Freelance workers in Los Angeles now have more protections than ever before, thanks to a new ordinance passed by the City Council. The Freelance Worker Protections Ordinance, made part of the L.A. Municipal Code effective July 1, has the stated aim of “ensuring that freelance workers are treated fairly and receive the compensation they are due.”
“Freelance worker” means any individual or entity with no employees, hired as an independent contractor to provide services in exchange for compensation. Expressly carved out from this definition are professionals already required to have a written agreement to provide services in exchange for compensation, such as attorneys, architects, and engineers.
“Hiring entity” means an entity regularly engaged in business or commercial activity. Expressly carved out from this definition are entities that hire app-based transportation and delivery drivers to provide prearranged services.
The ordinance applies to work performed by freelance workers for employers in Los Angeles, pursuant to a written or oral contract entered into on or after July 1, valued at least $600.
What does the ordinance require?
It requires a very basic written contract. If the hiring entity has only orally contracted for such work, the hiring entity must provide the freelance worker with a written contract, which must include the name, address, phone number and e-mail address of both parties, plus an itemization of all services, their value, the rate and method of compensation, and the date for payment or manner by which such date will be determined.
The ordinance requires timely payment. If the contract calls for payment by a certain date, that means payment in full by that date. If the contract does not specify a date, payment must be issued no later than 30 days after the work is completed.
Both parties must retain written records for no less than four years, including contracts, payment records, and anything else showing compliance with the contract.
Hiring entities are prohibited from punishing, penalizing, retaliating, or taking any adverse employment action against freelancers for exercising their rights.
Addressing Violations
Freelancers can file a civil lawsuit seeking damages for violations and/or file a complaint with the Bureau of Contract Administration, Office of Wage Standards (OWS) within one year of the alleged violation. Even if the freelance worker files an administrative complaint, they can still sue the hiring entity.
The OWS will inform the hiring entity of the complaint and their legal obligations, and request relevant documents and/or information, which in turn will be provided to the freelance worker. The hiring entity should be mindful of the OWS' request, as failure to respond to it within 20 calendar days will result in a rebuttable presumption in any civil action claiming that the hiring entity committed the violations.
The ordinance does not provide any additional detail regarding the manner of administrative proceedings brought pursuant to the ordinance, though it does provide that the OWS may promulgate guidelines and rules to administer and enforce the ordinance.
If the freelance worker sues and prevails, the court is required to award certain damages, some of which depend on the nature of the violation. In all instances, a prevailing freelance worker is entitled to their reasonable attorneys' fees and costs, injunctive relief if requested, and any other remedies deemed appropriate by the court.
If, prior to commencing work, the freelance worker requested and was refused a written contract, the freelance worker must be awarded $250.
If the hiring entity fails to timely and fully pay the freelance worker, the freelance worker must be awarded monetary damages. The ordinance appears to grant courts an element of discretion in the amount, and it could be punitive, expressly capping the amount at twice the amount remaining unpaid under the contract.
Any other violations of the article entitle the freelance worker to monetary damages equal to the value of the contract or the work performed, whichever is greater. The ordinance does not cap that value. Thus, in such a circumstance, the hiring entity could potentially be on the hook for much more than the contract required.
Employers should pay the ordinance the attention it is due, as it is neither narrow nor inconsequential. As a practical matter, most businesses will qualify as a hiring entity, and many of the independent contractors providing services to those businesses will qualify as freelance workers.
Administrators and managers should be aware of their obligations under the ordinance, review all existing vendor agreements for compliance, and be prepared to provide the requisite written contract for qualifying work going forward.
Landon R. Schwob is an attorney with Fisher Phillips in Los Angeles. © 2023. All rights reserved. Reprinted with permission.