The New York City Department of Consumer Affairs has now published its final rules to implement the Freelance Isn’t Free Act, offering additional guidance on how the law works, as well as imposing new restrictions on independent contractor agreements. These Rules, which went into effect on July 24, 2017, provide:
No Waiver of Rights under the Act: Hiring parties cannot include provisions in their contracts that purport to accomplish any of the following:
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Create a prospective waiver of rights under the Act;
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Forbid the independent contractor from participating or receiving relief from class or collective actions or representative proceedings;
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Impose a waiver of, or limitation on, any procedural rights “normally afforded to a party in a civil or administrative action” (i.e., the contract cannot prevent the independent contractor from bringing suit in court);
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Prevent the independent contractor from disclosing the terms of the contract to the Director of the Office of Labor Standards.
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Any such provisions are considered void and will be unenforceable.
Immigration Status Immaterial: The Rules clarify that all independent contractors are subject to the Act’s protections, regardless of the independent contractor’s immigration status.
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Contract Value Includes Reasonable Services, Supplies and Costs: The Rules provide that a “value” of a contract for purposes of the Act’s application include the reasonable value of services, reasonable cost of supplies, and any other reasonable costs incurred by the independent contractor.
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No Retaliation: Hiring parties are forbidden from retaliating against an independent contractor for exercising their rights or attempting to exercise their rights under the Act. The Rules clarify that an independent contractor alleging retaliation can establish retaliation through circumstantial evidence, including evidence that the contractor’s protected activity was followed closely by an adverse action (such as a threat, intimidation, discipline, harassment or denial of a work opportunity).
Next Steps
Any hiring party working with independent contractors in New York City should confirm that their independent contractor agreements comply with the Act and these new Rules. Particular attention should be paid to waiver and dispute resolution provisions to ensure that they allow independent contractors to seek relief under the Act through the court system. Hiring parties should also confirm that their independent contractors are properly classified in light of the increased scrutiny on worker classification.
