Understanding California’s Freelance Worker Protection Act
On September 28, 2024, California Governor Gavin Newsom signed SB 988, known as the “Freelance Worker Protection Act.” This new legislation mandates that most agreements with freelance workers be in writing, effective for contracts executed or renewed on or after January 1, 2025. Here’s what you need to know about this important new law.
Who Does the Act Apply To?
The Act defines a “freelance worker” as a bona fide independent contractor hired to provide professional services in exchange for $250 or more, either in a single transaction or aggregated over a 120-day period. This low threshold means the Act will cover most freelance engagements. However, it’s important to note that the Act applies only to contracts for professional services, as defined in Section 2778 of the California Labor Code. This primarily includes creative professionals such as graphic designers, marketing professionals, photographers, writers, and estheticians, provided they meet the criteria for classification as independent contractors.
Key Requirements for Contracts
Under the Act, contracts with freelance workers must include the following information:
Names and Mailing Addresses: The name and mailing address of each party involved.
Itemized Services: A detailed list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation.
Payment Due Date: The date by which payment to the freelance worker is due, or a mechanism for determining that date.
Submission Deadline: The date by which the freelance worker must submit a list of services rendered to the hiring party to ensure timely payment processing.
Protections and Penalties
The Act prohibits waivers of its provisions, deeming them contrary to public policy and unenforceable. Additionally, hiring parties cannot take adverse actions against freelance workers for exercising their rights under the Act.
If a hiring party fails to comply with the Act’s requirements, the freelance worker can bring a civil action to recover injunctive relief, reasonable attorneys’ fees, costs, and statutory damages. Specific penalties include:
$1,000 Award: If the worker requests a written contract before starting work and the hiring party refuses.
Double Damages: If the hiring party fails to pay the worker by the due date, the worker can be awarded up to twice the amount owed.
Reasonable Rate: If the worker requested a contract and the hiring party refused, the amount due shall be the rate the worker reasonably understood to apply.
Contract Value Damages: For any other violations, the freelance worker may be awarded damages equal to the value of the contract or the work performed, whichever is greater.
What Should Businesses Do?
Businesses should review their internal processes to ensure compliance with the new requirements. Those with authority to hire freelance workers must understand and adhere to the Act’s stipulations, ensuring written contracts are executed as required. Given the complexities of contractor classification under California law, businesses should consult with legal counsel when considering engaging workers as independent contractors.
By understanding and adhering to the Freelance Worker Protection Act, businesses can ensure fair treatment of freelance workers and avoid potential legal pitfalls. If you have any questions or need further guidance, consulting with a legal professional is always a wise step.
Employers should update their policies and consult with legal counsel to ensure compliance with these new regulations.
Resources: Bill Text - SB-988 Freelance Worker Protection Act. (ca.gov)