NEW YORK STATE TO REQUIRE WRITTEN AGREEMENTS FOR INDEPENDENT CONTRACTORS

The "Freelance Isn't Free Act" —which will become effective on May 20, 2024—adds a new section 191-d to the New York State Labor Law. The act requires businesses in New York State to enter into a written agreement with any freelancer (independent contractor) who provides services with a value of $800 or more, or services that, when combined with prior agreements between the parties in the preceding 120 days, have an aggregate value of $800 or more. 

Specifically, the written agreement must include…

• The name and mailing address of the hiring party and the freelancer; 

• An itemization of all services to be provided; 

• The rate and method of compensation; 

• The date on which the freelancer must be paid or the mechanism by which the payment date will be determined; and

• The date by which the freelancer must submit a list of services rendered (e.g., invoices) in order to meet any internal processing deadlines for the purposes of compensation being timely rendered by the agreed-upon payment date. 

Scope of Coverage:

The Act does not apply to services provided by:

• any sales representative as defined in section 191-a of the New York Labor Law;

• Attorneys;

• licensed medical professionals; and

• construction contactors (as defined in the Act). 

Payment Enforcement: The Department of Labor will issue rules governing the law and will make "model" contracts available on its website. 

Recordkeeping Requirement: The hiring party must provide a copy of the written agreement to the freelancer and must keep a copy of the agreement for six years. 

Practical Advice: New York State businesses should review their relationships with independent contractors to ensure they have entered into written agreements by the May 20, 2024, effective date of the Act. The agreements should identify the services to be provided and any specific conditions that must be met (including, for example, the freelancer's provision of detailed invoices) in order for payment to be made to the freelancer. Even if a current freelancer provides services worth less than $800, the business should look at other services provided by the same freelancer in the prior 120 days to determine whether, in the aggregate, the freelancer has provided services worth $800 or more. 

Finally, businesses should train employees with authority to enter into freelance agreements on the requirements of the Act in advance of the May 20, 2024, effective date. 

This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship. 

For more information on this and other topics, please contact Kevin via any of the channels listed below:

📧 kevin@kmckernan.com  | 📞 718-317-5007