Some may consider “stiffing” independent contractors on the back end of a project’s substantial completion to be “smart” business. New York City disagrees, and offers unique protections for contract workers and independent contractors: the Freelance Isn’t Free Act.
Double damages for late payment, underpayment, or non-payment.
Contractors can receive double damages if their client refuses to pay, underpays, or pays late (even by a single day).
Independent contractors who face retaliation, harassment, or intimidation can receive the full contract value of the work for each act of retaliation. The value of the contract is the value of all work performed for the same client within a 120 day period, plus the independent contractor’s expenses.
If the independent contractor is not paid on time, they can take the client to court and be awarded two times what they were supposed to be paid under the terms of their agreement. This remains true even if the client argues that the work was not completed or performed in a satisfactory manner.
Independent contractors receive reasonable attorney’s fees and costs if they win their case.
Examples of Penalties
- A dog sitter makes an oral contract to work for a monthly rate of $500. She doesn’t receive a contract in writing, but the dog owner pays on time for the first few months. Then the dog sitter receives a late payment. She is entitled to damages of $500 for the contract value during a 120-day period plus double the value of the late payment.
- A landscaper agrees to a $20,000 project, but the homeowner does not provide a written agreement. If the homeowner does not pay within 30 days of the job’s completion, the contractor can sue for $20,000 under the contract plus $20,000 in damages, for a total of $40,000.
- A web designer agrees to work on a website for a $10,000 flat fee. The customer provides a written contract, but leaves out the method and date of payment. The customer delays payment for longer than 30 days. The web designer can receive $10,000 for the value of the contract, $10,000 in damages for non-payment, plus $10,000 in damages for a contract that violates the Act, for a total of $30,000.
Retaliation and Harassment
The Freelance Isn’t Free Act also protects independent contractors from retaliation and harassment. This includes punishing the independent contractor, making threats, or blacklisting the the independent contractor to try and get the independent contractor to reconsider enforcing his or her rights under the Act.
Clients cannot refuse future work if independent contractors file a complaint under theAct or threaten to sue the independent contractor for exercising their rights.
Examples of Retaliation or Harassment:
- The client threatens to end the contract if the contractor continues the lawsuit for non-payment.
- When the contractor files a claim under the Act, the client threatens to submit a counter-claim and says they will blacklist the contractor.
- The client threatens to give a poor online review if the contractor files under the Act.
Up To Six Years to File a Claim
A claim for failure to provide a written contract must be made within two years from the date of the violation. Independent contractors have up to six years to make a claim for non-payment, underpayment, or an act or retaliation.
Client Must Provide A Contract
The contact must be in writing and include:
- The parties’ names and mailing addresses
- An itemization of services to be provided
- The “value of services to be provided”
- A description of the rate and method of compensation
- The date when the “hiring party” must pay the compensation or the “mechanism by which such date will be determined”
As soon as the independent contractor has commenced performance of the work, the hiring party is not permitted to demand that the contractor accept less money in return for the contractor being paid on time.
Independent contractors have the right to be paid by the due date in the written contract. If there is no due date, the hiring party must pay the independent contractor within 30 days after completion of the scope of work listed in the written contract.
What Contracts Are Protected?
The contract is for at least $800 either by itself or when combined with all contracts between the same parties within the past 120 day period.
For example, if you perform five jobs for the same client over the past four months, three for $200 each and one for $300 each, that contract is covered under the Act.
If you are an independent contractor with no employees other than yourself, and you have been “stiffed” or unlawfully threatened by a customer or client, give us a call for a confidential and free consultation.