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New State Laws Require Written Contracts and Timely Payment for Freelancers

If your business hires freelance workers (also known as independent contractors), recent legal changes in California, Illinois, and New York may affect how you operate. These states have enacted laws that enhance protections for freelancers—primarily to address late or missing payments.




 

What’s Changing?

The new laws, known as freelance worker protection acts, apply to most private businesses—regardless of size—that hire freelancers based in or providing services within these states. They require written contracts and impose deadlines for payment.


Key Requirements by State

If your business pays a freelancer above the following thresholds within a 120-day period, you must use a written agreement:

  • California: $250 or more

  • Illinois: $500 or more

  • New York: $800 or more


The written contract must include:

  • Names and addresses of both parties

  • Description and value of the services

  • Rate and method of compensation

  • Payment due date or terms

  • Date by which the freelancer must submit service records


Contracts can be in paper or electronic format, but retention is required:

  • California: 2 years

  • Illinois and New York: 6 years


Who Is Covered?

These laws apply primarily to one-owner independent businesses.

  • California limits protections to specific freelance occupations (e.g., writers, appraisers, designers).

  • Illinois excludes incorporated businesses like LLCs and corporations.


Penalties for Non-ComplianceViolating these rules can lead to serious financial consequences:

  • Up to double damages for unpaid invoices

  • Attorney fees and statutory penalties

  • Fines of up to $1,000 per violation

  • New York may assess up to $25,000 for repeat violations


What Your Business Should Do

  • Use a compliant freelance agreement for all qualifying engagements

  • Pay freelancers promptly and according to the agreed terms

  • Keep documentation of any performance issues if you plan to withhold payment

  • Do not retaliate against freelancers for asserting their rights


Staying compliant with these new laws not only helps you avoid penalties—it also supports better, more transparent relationships with freelance talent.




 
 
 

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