If your business hires freelance workers—also known as independent contractors—you need to be aware of new laws now in effect in California, Illinois, and New York. These laws are designed to protect freelancers by requiring written contracts and prompt payment.

What’s New?

These states have enacted freelance worker protection acts in response to widespread concerns from freelancers about late or missing payments. The laws apply to most private businesses, regardless of size, that hire freelancers located in or providing services in one of the three states.

Key Requirements

If you pay a freelance worker more than a threshold amount—$250 in California, $500 in Illinois, or $800 in New York (within a 120-day period)—you must use a written agreement that includes the following:

• Names and addresses of both parties

• Description and value of the services

• Rate and method of compensation

• Payment due date (or how it will be determined)

• Date by which the freelancer must submit a service record for processing

You may use paper or electronic contracts, but you must keep a copy for two to six years, depending on the state.

Who Is Covered?

These laws apply only to freelancers—typically one-owner independent businesses. California’s law applies only to freelancers in specified professions (e.g., writers, designers, appraisers), and Illinois excludes entities like LLCs and corporations.

Failure to pay a freelancer or to provide a proper contract can lead to double damages, attorney fees, and statutory penalties—up to $1,000 per violation in some cases. New York may impose fines of up to $25,000 for repeated violations.

What You Should Do

• Use a compliant freelance agreement.

• Pay freelancers on time.

• Document performance issues carefully if withholding payment.

• Avoid retaliation against freelancers who assert their rights.

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Matt Bontrager