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The NYC Freelance Isn’t Free Act Explained for Business Owners

NYC business owner reviewing a contract under the NYC Freelance Isn’t Free Act

The NYC Freelance Isn’t Free Act affects many New York City businesses that hire freelancers, consultants, designers, writers, photographers, developers, marketers, and other independent contractors.

At its core, the law is fairly straightforward: put qualifying freelance agreements in writing, clearly state when the freelancer will be paid, and then pay them on time.

That may sound like standard good business practice. But under this law, failing to follow those practices can lead to more than an uncomfortable conversation with a contractor. It may result in double damages, legal fees, and other penalties.

What Is the NYC Freelance Isn’t Free Act?

New York City’s Freelance Isn’t Free Act took effect on May 15, 2017. New York State also enacted a statewide Freelance Isn’t Free Act that took effect on August 28, 2024. As a result, businesses outside New York City may now face similar requirements under state law. It gives covered freelance workers three primary protections:

  • The right to a written contract
  • The right to full and timely payment
  • Protection from retaliation for asserting their rights

When Does the NYC Freelance Isn’t Free Act Require a Contract?

Under the NYC Freelance Isn’t Free Act, a written contract is generally required when the freelancer’s services are worth at least $800.

That threshold can be reached through:

  • One contract worth $800 or more, or
  • Multiple agreements between the same business and freelancer that total at least $800 during a 120-day period

This second rule is easy to overlook.

For example, suppose you hire a freelance photographer for three separate projects:

  • First project: $300
  • Second project: $250
  • Third project: $300

Even though no single project exceeds $800, the three projects total $850 within 120 days. The written-contract requirement would generally apply.

From a practical standpoint, businesses should consider using a written agreement for every freelancer, even when the first project is below $800. It is much easier than trying to monitor when several small projects cross the legal threshold.

What Must the Freelance Contract Include under the NYC Freelance Isn’t Free Act?

A qualifying written agreement should clearly identify the basic terms of the relationship. At a minimum, the contract should generally include:

  • The name and mailing address of the business
  • The freelancer’s name and mailing address
  • A description or itemization of the services
  • The value of the services
  • The rate and method of compensation
  • The payment date or a clear method for determining the payment date

Both the business and the freelancer should keep a copy of the agreement. New York City also provides a model contract that businesses may use as a starting point. A good contract should go further than the bare minimum. Depending on the engagement, it may also address:

  • Project deadlines
  • Deliverables
  • The number of revisions included
  • Ownership of completed work
  • Confidentiality
  • Reimbursable expenses
  • Cancellation terms
  • What must happen before the freelancer can submit an invoice

The NYC Freelance Isn’t Free Act Has Strict Payment Rules

The payment date written into your contract matters. A business must generally pay the freelancer:

  • On or before the date stated in the contract, or
  • Within 30 days after the freelancer completes the work when the contract does not establish a payment date

Once the freelancer begins the work, the business generally cannot make timely payment conditional on the freelancer accepting less than the agreed-upon amount.

This is where accounting procedures become especially important. Your contract may say that payment is due within 15 days, but that promise is only useful when your internal process can support it. Someone still needs to receive the invoice, approve it, enter it into the accounting system, and release the payment. The contract and the accounts payable process need to match.

“We Are Waiting to Get Paid” Is Usually Not a Payment Policy

Small businesses sometimes assume they can pay a freelancer after their own customer pays them. That arrangement should not be assumed.

For example, imagine your business hires a freelance designer for a client project. Your client is late paying your invoice, so you delay paying the designer.

From a cash-flow perspective, that may feel understandable. From a contract and compliance perspective, it may still mean the freelancer was paid late. The freelancer’s payment deadline should be based on the agreement between your business and the freelancer—not on an informal expectation that your customer will pay first.

When cash flow is tight, the answer is usually better planning before the freelancer starts the work. That could include:

  • Requiring a deposit from your customer
  • Building contractor costs into the project budget
  • Setting aside the freelancer’s payment as revenue is collected
  • Negotiating a realistic payment schedule in advance

Retaliation Against a Freelancer Is Prohibited under the NYC Freelance Isn’t Free Act

The NYC Freelance Isn’t Free Act also prohibits retaliation. A business should not threaten, intimidate, blacklist, deny future work to, or otherwise penalize a freelancer because the freelancer:

  • Asked for a written contract
  • Requested payment
  • Filed a complaint
  • Exercised another right under the law

Even threatening unwarranted legal action or refusing future projects because a freelancer pursued payment may be considered retaliation.

