation is successful, the Council will expand its protections, in recognition of the economic hardship to all small businesses that can be imposed by clients willfully refusing to pay for contracted work.