On September 28, 2024, Governor Newsom of California signed the "Freelance Worker Protection Act" (FWPA), into law which will take effect on January 1, 2025. The bill expands protections for freelance workers by requiring private companies who hire independent contractors for certain professional services to provide written agreements specifying certain terms and outline certain deadlines for payment. Significantly it will address a longstanding issue for freelancers, the ability to be paid in a timely manner.
FWPA applies to private companies in California with contracts entered into or renewed on or after January 1, 2025, between a "hiring party" and "freelance worker" providing "professional services." A hiring party means a person or organization in the State of California that retains a freelance worker to provide professional services, except for the federal, state, local, or foreign governments or individuals hiring services for the personal benefit of themselves, their family members, or their homestead. A freelance worker means a person that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for $250 or more, either by itself or aggregated with all contracts for services between the same hiring party and independent contractor during the past 120 days. Professional services as defined in the California Labor Code §2778 means services such as marketing, human resources, travel agent services, graphic design, grant writing, fine artistry, photography, videography, photo editing, freelance writing, translating, editing, copy editing, illustrating, content contributing, advising, producing, narrating, and others.
FWPA will provide these independent contractors with the following protections, including: (i) mandatory contracts; (ii) thirty-day payment terms; (iii) payment agreement protections; (iv) anti-retaliation provisions; and (v) double damages provisions. These protections will increase the freelancer's payment collection rights by providing penalties for clients failing to pay contractors for work completed in a timely manner.
When hiring independent contractors who qualify under the FWPA, the hiring party is required to provide the freelancer with a signed copy of the agreement, either physically or electronically, and it must keep a copy of the agreement for at least four years. The written contract must include, at minimum: (i) the name and mailing address of each party; (ii) an itemized list of all services that will be provided, including the value of those services and the rate and method of compensation; (iii) the date the hiring party will pay the contracted compensation or mechanism to determine said date; and (iv) the date by which the freelance worker will submit a list of services rendered under the contract to the hiring party to meet the hiring party's internal processing deadlines for timely payment of compensation. If a written contract is not provided, the parties' actions and communications can be evidence that a contract is formed, such as discussing rates for services with the freelance workers or the worker completing the tasks they were expected to, even if never put into writing.
FWPA requires the hiring party to pay freelancers (i) on or before the compensation is due under the contract; or (ii) if the contract does not specify a payment date, no later than 30 days after the freelance worker completes the services under the contract. Further, the hiring party is prohibited, to make as a condition of timely payment and once freelancer has started performing services to: (i) accept less compensation than specified in the contract; or (ii) provide more goods or services or grant more intellectual property rights than they agreed to in the contract.
The FWPA also prohibits retaliatory action, A hiring party may not discriminate or take any adverse action against a freelance worker or deter a freelancer from: (i) opposing any practice that is prohibited by the FWPA; (ii) participating in any proceedings related to enforcement of the FWPA; (iii) seeking to enforce any rights provided to them by the FWPA; and (iv) otherwise asserting or attempting to assert rights provided by the FWPA.
FWPA gives freelancers strong enforcement rights if the law is not complied with. A freelancer may bring a lawsuit and recover any of the following remedies: (i) an additional $1,000 if a requested written contract was refused by the hiring party prior to beginning the work in violation of Section 18103; (ii) damages up to twice the amount that remained unpaid at the time payment was due if the hiring party failed to pay freelance worker compensation within required timeframe; (iii) amount unpaid shall be determined by the rate the freelance worker reasonably understood to apply to the work if the freelance worker requested a written contract prior to commencing the work under the contract and the hiring party refused to provide one in violation of Section 18103; and (iv) damages equal to the value of the contract or the value of the work performed, whichever is greater, if the hiring party violates any provision of this law. A prevailing plaintiff is also entitled reasonable attorney's fees and costs, as well as injunctive relief. Additionally, a waiver of any provision is void and unenforceable as it would go against public policy.
Ultimately, the FWPA expands the protections of freelance workers and private companies in California should evaluate their practices to ensure compliance by reviewing existing agreements and updating new agreements with their attorneys, as well as creating internal procedures to ensure that freelancers are paid timely.
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