Contributors

Jennifer Woo Burns

Of Counsel

Effective January 1, 2025, California’s new Freelance Worker Protection Act takes effect.

To whom does this law apply?

This new law applies to any person or organization in California that hires or retains any one-person individual or entity as an independent contractor for professional services for an amount greater than $250 total in the preceding 120 days. The type of professional services covered by this law is limited to specific areas, including: marketing, human resources, travel agent services, graphic design, grant writing, fine artistry, photography, videography, photo editing, freelance writing, translating, editing, copy editing, illustrating, content contributing, advising, producing, narrating, and others.

What is required by this law?

1. A written agreement must be in place regarding the services that contains the following:
   • The name and mailing address of each party
   • An itemized description of the services that the worker will provide, including the amount to be paid for the services and method of compensation
   • The date by which the hiring party must pay the worker for the services, or if no specific date is provided, the mechanism by which the payment date will be determined
   • The date by which the worker must submit an invoice, or list of services provided, so that timely payment can be made.
   Note that these requirements do not apply to government entities or to individuals hiring services for the personal benefit of themselves, family members or household.
2. The hiring party must provide a copy of the contract to the worker and maintain a copy of the contract for at least 4 years.
3. The freelance worker is to be paid on or before the date compensation is due pursuant to the contract, or if the contract does not specify when the hiring party shall pay, no later than 30 days after the completion of the freelance worker’s services under the contract.
4. Once the freelance worker has commenced performance of services under a contract, a hiring party shall not require as a condition of timely payment that the freelance worker do either of the following:
   • Accept less compensation than the amount of compensation specified by the contract, or
   • Provide more goods or services or grant more intellectual property rights than agreed to in the contract.
5. Hiring entities must also avoid discriminating against or taking adverse action against a freelance worker that would penalize or deter such a worker from exercising or attempting to exercise any of their rights under this law.

What action should businesses take now?

Businesses should conduct a review of all their service providers to determine which “professional services” arrangements are covered by this law. In a dealership setting, these service providers may include:

• Certain photographers or videographers used by the dealership to capture images of inventory or for marketing pieces
• Human resources consultants
• Digital content creators
• Marketing/promotions consultants

Any covered contracts entered into or renewed as of January 1, 2025 should be prepared in accordance with this law’s requirements. Legal counsel should be consulted in drafting these contracts to ensure compliance, to address other ancillary contract provisions that may apply or are recommended, and to review whether any of these independent contractors may qualify as employees under the law to ensure that they are not misclassified.