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New York City Wage Theft Law Would Include Big Fines, Jail Time

Teddy Wilson

Businesses in New York City would be required to provide freelance employees with contracts or face severe penalties, including jail time, if they did not pay freelance employees, according to a bill introduced this week in the New York City Council.

The New York City Council is considering passage of what would be one of the country’s toughest wage theft policies as lawmakers nationwide look for ways to crack down on the illegal business practice.

Businesses in New York City would be required to provide freelance employees with contracts or face severe penalties, including jail time, if they did not pay freelance employees, according to a bill introduced this week in the New York City Council.

The Freelance Isn’t Free Act, introduced by Councilman Brad Lander (D-Brooklyn), is modeled after legal protections provided for traditional employees against wage theft. Employers who refuse to pay or attempt to delay payment would face penalties including monetary damages, attorney’s fees, and civil penalties.

Lander said in a statement that the bill is a first-of-its-kind piece of legislation that would provide freelancers with protection from wage left.

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“The bill works by requiring any company who hires a freelance worker to execute a simple written contract, describing the work to be completed, the rate and method of payment, and date when payment is due,” Lander said.

The new bill comes less than a month after Mayor Bill de Blasio signed a bill creating the Office of Labor Standards to enforce the city’s labor laws.

State and city policymakers across the country have pushed for laws that would help employees receive fair payment from employers who often withhold money without consequence. A recent study showed that wage theft is rampant in Minnesota. Democratic lawmakers in Wisconsin have grappled with how to ensure low-wage workers are paid what they’re owed, while in California—where wage theft costs workers $29 million per week in lost pay—lawmakers consider penalties for employers who violate labor laws.

Under the New York City bill, employers would be required to provide freelancers with contracts that include the length of the employment and the compensation the freelancer will receive. Employers will have 30 days to pay freelance employees upon completion of the contracted services.

Employers who violate the proposed law would face civil penalties, including a fine of up to $5,000, and an additional $100 for every day that payments are withheld. The proposed law includes criminal penalties of a fine of up to $500 and imprisonment of up to three months.

A notable exception to the proposed law would be that the city government would be exempt, as an employer, from adhering to the new rules with freelancers it hires.

Lander told Crain’s New York Business that the bill could be amended to ensure freelancers working with the city government would have the same protections. “We have to make sure the city isn’t stiffing its freelance workers,” Lander said.

The bill has the support of the Freelancers Union, an organization that advocates for legal protections for freelancers but is not a labor union and cannot collectively bargain for its members.

Sara Horowitz, the Freelancers Union’s founder and executive director, told the Washington Post that wage theft against freelance workers is disturbingly commonplace.

“It’s almost become something that people view as the price of doing business, just accepting that they won’t get paid,” Horowitz said. “It’s really crazy, because it’s a lot of money, and it’s really bad practice for companies to think they can do this.”

The Service Employees International Union (SEIU) has lent its support to the bill. Hector Figueroa, president of 32BJ SEIU told the Nonprofit Quarterly that the union is supporting the bill because wage theft affects workers across many socioeconomic backgrounds, from day laborers to freelance journalists.

“That’s why we’re coming together in this coalition,” Figueroa said. “The union movement was built on solidarity and strength in numbers and that’s how we’ll win independent workers the equal protection they deserve.”

Rachel Northrop, a freelancer working in New York, told the Washington Post that when a magazine she did freelance work for stopped paying her, she questioned whether she could continue working as a freelancer.

“Non-payment paralyzes the most motivated sector of people, who are willing to work on their own schedule, be independent and self sufficient,” Northrop said. “When other people hear this, it makes people think ‘let me stay at this boring job that I don’t even like.’”

Lander said that more than 70 percent of freelancers have reported being paid late, being underpaid, or not being paid at all, and on average it cost freelance workers $6,390 per year.

There were more than $20 million in lost income per week in New York due to wage theft, according to a study released last year by the U.S. Department of Labor. The study concluded that 19.5 percent of low-wage workers in New York had their wages stolen each month.

A 2009 study conducted by the Center for Urban Economic Development examined data from Los Angeles, Chicago, and New York, and found that 26 percent of low-wage workers were paid less than the minimum wage in the week prior to the survey.

The Business Council of New York State, a lobbyist group, opposes the bill. Zack Hutchins, spokesperson for the council, told Crain’s New York Business that the bill is unnecessary because the market weeds out bad actors.

“Companies that don’t pay freelancers properly, or on time, quickly find themselves unable to hire freelancers,” Hutchins said. “All this bill will do is put another law on the books that regulators will be unable to enforce and add to the burden of the 99 percent of business owners who act properly every day.”

Lander said that he will pursue other measures designed to protect workers’ rights.

Lander introduced another bill Monday that would change the legal definition of “employee” to include interns, and would clarify the protections for part-time, temporary, leased, and seasonal workers and independent contractors under the city’s human rights law.

The bill has been referred to the Committee on Consumer Affairs, where it awaits further action.

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