What the Freelance Isn’t Free Act Means for Independent Contractors
The Freelance Isn’t Free Act, which came into effect on May 15th, 2017, applies to all freelancers and independent contractors. The law protects freelancers from exploitative work practices. The act is vital to ensure that freelancers are paid fairly for their work. It also helps protect workers from abuse by bad actors looking to take advantage of them. In addition, the act requires all companies that use independent contractors to provide essential benefits such as health insurance, life insurance, and paid sick leave. These benefits must be present even if the contractor is ‘self-employed’ and not technically an employee of the company.
Implications of the Act
Under the Freelance Isn’t Free Act, independent contractors are entitled to minimum wages, overtime pay, and other benefits like paid leave and health insurance coverage. In addition, the Freelance Isn’t Free Act protects independent contractors from being duped into working for free. For example, it prohibits employers from using non-compete agreements with roofing contractors. It further requires employers to provide notice of the terms of the freelance agreement in writing.
A freelance worker is entitled to reasonable notice before their contract is terminated and fair compensation when terminated without notice. The act also protects freelancers from retaliation by their employers if they file a complaint under the law. As an independent contractor, you should know that you have a right to certain protections under federal and state law. The rule applies to any business, including electrical contractors, and prohibits employers from requiring services without compensation before being hired as an independent contractor. The law applies even if the employer offers benefits or compensation for the work.
Definitions Under the Act
A worker is anyone who provides services for compensation. If you are working and not getting paid, you may be a victim of wage theft. Here is when an employer does not reimburse the worker for all hours worked, pays less than the minimum, or does not pay overtime wages as required by law. The law covers freelancers, independent contractors, temporary workers, day laborers, and more.
Compensation refers to payment for services performed by a worker. Compensation can include money, property, or anything else of value. The settlement does not have to be in the form of a paycheck or direct deposit. It can also come in the goods or services the employer provides that are necessary for job duties.
Who Independent Contractors Are
As an independent contractor, you’re responsible for paying your taxes, filing quarterly income tax returns, and paying self-employment tax (Social Security and Medicare). In addition, you can net expenses from your income, including office supplies and depreciation on equipment used in performing services. The law requires independent contractors to register with the IRS as independent contractors and pay self-employment taxes. Plumbing contractors, in particular, have been affected by this law because many plumbers work as subcontractors for general contractors or plumbing companies. In some instances, independent contractors are not considered employees of these businesses but perform as independent contractors.
Freelancers include contractors, subcontractors, or independent contractors who perform work under contract or similar arrangements. For example, the attorneys offices customarily operate independently established trades, occupations, professions, or businesses. Independent consultants who provide services under a written agreement are independent contractors. Independent contractors can work for any company they choose and set their hours. They have to pay their Social Security tax but are not eligible for unemployment insurance or workers’ compensation. They also do not have to pay employment taxes such as Medicare.
Temporary employees get hired through a temporary employment agency. Temporary employees work for one company only and have a contract with the employer that specifies when the employee gets paid, how much they will get paid, what benefits are available, and when they end. The employee’s relationship with the company ends when their assignment ends.
The provision of this law that has the most significant impact on lawyers relates to those engaged by clients through online platforms. These platforms enable attorneys specializing in certain areas of law, such as immigration or litigation, to bid for legal work posted by clients online or through mobile apps. The client chooses which lawyer best fits their needs based on price and experience level among other factors.
The contract spells out the services that a contractor will perform and the materials to use, and it also includes the total cost of labor and materials. Therefore, it’s paramount for both parties to read and understand the contents of their written contract before signing it. A written agreement must include the subcontractor’s name, contact information, and estimated completion date. If there are any agreed-upon changes to the scope of work, they should show in the contract.
What Businesses Should Know When Hiring an Independent Contractor
When you hire an independent contractor, you hire a person to perform a specific job. You won’t pay payroll taxes or follow any other laws related to employees. You can’t require an independent contractor to work at certain hours or on weekends unless their work requires it (such as in healthcare). Nor can you force them to work exclusively for your business or prevent them from working for other companies while simultaneously performing yours. You cannot control how an independent contractor performs their duties once you hire them.
Contractors’ Rights and Responsibilities
Employers may not mislead or deceive you into believing you are an employee rather than an independent contractor. You must be allowed to control your work schedule and have the freedom to choose whom to serve. The employer should not have control over how you perform your services or what tools or equipment you use in performing those services. Freelancers allow one to set their hours and schedule whatever job they want. That doesn’t mean they’re not working when they’re not working. It just means they don’t have someone telling them when and where to be.
