Key Takeaways:
A new California law requires written contracts when engaging most solo independent contractors. The written contracts must contain certain types of information.
With this new freelancer law, California joins Illinois, New York state, New York City, Los Angeles, Minneapolis, Seattle and Columbus, Ohio, in imposing specific requirements for engagements with freelance independent contractors.
The Freelance Worker Protection Act (FWPA), which will be codified at Bus. & Prof. Code 18100 et seq., takes effect on January 1, 2025. The law does not change the test for determining whether a worker is an employee or an independent contractor.
Who Is Affected
The FWPA applies to the retention of freelance workers, defined as individuals or single-person entities, who will provide goods or services valued at $250 or more over any 120-day period.
The FWPA does not apply if the hiring party is an individual and the work is for the hiring party’s personal benefit or the benefit of their family (e.g., babysitter, dog walker).
FWPA Requirements
Under the FWPA, an agreement between a hiring party and a freelancer must be memorialized in a written contract that includes:
Hiring parties must provide the freelancer with a copy of the written contract and must retain the contract for four years.
Payment to the freelancer must be made by the date specified in the contract. If no date is specified, then payment is due 30 days after the work is completed.
Once the work is completed, the hiring party cannot require the freelancer to (a) accept less in payment than what is specified in the contract, (b) provide more goods or services without entering into a new contract, or (c) assign intellectual property (IP) rights that were not already specified in the contract.
Other Provisions
The FWPA does not limit existing contract law. It does not limit the ability of a freelancer to bring claims for breach of a verbal contract or for promissory estoppel.
The following may be used as evidence to show the existence of a contract to which the FWPA would apply:
The FWPA can be enforced through a private civil action or by a public prosecutor.
If a freelancer proves a violation of the FWPA, the freelancer can recover:
A court may also grant injunctive relief.
Waivers of FWPA requirements are void. A hiring party is also prohibited from discriminating or retaliating against any freelancer attempting to assert their rights under the FWPA.
Tips for Compliance with the FWPA
When hiring a solo independent contractor, businesses need to make sure they memorialize the terms of the retention in a written contract. The written contract must contain all information required under the new law.
To protect against other provisions in the law, hiring parties should also consider including the following items in their written contracts:
Our Labor and Employment Practice Group is prepared to help businesses comply with these new requirements.
