Question: I heard that there is a new law that provides additional rights to freelance workers. Is this true? What does it mean, and what kinds of workers do this law apply to?
Answer: Starting on Jan. 1, California’s Freelance Worker Protection Act—SB 988—will take effect. Under this new law, certain workers who are considered independent contractors will be granted new rights under state law.
In general, the new law applies to contracts between a “hiring party” and a “freelance worker” entered into or renewed on or after Jan. 1. A “hiring party” is broadly defined to include nearly all private persons or organizations unless the individual is hiring services for the personal benefit of themselves, their family members or their homestead. A “freelance worker” is also broadly defined to mean any person or organization that is hired by a hiring party to provide professional services valued at $250 or more in the past 120 days. A person can be a “freelance worker” even if they are a sole proprietor who is not incorporated or using a trade name. whether or not they are incorporated or even using a trade name.
In addition to the above limitations, SB 988 only applies to “freelance workers” who provided “professional services,” as that term is defined by the Labor Code. The Labor Code defines “professional services” as people who provide the following services: Marketing, human resources administration, travel agent services, graphic design, fine art, grant writing, tax preparation, payment processing, writing/copy editing, photography or photo/video editing, barbers or cosmetology-related services, appraisers and professional foresters. A worker who does not provide these types of services is not entitled to the new protections under SB 988.
If applicable, the new rights provided to freelance workers under SB 988 focus on the written contract and its terms. The law will now require that all contracts with freelance workers be in writing and must include certain elements, such as mailing address, the rate of compensation and the services to be provided. Workers must be paid on the date specified in the contract or no later than 30 days from the date services are rendered. Hiring parties must also keep records of freelance worker contracts for four years, and they cannot contract around these requirements. For example, the hiring party cannot require that workers accept less compensation or provide additional services in exchange for receiving timely payment. Nor can freelance worker contracts include SB 988 waivers: “A waiver of any provision of” SB 988 “is void and unenforceable.”
SB 988 creates new potential sources of legal liability. For example, hiring parties cannot retaliate or discriminate against workers who attempt to assert their rights. Also, refusal to provide a written contract to a worker carries a $1,000 penalty. Failure to timely pay a worker will result in double damages—i.e., the hiring party will be required twice the amount owed under the contract. For any other violations, hiring parties will be required to pay “the value of the contract or the work performed, whichever is greater.”
SB 988 will apply to any new contracts or contracts that are renewed after Jan. 1. Hiring parties and other employers who work with potential freelance workers should consult with their employment counsel to ensure they are following SB 988.
Marco Lucido is a lawyer with Fenton & Keller in Monterey. This column is intended to answer questions of general interest and should not be construed as legal advice. Email queries to email@fentonkeller.com.
Source: Marco Lucido, Workplace Law: Freelance Worker Protection Act
