The City of Los Angeles’ Freelance Worker Protections Ordinance is now in effect. This ordinance sets forth requirements for businesses who use freelancers to perform work within the City after July 1, 2023.
Which work arrangements does this ordinance cover?
A “freelance worker” covered under this ordinance is defined as an individual or entity composed of no more than one person (with no employees) that is hired by a “hiring entity” as a bona fide independent contractor to provide services in exchange for compensation. A “hiring entity” is defined as being regularly engaged in a business or commercial activity but does not include entities that hire app-based drivers to provide prearranged transportation or delivery services. This ordinance applies to jobs for work performed in the City valued at $600 or more (either per individual job or total of cumulative jobs within a calendar year).
If the above criteria apply, what are the requirements under the ordinance?
- A written contract must be in place for the covered services that contains the following information: 1) name, mailing address, phone number and email of both the hiring entity and the freelance worker; 2) an itemization of all services to be provided by the freelance worker, the value of the services to be provided pursuant to the contract, and the rate and method of compensation; and 3) the date by which the hiring entity must pay for the contracted compensation or the manner by which such date will be determined.
- The hiring entity is required to provide full payment by the date specified in the contract. But if there is no written contract or the written contract does not specify a due date, then payment is due no later than 30 days after the services are rendered.
- Both the hiring entity and freelance worker must retain records for 4 years, including contracts, payment records, and any other records that demonstrate compliance.
- The hiring entity may not retaliate against a freelance worker for asserting any rights under this ordinance.
A complaint process is in place for freelance workers who allege any violation of the ordinance by the hiring entity, and the ordinance also provides for a private right of action with damages and attorney fees for a prevailing freelance worker.
Written contracts are highly recommended for ALL freelance/independent contractor services, not just those being performed within Los Angeles. Businesses using such services should seek assistance from legal counsel in drafting such agreements and also should obtain legal advice as to whether the workers are properly classified as independent contractors as opposed to employees.