What the Act Entails
The Freelance Isn’t Free Act requires that independent contractors receive paid sick leave and other benefits. In addition, the act requires that independent contractors receive a signed contract before beginning work, and the agreement must include specific terms for the work. Residential contractors include laborers, subcontractors, and vendors who provide services on a piecemeal or per-job basis. Finally, the new law requires any person or company that retains the services of a freelance worker, such as an excavating contractor, to enter into a written contract and to pay the total contract amount no later than 30 days after completing the work.
The contract should include clear terms and conditions, including but not limited to: specific payment terms, specific work hours, specific work location and equipment required for the job, and other material information. The new law requires written contracts between homeowners and paving contractors when hiring outside help for home improvement needs. In addition, the law makes it clear that if you provide services as an independent contractor, you have the right to be paid at least minimum wage and any overtime pay required by federal or state laws. It follows that even though you may be considered independent glass contractors by your employers, you are still entitled to these protections under the law.
Employers must also provide employees with a safe workplace free of harassment or discrimination. The law also forces employers to provide workers’ compensation insurance so that if an employee suffers harm on the job, they will receive medical care and financial support until they can return to work. The act has received widespread support from advocacy groups for freelance workers as it sets out some guidelines on how companies should approach their relationships with contractors. However, there’s no shortage of controversy around the Freelance Isn’t Free Act.
Some consider it a threat to the freelancer sector that’s grown thanks to independent contractors. While these platforms have made life easier, they’ve also created confusion about who exactly qualifies as an employee or contractor under federal labor laws resulting in lawsuits. Some critics say this ambiguity has given rise to unscrupulous employers who take advantage of workers by classifying them incorrectly. Others argue that these platforms give people greater flexibility with their schedules than traditional employment arrangements without sacrificing adequate compensation or benefits like health insurance coverage. Some fear that such new legislation will undermine those benefits altogether.
Contracts Employers Must Establish for Workers
While the law applies only to independent contractors and freelancers, it affects workers who earn over $800 a year. Because of this, employers may establish contracts with employees who were previously exempt, such as those paid by the hour. The contractors are paid per hour or per day if they are working under a contract with New York City. An employer must give each contractor a copy of this contract before they start working for them, and both parties must sign it. Employers must keep copies of every contract until the contractor completes the job. The same regulations apply to all other trades, including HVAC contractors. If a client owes you money, you could file a complaint with your state’s Department of Labor or attorney general’s office. Additionally, an employer’s failure to comply with the law could expose them to civil penalties or private lawsuits through a workers comp lawyer by their workers.
Exemptions
Independent consultants who provide services under a written agreement are not customer employees. They are self-employed and responsible for paying their expenses. As such, they must pay self-employment tax on their earnings. Independent consultants who do not have a written agreement are customer employees. Therefore, they are entitled to all employment law protections, including sick leave and health insurance coverage.
The law doesn’t apply to workers who provide services under an oral or implied contract. Employees under collective bargaining agreements are exempt from the law. In addition, it does not apply to employees or partners of an entity that pays their income taxes. Similarly, it does not apply to sole proprietorships or other unincorporated businesses taxed under the single-owner rule.
Shortcomings of the Freelance Isn’t Free Act
The bill does not clarify what makes someone an ‘independent contractor.’ Instead, it provides a list of factors that courts may consider when deciding whether an individual is an employee or an independent contractor. As a result, the act leaves room for interpretation that could lead to costly lawsuits if there’s disagreement over whether or not someone should be an employee or independent contractor.
The bill requires companies to keep records of their independent contractors’ hours worked. That could lead to less flexibility in how they work since many freelancers prefer to work remotely. The real issue with unpaid invoices is that too many small businesses don’t pay their bills on time, and there aren’t enough resources for freelancers to get paid. Unfortunately, the act doesn’t address this problem directly. Instead, it shifts liability from the companies that don’t pay their bills to other companies that will have to take on extra expenses to comply with these new laws. The biggest challenge with this law is enforcement. With limited resources and workforce, government agencies such as the IRS or FTC can’t enforce every business transaction between independent contractors and employers.
In a nutshell, the Freelance Isn’t Free Act is a step in the right direction for improving labor conditions for Independent contractors. While it’s far from perfect, it does protect freelancers against exploitative practices that are common among employers. Moreover, this law is one of many steps cities and states can take to improve working conditions for independent contractors and workers not protected by traditional employment laws like overtime pay or minimum wage regulations. Contact us for more information and to learn more about the act and related inquiries.
