What happened?

On September 28, 2024, Governor Newsom signed SB 988, known as the Freelance Worker Protection Act, which establishes protections for freelance workers regarding contracts, payment, and retaliation.

Quick Summary:

• Establishes new protections for freelance workers by requiring written contracts for services, timely payment, and prohibiting retaliation against freelancers.

• This law is relevant to employers as it mandates compliance with these new requirements, ensuring fair treatment and legal protections for freelance workers starting January 1, 2025.

What are the details?

Under the Freelance Worker Protection Act (SB 988)

• “Covered employers” include any person or organization in California that hires a freelance worker to provide professional services.
  • Exceptions include the U.S. government, the State of California and its subdivisions, foreign governments, and individuals hiring for personal benefit.

• This law imposes minimum requirements for contracts between hiring parties and freelance workers.
  
  Key requirements:
  
  • Written Contracts: Contracts must be in writing and include names and addresses of both parties, an itemized list of services, their value, compensation method, payment due dates, and reporting dates for completed services.
  • Timely Payment: Freelancers must be paid on or before the date specified in the contract, or within 30 days after completing services if no date is specified.
  • Prohibitions on Retaliation: Hiring parties cannot retaliate against freelancers for enforcing their rights under the Act.

• A “freelance worker” is defined as a person or organization with no more than one person, hired as a bona fide independent contractor to provide professional services for $250 or more.

• The Act applies to services listed in California Labor Code Section 2778(b)(2).

• The law allows freelancers to sue for double damages if not paid on time and mandates that hiring parties retain contracts for at least four years.

Business Considerations

• Employers should identify and review all vendors and contractor agreements to ensure compliance with the Freelance Worker Protection Act (FWPA) and update contracts as needed.
• Employers should update policies to comply with the new requirements, including protections against discrimination and retaliation, payment, and contract provisions.
• Employers should ensure timely payment to freelance workers as specified in the contract or within 30 days of service completion if no date is specified. This will help employers avoid heavy penalties.
• Employers should maintain detailed records by retaining contracts for at least four years and including all required details such as names, addresses, services, compensation, and payment terms.

Source References

• CA SB 988

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