The enactment of California’s Freelance Worker Protection Act goes into effect on January 1, 2025.
Here is a revised summary analysis of the California Freelance Worker Protection Act (Senate Bill 988) and its implications for your business operations.
Freelance worker is defined as an individual or a single-person organization hired as an independent contractor to provide professional services for compensation of $250 or more. The California Freelance Worker Protection Act, does not encompass all freelancers as initially perceived. The law references Section 2778(b)(2) of the California Labor Code to define "professional services," which includes a diverse group of professionals such as creative marketing professionals, human resources administrators, travel agents, and more. See here for complete list.
A hiring party refers to any person or organization within California that retains a freelance worker, excluding government entities and individuals hiring for personal use. The law does not explicitly clarify whether it applies solely to services rendered within California or to companies based in California. This ambiguity could pose challenge.
Under the Freelance Worker Protection Act, contracts between hiring parties and freelance workers must be in writing, specifying the services, compensation rate and method, and the payment schedule. The Act mandates that hiring parties provide a signed copy of the contract to the freelancer and retain it for at least four years.
The Act prohibits discrimination or adverse actions against freelance workers for asserting their rights under the law.
Damages for violations include an additional $1,000 if a written contract was requested but not provided, double the unpaid compensation for late payments, and damages equal to the greater of the contract value or the work performed for other violations.
Double Damages Provision: A significant aspect of the law is the provision for double damages if a freelancer's fees are not paid within 30 days or as otherwise agreed upon "after completion of the freelance worker's services under the contract." This provision is contentious due to the subjective nature of what constitutes the "completion" of services. The risk of double damages arises if there is a dispute over the quality or specifications of the work completed, even if the hiring party has a good faith belief that the work was unsatisfactory.
Freelance workers and public prosecutors can bring civil actions for violations of the Act. Successful plaintiffs are entitled to reasonable attorney’s fees, costs, injunctive relief, and other appropriate remedies.
Non-Waivability and Enforcement: Any waiver of the provisions of this Act is void and unenforceable as contrary to public policy
Minimizing Risks: To mitigate the risks associated with the double damages provision, it is advisable for companies to:
Ensure clear, written contracts are in place for freelancers providing "professional services," explicitly detailing the scope of work, payment terms, and criteria for "completion" of services.
Seek legal counsel to clarify the geographic scope of the law's applicability to your business.
Establish objective standards and processes for evaluating the completion and satisfaction of services rendered.
Promptly address any disputes or concerns regarding the quality of work to avoid potential claims for double damages.
We understand that navigating legal requirements can be challenging. We here at the Law Office of Samira Amato are here to support you every step of the way, speically with the new California Independent Contractor Pay Protection Law. Please do not hesitate to reach out if you have any questions or require further assistance in ensuring compliance with the California Freelance Worker Protection Act.