Independent Contractor

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We’re not even out of 2023, and New York employers who engage independent contractors already have new obligations to reckon with before next spring. On November 22, 2023, New York Governor Kathy Hochul signed the New York State “Freelance Isn’t Free Act”, increasing obligations for parties who engage freelance workers (including independent contractors). Starting May 20, 2024, hiring parties (including employers who engage independent contractors) must provide freelance workers with written contracts, pay them within a specified time period, maintain records, and satisfy additional new obligations—and freelance workers will gain a private right of action for violations.

The Act replicates the 2017 NYC’s Freelance Isn’t Free Law, adding administrative oversight and support from the New York State Department of Labor and the New York State Attorney General while maintaining New York City’s local law. The Act will apply to contracts entered into on or after the May 20, 2024 effective date.

Here are some key details:

Definitions: “freelance workers” and “hiring parties” 

The Act defines a “freelance 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 an amount equal to or greater than eight hundred dollars”—but does not include certain sales representatives, practicing attorneys, licensed medical professionals, and construction contractors. Also, a “hiring party” is any person (other than government entities) who retains a freelance worker to provide any service.

Written contracts required

The Act requires a written contract if the freelance work is worth at least $800, inclusive of multiple projects over a 120-day period. The hiring party must furnish a copy of the contract, either physically or electronically. At a minimum, the written contract must include:

  1. The name and the mailing address of both the hiring party and the freelance worker;
  2. An itemization of all services to be provided by the freelance worker, the value of the services to be provided under the contract, and the rate and method of compensation;
  3. The date on which the hiring party must pay the contracted compensation (or the mechanism by which the date will be determined); and
  4. The date by which a freelance worker must submit to the hiring party a list of services rendered under the contract to meet the hiring party’s internal processing deadlines to allow compensation to be paid by the agreed-upon date.

The New York State Department of Labor will provide model contracts on its website for freelancers and hiring parties to use.Continue Reading More Scrutiny and Obligations for NY Businesses Engaging Independent Contractors Coming Spring 2024

New York may soon restrict employers and employment agencies from using fully-automated decision making tools to screen job candidates or make other employment decisions that impact the compensation, benefits, work schedule, performance evaluations, or other terms of employment of employees or independent contractors. Draft Senate Bill 7623, introduced August 4, aims to limit the use of such tools and requires human oversight of certain final decisions regarding hiring, promotion, termination, disciplinary, or compensation decisions. Senate Bill 7623 also significantly regulates the use of certain workplace monitoring technologies, going beyond the notice requirements for workplace monitoring operative in New York since May 2022 and introducing data minimization and proportionality requirements that are becoming increasingly common in US state privacy laws.

While there is not yet a federal law focused on AI (the Biden administration and federal agencies have issued guidance documents on AI use and are actively studying the issue), a number of cities and states have introduced bills or resolutions relating to AI in the workplace. These state and local efforts are all at different stages of the legislative process, with some paving the path for others. For example, New York City’s Local Law 144 took effect on July 5, prohibiting employers and employment agencies from using certain automated employment decision tools unless the tools have undergone a bias audit within one year of the use of the tools, information about the bias audit is publicly available, and certain notices have been provided to employees or job candidates (read more here).

If enacted, Senate Bill 7623 would take things much further. Here are some of the most significant implications of the draft legislation:Continue Reading Check Yourself Before You Wreck Yourself: New York and Other States Have Big Plans For Employer Use of AI and Other Workplace Monitoring Tools

Many thanks to our Franchise, Distribution & Global Brand Expansion  colleagues Abhishek Dubé, Kevin Maher, and Will Woods for co-authoring this post.

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On May 5, 2021, the US Department of Labor (DOL) announced the withdrawal of the previous administration’s independent contractor rule, effective May 6, 2021. The DOL has not proposed any regulatory guidance to replace the rule, leaving employers with no clear guidance on worker classification under the FLSA.

The withdrawal is no surprise. The DOL…

The Department of Labor (DOL) has proposed to put the final nail in the coffin on two Trump era rules under the Fair Labor Standards Act (FLSA) that were favorable to employers. On March 12, 2021, the DOL’s Wage and Hour Division published in the Federal Register both a proposed rule to rescind the Trump administration’s rule on joint employer status under the FLSA and a proposed rule to withdraw the Trump administration’s rule on independent contractor status under the FLSA. In both cases, the DOL is seeking public comments for 30 days (until April 11, 2021). Neither of these proposed rules comes as a surprise to those keeping tabs on the Biden administration’s agenda, but the DOL has not proposed any new guidance, leaving employers wondering what comes next.
Continue Reading The DOL Proposes to Nix the Trump Administration’s Joint Employer and Independent Contractor Rules

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Continue Reading DOL Announces Final Rule for FLSA Worker Classification Focused on Economic Dependence-But Its Future is Uncertain

The federal guidance on whether to classify a worker as an employee or an independent contractor continues to shift, as the U.S. Department of Labor (DOL) issued a new proposed rule favorable for companies. If finalized, the rule may provide businesses with greater latitude to engage independent contractors.
Continue Reading New DOL Proposed Rule Makes It Easier For Companies to Engage Independent Contractors

As predicted, on Friday, California Governor Newsom signed AB 2257 into law. The most significant changes are expanding the exemptions to AB 5’s coverage, that is, widening the range of occupations that will be held to an earlier standard for determining employment status. The new law takes effect immediately. For our coverage of AB 2257,…

A potential amendment to California’s AB 5 law is sitting on Governor Newsom’s desk. If enacted, the amendment will allow certain professions to be classified as independent contractors rather than employees, notwithstanding AB 5’s presumption of employment status. On August 31, the California legislature sent AB 2257 to Governor Newsom for his review and signature. Supporters of the bill expect Newsom to sign it into law next month, especially given AB 5’s perceived negative impact on the “gig” economy during the pandemic. If signed by the governor, the law will take effect immediately.

By way of brief reminder, AB 5 established a 3-part test, known as the “ABC” test, that is used to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. This broad test places most workers in the employee classification. AB 5, however, enumerated a few limited exemptions for specified occupations and business relationships from the application of the ABC test, providing that the exempt relationships are governed by the pre-AB 5 multi-factor test set out in S. G. Borello & Sons, Inc. v. Department of Industrial Relations. (For more detail on AB 5, click here.)

AB 2257 will modify some of the current exceptions to AB 5, and create new exceptions to AB 5’s presumption that workers are employees. A close read of the bill’s text is necessary given the proposed amendments’ nuances and sometimes conflicting detail.  We outline below some of the major changes contemplated by AB 2257, but if your business potentially falls into one of the enumerated exceptions, we strongly recommend consulting with employment counsel given the complexities involved.

New Exceptions

If enacted into law, AB 2257 will allow the following professionals to be classified as independent contractors in California if they satisfy the Borello standard.Continue Reading Big Changes Coming To California’s Landmark Independent Contractor Law? Sort of.