As of January 1, 2025, California will implement significant changes to the way businesses engage with freelance workers. The new legislation, the Freelance Worker Protection Act (FWPA), introduces critical requirements for private employers hiring certain independent contractors. The law aims to enhance protections for freelancers by mandating written contracts and enforcing strict payment deadlines.
For more information on the Freelance Worker Protection Act (FWPA) and its potential impact on your organization, contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Overview of the Freelance Worker Protection Act (FWPA)
The FWPA, signed into law by Governor Gavin Newsom on September 28, 2024, mirrors elements of the Los Angeles Freelance Worker Protections Ordinance. This new state law is designed to give freelancers essential protections similar to those provided to traditional employees, including the right to timely payment and safeguards against discrimination and retaliation.
Key Requirements of the FWPA
Written Contracts: Starting in 2025, businesses will be required to provide freelance workers with a written contract that outlines key details, including:
The names and addresses of both parties
A description of services and their value
The compensation rate and method of payment
The payment timeline or a process for determining payment due dates
This contract must be signed and retained by both parties for at least four years. Importantly, even if no contract is provided, actions and communications can still be used to establish that a contract exists.
Timely Payment: Freelancers must be paid by the date specified in the contract. If no payment date is mentioned, the FWPA requires that payment be made no later than 30 days after the completion of services.
Prohibition of Retaliation: The law prohibits businesses from taking adverse action against freelance workers for asserting their rights under the FWPA, such as requesting timely payment or participating in enforcement proceedings.
Who Must Comply
The FWPA applies to nearly all private businesses in California that hire independent contractors for professional services, including industries such as marketing, graphic design, photography, writing, and more. However, certain entities—such as federal, state, local governments and individuals hiring services for personal benefit—are exempt from the law.
Penalties for Non-Compliance
Failing to comply with the FWPA can lead to significant financial consequences for businesses. Freelancers have the right to file a lawsuit to recover unpaid compensation, with the possibility of additional penalties if certain provisions of the FWPA are not followed. For example, if a business refuses to provide a written contract, freelancers may be entitled to an additional $1,000. If payment is delayed, freelancers may recover up to twice the unpaid amount.
How to Comply with the FWPA
To ensure compliance with the FWPA and avoid potential legal risks, businesses should take the following steps:
Identify Freelancers: Review your workforce to identify any freelancers or independent contractors that may be impacted by the new law.
Update Contracts: Ensure all contracts with freelancers meet the FWPA’s requirements. For existing freelancers, update contracts as needed to include the required details.
Revise Policies: Amend your company’s anti-discrimination and anti-retaliation policies to extend protections to freelance workers.
Educate Hiring Managers: Train managers and HR staff on the FWPA’s requirements to ensure proper handling of freelance engagements, including timely payments and contract formation.
Implement Payment Systems: Establish internal systems to guarantee that freelancers are paid according to the contract terms or within the 30-day timeframe when no payment date is specified.
Conclusion
The Freelance Worker Protection Act is poised to provide much-needed protections to California’s freelance workforce, ensuring that freelancers are treated fairly and paid on time. For businesses, this new law introduces clear obligations regarding contracts and compensation. Taking proactive steps now will help ensure compliance with the FWPA by 2025, reducing legal risks and maintaining positive working relationships with freelancers.
For more information on the Freelance Worker Protection Act (FWPA) and its potential impact on your organization, contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.
Richard Liu, Esq. is the Managing Counsel of ILS. He serves clients as a management-side defense lawyer specializing in employment and business litigation. Richard is also an expert on litigation prevention and compliance. He regularly advises Fortune 500 companies and startups on employment, labor, and commercial matters.
Email: richard.liu@consultils.com | Phone: 626-344-8949
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