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In the pursuit of our goal to keep you enlightened and educated about the New York Labor Law and how it affects you, as the employer and employee, we’ve continued to update our series. In our previous blog, which was Part VI of the series, we covered the “New York City Earned Safe and Sick Time Act (NYC ESSTA)” statute.
In this blog, which is Part VII of our continuing series, we’d like to move forward the discussion and hammer on what the Labor Law says about Independent Contractors and the Gig Economy. As usual, special to similar blogs, we’ve provided you, as an employer, with key tips on how to remain compliant with the law on how independent contractors should be treated.
Who are Gig Workers?
Gig workers are freelancers or independent contractors who typically do short-term work for multiple clients. The work may be part-time or hourly, project-based, and can be either a temporary position or an ongoing contract. In New York, several competing state and federal laws, and not New York City law, govern independent contractor classifications. As such, the state and federal laws address whether income should be reported on a Form W-2 or Form 1099 and whether employment taxes should be withheld among other issues. Further, when it comes to determining a worker’s eligibility for state-mandated insurance benefits (including short-term disability, workers’ compensation, and unemployment) and various labor law’s requirements (including overtime and minimum wage), federal and state laws apply to worker classifications.
However, irrespective of the applicable law, gig workers are entitled to protections under the NYSHRL (New York State Human Rights Law), NYCHRL (New York City Human Rights Law), and FIFA (Freelance Isn’t Free Act) of the New York City.
Treatment of Independent Contractor under the NYCHRL & NYSHRL
On the one hand, in a directive that became effective on January 11, 2020, the NYCHRL was amended to include the provision that gig workers and freelancers are covered and entitled to similar protections as employees under the law. Under this law, an independent contractor is any individual who is not an employee, but is performing work in furtherance of an employer’s business. On the other hand, these workers are also entitled to certain provisions and protections under the NYSHRL. Under both laws, employers are obligated to assume liability for any acts of harassment or discrimination committed by freelancers or gig workers, as long as the incident occurred in the course of the contractor’s work for the employer and the employer has actual knowledge of the discriminatory conduct.
Under the NYCHRL, if the gig worker provides services for at least 90 days and for more than 80 hours in a calendar year (irrespective of whether the days were consecutive or not) and works for an employer of 15 or more people, then employer’s in NYC must provide mandatory annual training on sexual harassment to this independent contractor. On the same note, an independent contractor may produce documentation of having taken the mandatory annual sexual harassment training course from the previous employer during that year if they provide services for multiple employers.
How to Remain Compliant with the NYCHRL & NYSHRL’s Requirements for Gig Workers
As we have often emphasized in past videos and blogs, complying with the labor law is crucial to every employer. Accordingly, in order to ensure compliance with the requirements of these two laws, New York City employers who seek to engage independent contractors should consider taking the following measures:
- Provide policies – ensure that independent contractors have been provided with a copy of your company’s anti-harassment and anti- discrimination policies;
- Provide the mandatory training – in line with the NYCHRL, ensure that you provide gig workers with training on sexual harassment and maintain records of course completion;
- Incorporate specific language in agreements – ensure that agreements signed between you and the independent contractors contain specific language that requires them to comply with the anti-harassment and anti-discrimination policies. The agreement should also indicate that they must comply with termination for cause right should it be established beyond doubt that they have violated your company or business’s anti-harassment and anti-discrimination policies or any other applicable law;
- Maintain documentation of signed acknowledgement of receipt of policies and training – ensure that signed documents from gig workers acknowledging that they have received both the anti-harassment and anti-discrimination policy documents and annual training (if applicable) are collected and retained;
- Conduct sexual harassment complaint investigations thoroughly and promptly – while investigations should start as soon as possible, you should ensure that the appropriate course of action should be taken against independent contractors found to have violated the laws and policies.
Freelance Isn’t Free Act (FIFA) and Gig Workers
Under FIFA, a freelance worker is defined as any organized or any natural individual composed of no more than one natural person, whether or not employing a trade name or not incorporated, that is retained or hired as a gig worker (independent contractor) by a hiring entity to offer services in exchange for compensation. However, medical professionals, lawyers, and salespeople who solicit orders are not categorized as freelance workers under the FIFA. Currently, freelance workers in New York enjoy certain extended protections as provided for by the city’s Freelance Isn’t Free Act (FIFA). These protections include the rights to:
- Unlawful payment practice protections;
- Written contracts under which contractors provide services valued at $800 or more; and
- Protections against retaliation.
The FIFA is very straightforward about the particulars of any agreements made between a hiring entity of individual and a freelance worker. This means that all employers must observe these particulars as part of complying with the FIFA’s requirements for freelance workers. At a minimum, a written contract should incorporate:
- Both parties’ names and addresses;
- The date on which the contracted compensation must paid to the freelancer;
- An itemization of all services the freelance worker is supposed to provide;
- The method of compensation to be used, the rate, and the value of the services to be provided.
Terms of Compensation/Payment under FIFA
Under FIFA, the hiring entity must pay the freelancer:
- On or prior the date on which the written contracts indicates the payment should be made; or
- If the written contract fails to specify when the freelancer must be paid or the rationale under which such a date could be determined, no later than 30 days following the completion of the work or provision of services the freelance worker was supposed to provide under the written contract.
However, FIFA prohibits an employer to require a freelance worker to accept, as a condition for timely payment, less payment than what was agreed in the original agreement signed.
Stay tuned for more guidance, training, and counsel and be #UnusuallyMotivated. In the interim, if there are any questions or comments, please let us know via the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer & Author.