Earlier this year, we reported that New York City adopted The Establishing Protections for Freelance Workers Act, also known as the Freelance Isn’t Free Act, (the “Freelance Law”). As explained in our prior blog, under the Freelance Law, a company must: (1) provide a written contract when it contracts with a freelance worker for services worth $800 or more, (2) ensure that all payments to freelance workers are made on a timely basis and paid in full, and (3) prohibit any type of retaliatory or adverse action against freelance workers for exercising the rights granted to them under the Freelance Law.

The New York City Department of Consumer Affairs recently adopted new rules to clarify previously ambiguous requirements under the Freelance Law. The rules also provide additional protections to freelance workers. More specifically, companies are prohibited from including waivers of certain rights in independent contractor agreements with freelance workers providing services in New York City. The following is a summary of the waivers that are prohibited under the rules:

  • The rules prohibit any contract entered into with a freelance worker from including any prospective waiver or limitation of rights under the Freelance Law.
  • The rules state that if a contract includes language that waives or limits a freelance worker’s right to participate in or receive money or any other relief from any class, collective, or representative proceeding, said waiver or limitation is void.
  • The rules provide that any contractual waiver or limitation of a procedural right afforded to a party in a civil or administrative action, which presumably would include arbitration agreements or jury trial waivers, is void.
  • The new rules also prohibit any contractual provision which would limit or waive a freelance workers right to disclose the terms of any independent contractor agreement with the director of the Office of Labor Standards.

In addition, several requirements of the new rules are aimed at strengthening the impact of the anti-retaliation provision of the Freelance Law, including the following:

  • The rules clarify that an “adverse action” under the Freelance Law means any action by a hiring party, their actual or apparent agent, or any other person acting on their behalf, that constitutes a threat, intimidation, discipline, harassment, denial or work opportunity, discrimination, or any other act that penalizes or is reasonably likely to deter a freelancer from exercising any rights under the Freelance Law.
  • The rules specify that the retaliation provision of the Freelance Law applies to adverse actions taken against freelancers who are perceived as having immigrant status or a work authorization.
  • The rules clarify that freelancers may establish the “causal connect” prong of a retaliation claim by circumstantial (proximity) evidence or direct evidence and that a retaliation claim will prevail under the Freelance Law where the exercise or attempted exercise of rights under the Freelance Law is merely a motivating factor for an adverse action.

Finally, the new rules also provide clarification regarding the value of a freelance contract, as follows:

  • The rules define a contract’s “value,” as it pertains to the requirements for what must be included in a freelance contract, as “the reasonable value of all actual or anticipated services, costs for supplies, and any other expenses under the contract.”
  • The rules also define a contract’s “value” as it pertains to the amount which a freelancer may recover for violations of the contract requirements plus one or more other violation under the Act, as “the reasonable value of all services performed and/or anticipated, and reasonable costs for supplies and any other expenses reasonably incurred by the freelance worker.”

The new rules become effective as of July 24, 2017. Any companies who engage or plan to engage freelancers in New York City after July 24, 2017 are advised to review their independent contractor provisions for compliance with the new rules. Many standard provisions, such as arbitration, class action waivers and confidentiality provisions, will need to be reviewed carefully to determine if they should be revised or removed in accordance with the above requirements.