On September 28, 2024, California Governor Gavin Newsom signed into law Senate Bill (SB) No. 988, the Freelance Worker Protection Act (FWPA). The FWPA provides minimum requirements for agreements between freelance workers and hiring parties, effective January 1, 2025. Entities engaging independent contractors may want to familiarize themselves with these new requirements, as their contractors are likely to be “freelance workers” for purposes of the FWPA.
Quick Hits
- Contracts for freelance work of $250 or more must be in writing and contain certain specific information regarding services to be provided and dates for contract completion, among other things.
- Payment for freelance work must be made on time or within thirty days after the completion of the work if no due date is specified in the contract.
- The FWPA prohibits discrimination or adverse action against freelance workers for protesting violations of the FWPA or seeking to enforce it.
- The FWPA takes effect on January 1, 2025.
“Freelance Workers” and “Hiring Parties”
The FWPA defines “freelance worker” as “a person or organization composed of no more than one person … that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than two hundred and fifty dollars ($250).”
A “hiring party” is defined as “a person or organization in the State of California that retains a freelance worker to provide professional services.” The FWPA specifically excludes the following from the definition of “hiring party”: the U.S. government, the “State of California or any subdivision thereof,” a foreign government, and “individual[s] hiring services for the personal benefit of themselves, their family members, or their homestead.”
Contracts Must Be in Writing
Under the FWPA, contracts between hiring parties and freelance workers must be in writing. The hiring party must provide the freelance worker with a signed copy of the written contract, either physically or electronically, and must retain the contract for at least four years.
Contracts Must Include Certain Information
Applicable contracts must include the following information, at a minimum:
- “The name and mailing address of each party.”
- “An itemized list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation.”
- “The date on which the hiring party shall pay the contracted compensation or the mechanism by which the date shall be determined.”
- “The date by which a freelance worker shall submit a list of services rendered under the contract to the hiring party to meet the hiring party’s internal processing deadlines for purposes of timely payment of compensation.”
Notably, the FWPA provides that where a formal written contract does not exist, the parties’ actions and communications may serve as evidence of contract formation.
Payment
The FWPA specifies that “[e]xcept as otherwise provided by law, a hiring party shall pay a freelance worker the compensation specified by a contract for professional services: (1) [o]n or before the date compensation is due pursuant to the contract [or] (2) no later than 30 days after the completion of the freelance worker’s services under the contract,” if the contract does not specify a payment due date.
Prohibition Against Discrimination
Under the FWPA, a hiring party may not “discriminate or take any adverse action against a freelance worker that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, taking any of the following actions”:
- “Opposing any practice prohibited by [the FWPA].”
- “Participating in proceedings related to the enforcement of [the FWPA].”
- “Seeking to enforce rights provided by [the FWPA].”
- “Otherwise asserting or attempting to assert rights provided by [the FWPA].”
Enforcement
An aggrieved freelance worker may bring a civil action to enforce the FWPA and may be entitled to recover reasonable attorneys’ fees and costs, injunctive relief, and any other remedies deemed appropriate by the court.
The FWPA provides that “[d]amages shall be awarded to an aggrieved freelance worker as follows”:
- “If the freelance worker requested a written cont[r]act prior to commencing work under the contract and the hiring party refused in violation of Section 18103 [of the FWPA], the freelance worker shall be awarded an additional one thousand dollars ($1,000).”
- “If the hiring party failed to pay the freelance worker the contracted compensation by the time required under Section 18102 [of the FWPA], the freelance worker shall be awarded damages up to twice the amount that remained unpaid at the time payment was due. If the freelance worker requested a written contract prior to commencing work under the contract and the hiring party refused in violation of Section 18103 [of the FWPA], the amount unpaid shall be determined by the rate the freelance worker reasonably understood to apply to the work.”
- “If the hiring party violates any other provision of [the FWPA], the freelance worker may be awarded damages equal to the value of the contract or the work performed, whichever is greater.”
