New York Appellate Court Takes First Crack at Interpreting NYC’s Freelancing Law

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The First Department of the Supreme Court, Appellate Division (the “Appellate Division”) recently issued the first appellate decision interpreting New York City’s Freelance Isn’t Free Act (FIFA).1 Plaintiffs – a photography business and a model – first filed an administrative complaint against a high-end fashion label for failure to pay them in full for a photoshoot that took place in October 2019, and subsequently filed suit in state court after the fashion label failed to respond.2 The central issue on appeal was whether the model could properly be deemed a “freelance worker” under FIFA when, as here, she  was represented by a modeling agency. The Appellate Division ruled that representation by an agent does not necessarily disqualify a worker from FIFA’s freelance worker protections.

NYC Freelance Isn’t Free Act

Enacted in 2016 and effective as of May 15, 2017, FIFA is what the Appellate Division described as “the first act of its kind in this country to provide legal protections for freelance workers against nonpayment for work performed.”3 FIFA defines a “freelancer worker” as “any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.”4 In certain circumstances, FIFA mandates that agreements for freelance work be reduced to writing, and that freelance workers be paid within a certain timeframe. As with other New York City enactments, under FIFA, a freelance worker may file an administrative complaint before bringing an action in court, but is not required to do so.5 For a fuller overview of FIFA, see Littler’s prior coverage on this law.

Determining “Freelance Worker” and “Hiring Party” Status

The Appellate Division held that the model’s representation by an agency did not in and of itself disqualify her from the protections afforded to freelance workers under FIFA. Instead, the court found that her status would ultimately be a question of fact. The Appellate Division separately signaled the model had sufficiently pleaded her standing to sue the fashion label as the “hiring party.”

The fashion label argued that the model was not a freelancer, but rather an employee of the modeling agency pursuant to the terms of the model booking agreement. The court noted that FIFA and its implementing regulations are “silent as to how to factor an agent into the calculus of whether someone is a freelance worker,” but that workers represented by agents are not among the enumerated examples of individual workers excluded from the freelancer definition.6 The court also noted that, in enacting FIFA, the City Council had considered testimony from “FIFA proponents in various industries sharing that freelance workers utilize agencies.”7 By ruling that the model’s claim was properly pleaded and that the parties “should engage in discovery to ascertain” whether the model was a freelance worker for FIFA purposes, the court essentially held that a represented model’s status as a freelancer is a question of fact. The court did not explain, however, what factors would be relevant in determining whether an agent-represented worker is a freelancer or an individual working as part of a larger agency.

The fashion label also argued that, because it was in contractual privity with the modeling agency – not the model herself – it could not have been the model’s “hiring party” for FIFA purposes.8 The court held that the model booking agreement and the invoices issued thereunder were not dispositive of whether the fashion label, rather than the modeling agency or some other party, was the model’s “hiring party.”9 At the pleading stage, the court credited the model’s allegation that she furnished services to the fashion label. The court did not detail its legal reasoning, but its holding implies that courts may look to the reality of the work performed, rather than the way in which the transaction is contractually structured. In other words, if the model was performing work that benefited the fashion label, she may state a claim against the fashion label, rather than the modeling agency that may ultimately pay her for the work performed during the photoshoot in question.

What Deference is Owed to an OLPS Determination?

Underlying the Appellate Division’s decision is the fashion label’s failure to respond to the administrative complaint that plaintiffs made to the OLPS. After the fashion label failed to respond, the OLPS issued a notice advising the fashion label defendants: “When a hiring party fails to respond to a Notice of Complaint within 20 days it creates a rebuttable presumption in any civil action commenced pursuant to [FIFA] that the hiring party committed the violations alleged in the Complaint.”10 This presumption automatically attaches to a hiring party’s failure to respond to administrative complaints filed with the OLPS.11 Currently, the OLPS has no statutory authority to adjudicate administrative complaints. In the ordinary course, where a hiring party responds to an administrative complaint, the OLPS director issues a right-to-sue letter and provides the complaining party a copy of the hiring party’s response.

In considering the OLPS’s finding of rebuttable presumption in plaintiffs’ favor, the Appellate Division began from the principle that “deference may be warranted to an administrative agency’s interpretation and ‘specific application of a broad statutory term’ that it is charged with implementing.”12 The court admitted that “it is unclear what OLPS’s internal procedure is once it received a complaint” and suggested that “[d]iscovery from OLPS may also illuminate the question” of whether the agent-represented model is a freelancer for FIFA purposes.13 Despite the court’s suggestion that the OLPS completed some sort of factual investigation, it may be that the rebuttable presumption was applied solely by operation of OLPS rules, and that no substantive analysis was performed by the agency. In that event, the trial court will be left without judicial or administrative guidance regarding which facts or circumstances to consider in determining whether the agent-represented model is in fact a freelance worker under FIFA, or what evidence the hiring party may present to rebut the presumption in the model’s favor.

Advice for Hiring Parties

With this first appellate decision, and with the possible enactment of a similar bill that recently passed both houses of the New York State Legislature (discussed by Littler here), the enforcement of freelance worker protections may increase in fashion, the arts, and other industries. Hiring parties generally should not assume that the representation by a talent agency or staffing company will insulate it from the obligations that FIFA places on hiring parties with respect to their freelance workers. Hiring parties should consider taking steps to apprise themselves of how all the individuals and entities working on set, on site, or in the studio (or their remote equivalents) are being compensated, and should strive to ensure that there is clarity as to which entity is responsible for which payments.

Footnotes

1 Chen v. Romona Keveza Collection LLC, 2022 WL 2923476, Appeal No. 15697-15698-15699-15700, __ N.Y.S.3d __ (July 26, 2022).

2 Plaintiffs sued a number of related entities, as well as their principal. For purposes of this article, we will refer to all defendants as the “fashion label.”

Id. at *2.

4 Id. (quoting N.Y.C. Admin. Code § 20-927, et seq.).

5 The agency charged with enforcement of FIFA is the Office of Labor Policy and Standards (OLPS) of the New York City Department of Consumer and Worker Protection (DCWP). When a complaint is filed with the DCWP, the agency does not have authority to adjudicate the complaint or take any enforcement action.  See N.Y.C. Admin. Code 20-931(d). However, the OLPS is required to notify the hiring party of the complaint. N.Y.C. Admin Code 20-931[e][1]. If the hiring party fails to respond within 20 days of receipt of that notice to assert its defenses, the statute requires that, for any civil action, a rebuttable presumption is created that the hiring party committed a violation.

6 Chen, 2022 WL 2923476, at *4 & n.5.

7 Id. at *4.

8 Id. at *3.

9 Id. at *4.

10 Id. at *1.

11 N.Y.C. Admin. Code § 20-931(d).

12 Chen, 2022 WL 2923476, at *4.

13 Id. at *1.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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