Legislation Proposed to Assure Freelance Workers Are Paid For Work Performed

Most people know that it is against the law for employers to not pay their employees their earned wages.  But what if you are not an employee, but instead making a living as a freelance worker.  Because freelance workers are not considered employees, the laws that require employers to pay its employees their wages, such as the New Jersey Wage Payment Act and federal Fair Labor Standards Act, do not apply to freelancers.  While there are some laws such as the Independent Sales Representative Rights Act that protect independent sales representatives from not being paid their earned sales commissions, there is no specific law to protect many freelance workers. As a result, companies are far too often stiffing their non-employees from being paid their earned compensation.

New Jersey lawmakers have recognized this as a serious problem in today’s workforce and are now attempting to pass legislation to protect freelance workers from getting paid their earned compensation.  Assembly Bill No. 1526, approved on May 18, 2018, mandates that contracts between a company and a freelance worker, must now be in writing, and provides for severe penalties against companies for shirking their duty to  pay a freelance worker the compensation they are owed.

The bill requires a client to pay a freelance worker his or her compensation earned according to the work terms agreed to with the client.  If there is no agreement, payment shall be paid no later than 30 days after completion of the work or services performed.  The bill defines the term “client” to be any “sole proprietorship, partnership, corporation, limited liability company, association, other business entity or nonprofit organization in which that business has contracted with a freelance worker for compensation equal to or greater than $600.”

The bill includes a strong anti-retaliation provision that makes it illegal for a client to threaten, intimidate, discipline, penalize, harass, deny a work opportunity to, discriminate or take other action that is reasonably likely to deter the freelance worker from exercising any rights under the bill or from obtaining future work opportunities.

A freelance worker may file a claim for violation of the bill with the Commissioner of the New Jersey Labor and Workforce, who will conduct an investigation and bring any legal action on behalf of the freelance worker.  A freelance worker can also elect to file a private lawsuit.  If a client is found to have violated the law, they could be liable for the amount of compensation owed and could be assessed an additional penalty as liquidated damages to be calculated as no more than 100 percent of the total amount of the underlying contract.  Officers, agents or representatives who knowingly violate the law can be found guilty of a disorderly persons offense, which is punishable by a term of imprisonment up to six months or a fine not to exceed $1,000, or both.

The proposed bill excludes certain categories of persons who are not considered freelance workers, including licensed medical professionals, attorneys, licensed New Jersey real estate agents, certain sales representatives that have contracted with manufacturers, and those who are subject to a collective bargaining agreement that contains wage and conditions of employment provisions.

Companies and freelance workers are well advised to keep an eye on further developments of this bill.  With the new Governor and Legislature already passing the New Jersey Equal Pay Act and Paid Sick Leave Act this year, it would be no surprise to see this bill become law in the near future.

Most people know that it is against the law for employers to not pay their employees their earned wages.  But what if you are not an employee, but instead making a living as a freelance worker.  Because freelance workers are not considered employees, the laws that require employers to pay its employees their wages, such as the New Jersey Wage Payment Act and federal Fair Labor Standards Act, do not apply to freelancers.  While there are some laws such as the Independent Sales Representative Rights Act that protect independent sales representatives from not being paid their earned sales commissions, there is no specific law to protect many freelance workers. As a result, companies are far too often stiffing their non-employees from being paid their earned compensation.

New Jersey lawmakers have recognized this as a serious problem in today’s workforce and are now attempting to pass legislation to protect freelance workers from getting paid their earned compensation.  Assembly Bill No. 1526, approved on May 18, 2018, mandates that contracts between a company and a freelance worker, must now be in writing, and provides for severe penalties against companies for shirking their duty to  pay a freelance worker the compensation they are owed.

The bill requires a client to pay a freelance worker his or her compensation earned according to the work terms agreed to with the client.  If there is no agreement, payment shall be paid no later than 30 days after completion of the work or services performed.  The bill defines the term “client” to be any “sole proprietorship, partnership, corporation, limited liability company, association, other business entity or nonprofit organization in which that business has contracted with a freelance worker for compensation equal to or greater than $600.”

The bill includes a strong anti-retaliation provision that makes it illegal for a client to threaten, intimidate, discipline, penalize, harass, deny a work opportunity to, discriminate or take other action that is reasonably likely to deter the freelance worker from exercising any rights under the bill or from obtaining future work opportunities.

A freelance worker may file a claim for violation of the bill with the Commissioner of the New Jersey Labor and Workforce, who will conduct an investigation and bring any legal action on behalf of the freelance worker.  A freelance worker can also elect to file a private lawsuit.  If a client is found to have violated the law, they could be liable for the amount of compensation owed and could be assessed an additional penalty as liquidated damages to be calculated as no more than 100 percent of the total amount of the underlying contract.  Officers, agents or representatives who knowingly violate the law can be found guilty of a disorderly persons offense, which is punishable by a term of imprisonment up to six months or a fine not to exceed $1,000, or both.

The proposed bill excludes certain categories of persons who are not considered freelance workers, including licensed medical professionals, attorneys, licensed New Jersey real estate agents, certain sales representatives that have contracted with manufacturers, and those who are subject to a collective bargaining agreement that contains wage and conditions of employment provisions.

Companies and freelance workers are well advised to keep an eye on further developments of this bill.  With the new Governor and Legislature already passing the New Jersey Equal Pay Act and Paid Sick Leave Act this year, it would be no surprise to see this bill become law in the near future.