You are not required to continue working with every freelancer forever. Sometimes a relationship is simply not a good fit. The concern is whether the decision is being made to punish the person for asserting a protected right. Document legitimate performance or business reasons when ending a contractor relationship.

What Happens If a Business Violates the Law?

A freelancer who believes the law was violated may file a complaint with the New York City Department of Consumer and Worker Protection.

The business is generally expected to respond to the complaint within 20 days. If it fails to respond and the dispute later reaches court, that failure may create a presumption that the business violated the law. Depending on the violation, a freelancer may be entitled to:

  • The unpaid compensation
  • Double the unpaid amount
  • Statutory damages
  • Damages for retaliation
  • Attorney’s fees and court costs

New York City may also pursue businesses that demonstrate a pattern or practice of violations. Civil penalties for patterns of noncompliance may reach $25,000.

This is not just a law sitting quietly on a shelf. New York City has actively pursued businesses over late and unpaid freelance compensation, including settlements requiring restitution for affected workers.

The NYC Freelance Isn’t Free Act Does Not Resolve Worker Classification

One important point: calling someone a freelancer in a contract does not automatically make that person an independent contractor.

Worker classification depends on the actual relationship, including factors such as:

  • How much control the business has over the work
  • Whether the person sets their own schedule
  • Whether the person offers services to other customers
  • Who provides the equipment
  • Whether the services are a regular part of the business
  • The degree of independence involved

The NYC Freelance Isn’t Free Act protects qualifying freelance workers, but it does not give a business permission to classify someone as a contractor when that person should legally be treated as an employee.

Misclassification can create separate problems involving payroll taxes, unemployment insurance, workers’ compensation, wage laws, and employee benefits. To learn more about this check out our 1099 vs W2 post.

How Business Owners Can Comply With the NYC Freelance Isn’t Free Act

The best approach is to make freelancer compliance part of your normal onboarding and bill-payment procedures.

1. Use a standard freelancer agreement

Have an attorney prepare or review a reusable agreement for your business. You can then customize the scope, rate, and payment terms for each project. NYS provided a contract template.

2. Put the agreement in place before work begins

Do not wait until the project is halfway completed to discuss the contract. That is when disagreements about scope, revisions, and payment tend to appear.

3. Use specific payment language

Avoid vague terms such as “payment upon completion” unless everyone clearly understands what completion means. A better provision might say: The freelancer may submit an invoice after delivering the final approved files. Payment is due within 15 calendar days after the business receives the invoice.

4. Assign responsibility for approving invoices

Someone inside the business should be responsible for confirming that the work was completed and approving the invoice promptly. Invoices often become late because everyone assumes someone else is handling them.

5. Track freelance contracts centrally

Maintain a folder or system containing:

  • The signed contract
  • Any approved changes to the scope
  • Invoices
  • Approval records
  • Payment confirmations
  • Relevant emails or project correspondence

6. Monitor the $800 threshold

Do not look only at each individual assignment. Several smaller projects with the same freelancer can trigger the written-contract requirement when they total $800 within 120 days.

7. Match your contract to your actual payment cycle

Do not promise payment within seven days when your company only processes bills twice per month. Set a payment deadline that is fair, lawful, and operationally realistic and then meet it.

The Bottom Line for NYC Business Owners

The NYC Freelance Isn’t Free Act is mostly about three things: clear agreements, timely payment, and respectful treatment.

For most responsible business owners, none of those ideas should feel unreasonable. The challenge is turning them into a repeatable process.

Use written agreements. State exactly when payment is due. Make sure your bookkeeping and bill-payment systems can meet that deadline. Keep your records organized. And do not wait for a complaint before fixing a broken contractor-payment process.

At My Fiscal Office, we help small business owners understand what is happening inside their finances before an administrative problem becomes an expensive one.

Need help organizing your contractor bills, cash flow, or accounts payable process? Schedule a conversation with My Fiscal Office.