DISCLAIMER: This post is a general overview of the Freelance Isn’t Free Act (FIFA). It does not contain legal advice. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney. Don’t rely solely on what you read on the Internet.
On May 15, 2017, the Freelance Isn’t Free Act (FIFA) took effect in New York City (NYC). Despite its good intentions, I continue to have reservations about its implications. On May 20, 2024, a similar law will take effect throughout New York State (NYS). Here’s why I still don’t like it.
Existing Laws
The gig economy has long been a part of our economic landscape, and numerous laws already address its intricacies effectively. These include legislation such as:
- Black Car Operators Injury Compensation Fund
- Construction Industry Fair Play Act
- Contract Law
- Domestic Workers Bill of Rights
- Fair Labor Standards Act
- General Business Law
- Internal Revenue Code
- Internal Revenue Service’s Consistency and Rational Basis Tests
- Other Labor and Employment Laws
- Wage Theft Prevention Act
- Workers Compensation Law
Contract Requirements
The FIFA mandates that clients draft detailed contracts outlining the scope of work, payment terms, and other specifics that are typically provided by the freelancers, or the independent businesses providing the services. When clients come to me, I don’t expect them to tell me:
- What needs to be done or how to do it
- How long it will take or what it should cost
- When payment is due
Clients don’t typically have sufficient knowledge about the services they need performed by their vendors.
Misclassification Concerns
True freelancers have sufficient expertise in their respective fields to maintain businesses. They are not new graduates who are having a difficult time finding jobs and doing side work to get by. They are not former employees who have been contracted to do the same work they used to do for their former employers.
There’s a good chance that the freelancers the FIFA intends to protect are misclassified workers who don’t mind being misclassified, as long as they are getting paid. Rather than address the huge worker misclassification issues we have in NYS, the FIFA may inadvertently encourage misclassification by allowing consent-based agreements.
Payment Requirements
Under the FIFA, clients are required to pay freelancers in full on or before the date the contract requires payment. There is no provision for resolving performance issues, which is common in services contracts.
Instead, the FIFA appears to require payment for services, even if the work is unsatisfactory to the client. This is far too similar to employment, where your employees get paid for the hours worked, even if they are underperforming.
Anti-Retaliation Protection
The FIFA includes anti-retaliation provisions, potentially creating a climate where clients are presumed to be abusive employers if disputes arise. This could discourage clients from engaging freelancers altogether.
Conclusion
It’s important for freelancers and their clients to understand the implications of the FIFA, including potential penalties for subcontracting work. While the law aims to protect freelancers, its implementation may have unintended consequences that:
- Make existing laws even more confusing
- Deter businesses from hiring freelancers
- Penalize successful freelancers who get jobs bigger than they can handle alone
Concerned you’ve violated the FIFA?
Freelancer Misclassification: The Risks and How to Protect Yourself