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The New York State Freelancer Pay Protection Bill goes into law.

13 Dec

Update Applicable to:  Effective date
All hiring parties as defined in the law, either state or multi-state business, which retain a freelance worker as defined in the law and who provides services for an amount equal or greater to $ 800 (by itself or aggregated between the same hiring party) and during the immediately preceding 120 days.180 days after signature or on May 20, 2024.

What happened?

On November 22, 2023, Governor Kathy Hochul signed bill S 5026, making the Freelancer Pay Protection creating New York Labor law 191-d.

What are the details?

  • This law was modeled after the New York City freelancer pay protection law.
  • The new law covers contracts entered on or after the effective date, so previous contracts are not covered.
  • The law mandates that these types of contracts must be done in writing, but it does not specify if an electronic document will suffice as the written requirement.
  • Penalties for failing to properly comply are expensive, including class action lawsuits.

Best practices

  • Create or update the template used to engage with freelance parties.
  • Create and update your payroll practices.
  • Consider a communication plan and training for your key personnel.
  • Consider consulting a labor attorney if necessary.
  • Other considerations that a hiring party should consider is:
    • Establish a clear payment due date (because if it’s not, the hiring party must pay 30 days after the completion of the work).
    • Once the freelance worker begins performance, there is a express prohibition that “…the hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount of the contracted compensation.”
  • Consider some takeaways and recommendations regarding provisions and risk mitigation from Locke Lord LLP Law Firm .

Employers should review additional resources here:

  • NY Governor Official Release
  • S 5026
  • New York State Senate S5026
  • Law Firm Article
  • This new law would appear to include independent contractors operating on their own who provide services to on-demand companies or their customers in the gig economy, such as Uber, Lyft, InstaCart, Postmates, GrubHub, TaskRabbit, and Handy.” – Locke Lord LLP Law Firm
  • The legislative report accompanying the bill contains a “Justification” for the new law, reciting that it covers all types of freelancers including “writers, editors, graphic designers, videographers, consultants, temps, and those who are otherwise self-employed.”- Locke Lord LLP Law Firm

Need help understanding how changes to employment laws will affect your business?

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