Lesson Last Updated: October 15, 2024

Lesson Highlights

This is an employment law basics course, and technically independent contractors are NOT employees (yeah… the phrase “1099 employee”, which we hear a lot, is not “a thing” legally speaking). But they are workers that often work alongside employees and tend to overlap in some workplaces, so as a bonus, here’s a timely update for you. 

On January 1, 2025 a new state law, known as the “Freelance Worker Protection Act” (FWPA), will take effect. The FWPA will impose minimum requirements on contracts between freelance workers (in other words, independent contractors) and hiring parties.

In this lesson, we’ll cover:

• Who this law applies to;
• The basic requirements of the law; and
• Enforcement of the law. 

Suggestions for compliance are highlighted below in yellow!

Who This Law Applies To

If you hire a “freelance worker”, or renew an existing hiring relationship with one, on or after January 1, 2025, then this law will apply to you. Let’s pause for a moment and go over the important definitions: 

• A “freelance worker” means a person that is hired or retained as a bona fide independent contractor by a hiring party to provide professional services in exchange for $250 or more (either from a single contract or when aggregating all contracts between the same hiring party and the independent contractor during the past 120 days).
• A “hiring party” means a person or organization in the State of California that retains a freelance worker to provide professional services (other than federal, state, local, or foreign governments or individuals hiring services for the personal benefit of themselves, their family members, or their “homestead”).
• “Professional services” has the same meaning as it does under existing California law and includes services such as marketing, human resources, travel agent services, graphic design, grant writing, fine artistry, photography, videography, photo editing, freelance writing, translating, editing, illustrating, and more. [1]

So if you fall under the definition of a hiring party, and you are hiring or renewing a relationship with a freelance worker for professional services, then you need to comply with the FWPA. 

Basic Requirements of the Freelance Worker Protection Act 

The core requirement of the FWPA is that a hiring party must provide a signed copy of a written contract (either physically or electronically) to its freelance workers, and then maintain a copy of that contract for at least four (4) years afterward. 

The written contract must include, at minimum, the following information:

1. the name and address of each party;
2. an itemized list of all services that will be provided, including the value of those services and the rate and method of compensation;
3. the date the hiring party will pay the compensation or how the date will be determined; and
4. the date by which the freelance worker will submit a list of services rendered under the contract to the hiring party to meet the hiring party’s internal deadlines for timely payment of compensation.

For our clients who have worked with us on independent contractor agreements in the past, this probably not much of a change. It’s always wise to use a written agreement any time money is being exchanged, after all. Perhaps the only area that will need to be revisited is bullet #4 above within their master agreement.

The FWPA also requires covered freelance workers to be paid:

• on or before the date compensation is due as specified under the contract; or
• if the contract does not specify a payment date, no later than thirty (30) days after the freelance worker completes the services under the contract.

This is extremely important to note. For one, it means that hiring entities need to have their internal systems in order to ensure timely payment, or they run the risk of falling out of compliance. However, it does bring to mind the dozens of times our clients have run into issues with their independent contractors and declared, “I simply won’t pay them!” While it’s always been our opinion that this is a bad route to take, this law reinforces our professional thinking that any hiring entity that refuses to pay its freelance workers could create an even bigger problem for itself.

Under the FWPA, once a freelance worker has started performing services under a contract, the hiring party may not require, as a condition of timely payment, that the freelance worker: (1) accept less compensation than specified in the contract; or (2) provide more goods or services or grant more intellectual property rights than they agreed to in the contract. So if you are having issues with the quality of your independent contractors’ work or you need additional services from them, you should speak to your attorney before the relationship spirals out of control, not after. 

Lastly, the FWPA forbids a hiring entity from discriminating or taking action against a freelance worker that penalizes the freelance worker for, or is reasonably likely to deter the freelance worker from, doing any of the following:

• opposing any practice that is prohibited by the FWPA;
• participating in any proceedings related to enforcement of the FWPA;
• seeking to enforce any rights provided to them by the FWPA; or
• otherwise asserting or attempting to assert rights provided by the FWPA.

Note that the FWPA is not retroactive, which means that if you’ve hired freelance workers in the past and have neglected to put a written contract in place for them, you shouldn’t be in violation of the FWPA unless you renew the relationship after January 1, 2025 and still do not have a written contract for the relationship. If you plan on hiring freelance workers (or renewing any existing freelance worker relationships) after January 1, 2025, speak to an attorney to create a customized independent contractor agreement for your use. 

How Will the FWPA Be Enforced?

A freelance worker may bring a civil lawsuit to enforce the FWPA. A prevailing freelance worker is entitled to reasonable attorney’s fees and costs, injunctive relief, and any other remedies deemed appropriate by the court, as well as damages based on the alleged violation. The possible damages include:

• if the freelance worker requested a written contract before beginning work and the hiring entity refused to provide one, the amount unpaid will be determined by the rate that the freelance worker reasonably understood to apply to the work + an additional $1,000;
• if the hiring entity failed to pay the freelance worker the compensation they contracted for within the required timeframe, the freelance worker can recover up to twice the amount that was unpaid when payment was due; and/or
• if the hiring entity violates any provision of this law, the freelance worker can be awarded damages equal to the value of the contract or the value of the work performed, whichever is greater. 

Note that the last bullet applies even if the freelance worker received a contract; it’s not enough to have a contract, it must also be a compliant contract. If you’re not sure if your contract is compliant, it’s time to email your attorney for help!

This Lesson's Sources:

[1] SB 988