The pandemic changed employment patterns across the country, with more and more Americans turning to freelance or independent work to make a living — only hastening a trend many years along. But New York State still lacks wage protections for freelance and independent workers, something two lawmakers are hoping to remedy after last year’s attempt to do so was vetoed by Governor Kathy Hochul, a fellow Democrat.
This week, Brooklyn State Senator Andrew Gounardes and Assemblymember Harry Bronson of Rochester reintroduced the Freelance Isn’t Free Act, a bill that would provide mandatory contracts, timely payments, and redressal mechanisms against wage theft for independent workers. The bill is modeled after similar legislation that went into effect in New York City in 2017.
“I feel very optimistic,” Gounardes said in a phone interview. “I think last year, we ran up against the clock issue and were not able to have effective conversations with the governor's office about potential changes or other things that they may want to talk about.”
The legislation guarantees mandatory contracts to freelancers for any work over $250 or an aggregate of $800 or more over four months. The burden of providing a contract falls on clients, who can otherwise be penalized $250 for refusing to use one. Contracts must specify payment dates and, if they do not, must be paid out within 30 days of the work being completed.
It also includes anti-retaliation protections and legal assistance for freelance workers, as well as double damages for wage theft and attorney fees. Employers who are found to be engaged in a pattern of violations can be fined up to $25,000, and could also face potential criminal penalties.
“In my many years as a labor attorney and now as a member of the New York State Assembly, I know that independent contractors are not protected by the same minimum wage laws as regular employees and generally ineligible for unemployment and workers compensation, and are some of the most exposed laborers in our state when it comes to wage theft,” said Assemblymember Bronson, in a statement on Wednesday. “Freelance workers are a rapidly growing sector of the economy. Our legislation is a commonsense approach to ending the economic discrimination against freelancers and putting a value on their contributions.”
A report by the consulting firm McKinsey & Co, released in August 2022, found that 36% of Americans surveyed, which translates to about 58 million people, identify as independent workers, up from 27% in 2016. Among the reasons for the uptick, the company cited larger pools of workers on digital platforms, a shift to independent workers because of the pandemic, and pandemic layoffs and high inflation which could have pushed people towards independent work.
“This issue I think is always important, but especially in light of the pandemic, when we've seen people switch to non-traditional forms of employment in this way,” Gounardes said.
Independent work often comes with a price, however. Freelancers suffer from wage theft, delayed payments and other issues that would otherwise count as labor law violations. A survey released February 16 by the Independent Economy Council, a volunteer-led research and advocacy group, found that 74% of independent workers said they were not getting paid on time and 72% had outstanding invoices that have gone unpaid – 59% of such workers were owed $50,000 or more for already completed work.
Those findings portray a similar picture as another study from 2019, published by the Freelancers Union and Upwork, which showed that 59% of freelancers said they lived “paycheck to paycheck” and freelancers lost, on average, $5,968 annually to wage theft.
The Freelance Isn’t Free Act passed the State Senate on June 1 last year, and was approved by the Assembly the next day. On December 12, it was delivered to the governor for her approval or veto.
On December 23, however, Governor Hochul vetoed 165 bills, among them the Freelance Isn’t Free Act. In signing the veto, Hochul said she supported “efforts to ensure that New Yorkers are paid for their hard work.” But she expressed concerns about the costs associated with the legislation, requiring “at least several million dollars annually” and a significant increase in staffing at the state Department of Labor. As is typical of governors, Hochul vetoed most bills that were deemed to have enough of a fiscal impact that she believed they needed to be accounted for in the state budget.
A budget for next fiscal year is due from Hochul and the Legislature by April 1 — the governor has proposed a $227 billion budget for next fiscal year, up from $221.6 billion last year.
Besides citing “significant staffing and programmatic burdens,” Hochul also said the bill would require the Department of Labor to get involved in regulating private contracts between companies and non-employees, which falls outside the agency’s statutory authority.
“We will review the legislation if it passes both houses,” said Hazel Crampton-Hays, a spokesperson for the governor, in an email.
Gounardes, who chairs the Senate’s Committee on Committee on Budget and Revenue, was “skeptical” of the fiscal concerns that Hochul raised though he did concede that it will require more from the labor department. “I recognize that the Department of Labor has historically been underfunded when it comes to staffing up to prosecute and go after wage theft. It's an ongoing issue,” he said.
But, he noted that the bill has a two-tiered enforcement structure. Workers can either seek administrative adjudication by the state Department of Labor or go to court for damages. “That also helps ease the burden on the department,” Gounardes said.
Rafael Espinal, executive director of the non-profit Freelancers Union, echoed Gounardes, pointing to the success of New York City’s Freelance Isn’t Free Act, which was the first of its kind in the nation when it passed. The law, which Espinal helped pass as a City Council member, has helped freelancers claw back millions in unpaid wages. Between March 2017, when the law went into effect, through December 2021, the city’s Department of Consumer and Worker Protection handled more than 2,100 complaints under the law, and has won more than $2.4 million in restitution for 702 workers, according to the city’s fifth annual “The State of Workers’ Rights in New York City” report.
“The pandemic has shown that if there isn't a social safety net in place to ensure people are getting paid for work they complete or don't have access to basic social safety net protections, that they end up being in financially dire situations,” said Espinal, who was highly critical of the governor’s veto. “I think that the pandemic has really created this higher understanding of the needs of the independent workforce and the importance of government playing a role in ensuring the protections they need to ensure their income.”
Espinal has also pointed out that the governor’s State of the State policy agenda and executive budget proposal do not contain any new proposed protections specifically for independent workers. “The Governor’s clearly doesn’t have her finger on the pulse of NY. Freelancers were denied payment protections through a veto in 2022, now they’re left out in 2023,” he tweeted last month.
“This is a problem everywhere. It's not just a New York City problem,” Gounardes said. “You could be a graphic designer in Watertown, you could be a writer in Rochester, you could be a photographer in Binghamton. You could be anywhere and this is a challenge. So it only makes sense that we do this to help these folks.”
by Samar Khurshid, senior reporter, Gotham Gazette