The Independent View: NYC Freelance Isn’t Free Act

The New York City Council voted unanimously on Thursday to give Freelance workers a set of protections against wage theft that are believed to be the first of their kind in the Country.

Known as the Freelance Isn’t Free Act, the measure requires anyone hiring a Freelance worker to agree in writing to a timetable and procedure for payment, and increases the potential awards to Freelancers bringing legal complaints against those who have failed to pay them promptly.

The bill represents one of the earliest policy efforts to grapple directly with the growth in the so-called gig economy, a term that typically refers to the likes of Temporary workers, Contract workers, Independent Contractors and Freelance workers. According to one estimate by the economists Lawrence Katz and Alan Krueger, this group grew to almost 16% of the work force in late 2015 from roughly 10% in early 2005.

“New York is in some ways at the center of the gig economy, of the evolution of the economy to more independent and contingent work,” Brad Lander, the Councilman who introduced the Legislation, said.

But Mr. Lander, Democrat of Brooklyn, added that the existing Employment and Labor laws are “so badly outdated they don’t give the basic protections all workers expect, much less broader support and benefits to all workers in the growing gig economy.”

The Freelancers Union, a group that played a key role in shaping the measure, estimates that there are nearly 4 million Freelancers in the New York metropolitan area. A recent survey by the group found that half of all Freelancers nationwide said they had encountered trouble getting paid in 2014, and that more than 70% struggled to collect payment at some point in their careers.

Sara Horowitz, the Union’s Executive Director, said one of the bill’s most consequential provisions could be the requirement of a written contract for any Freelance relationship for which the compensation is at least $800 over a four-month period. “One of the things that trips people up is they go to sue in Small Claims Court and try to get a judgment and they don’t have a contract,” she said. “You’re left with, ‘We had a conversation. I wrote down these notes.’”

The bill also stipulates that Freelancers who do not receive full payment on time are to receive double damages if they win in Court. So, for example, Freelancers who previously would have been awarded $5,000 in damages from a company that failed to pay them would collect $10,000 if they prevailed. On top of that, the Court would automatically require the company to pay their legal fees and would award an additional amount if there were no contract or an incomplete contract.

“It starts us looking at a new form of enforcement — now it’s worth a lawyer’s time to start taking cases, you’re building up a marketplace,” Ms. Horowitz said. “Once you start to see the market function, companies start to know they can’t do this.”

New York City’s Corporation Counsel could also initiate lawsuits against repeat offenders, which could result in civil penalties of up to $25,000.

Under the new measure, Freelancers would file complaints with the City’s Office of Labor Standards, which would tell companies of the complaints and seek a response. The office could not assess fines or award damages. That would be left to the Courts.

Mayor Bill de Blasio, a Democrat, is expected to sign the law, which would take effect 180 days later. It would cover workers who live in New York City; there is some ambiguity about whether it would apply to workers who live outside the City but work for companies based in the City.

Carlo A. Scissura, President of the Brooklyn Chamber of Commerce, which supported the Legislation, said he felt most companies that failed to pay Freelancers on time were well-intentioned but simply had a poor system for following through, which he hoped the measure would change. “The way you pay a vendor who catered your lunch or breakfast, you should now pay a freelancer who maybe did some work for you on a website or project,” he said. “It levels the playing field for everyone.”

This bill directly affects me and my wife, as we are both self-employed.

Since 1974, my Statement of Work for my self-employed consulting companies: Creative Systems, Mi-Ro Systems Inc., Innovative Health Systems, and Michael H. Drucker Consulting, always had a payment schedule included.

I also created one of the first Information Technology Consulting Insurance policy to cover the loss of customers developed work product while traveling and required the external storage of developed code.