Landmark California Law Now Protects Independent Contractors

One of the common employer defenses we come across when representing employees in wage claims is the “independent contractor defense”. The argument goes, since the worker was only an independent contractor and was never an employee, the worker falls completely outside of the protections of the labor code and his claim must be dismissed. It is a formidable defense since, without the many penalties and protections afforded by the labor code, the legal costs of suing an employer are often greater than the amount owed, causing many workers to give up on their claims.

That’s all about to change.

Starting January 1, 2025, California’s Freelance Worker Protection Act (“FWPA”) will introduce a slew of protections for independent contractors, including importantly the recovery of attorney’s fees and costs. This drastically changes the economics of bringing an independent contractor lawsuit in the worker’s favor.

Who Is Covered by the FWPA?
The FWPA applies to freelance workers—individuals or sole proprietors—hired to provide professional services (which could include, for example, providing marketing services, designing a website, or consulting for a small business) worth $250 or more within any 120-day period. It does not apply to contracts with government entities, foreign governments, or personal household hires for family needs.

What Does the Law Require?
One of the key provisions is the requirement for written contracts. Whenever a hiring party engages a freelance worker, they must provide a contract outlining the scope of work, payment details, and deadlines. This ensures that both parties have clear expectations from the beginning, giving workers a document to rely on if disputes arise.

Even if a hiring party refuses to provide a written contract, workers are still protected. Communications such as emails or text messages that summarize the agreement can be used to enforce rights under the FWPA. Moreover, “the amount unpaid shall be determined by the rate the freelance worker reasonably understood to apply to the work”.

Clear Payment Deadlines
The FWPA also establishes strict payment rules. If the contract does not specify a payment deadline, hiring parties must pay freelance workers within 30 days of completing the work. Additionally, hiring parties cannot force workers to accept reduced payments or extra work as a condition for receiving timely payment.

Protection Against Retaliation
The FWPA protects workers from retaliation. This means hiring parties cannot penalize workers for speaking up about violations, participating in legal proceedings, or asserting their rights under the law.

Legal Remedies and Attorney’s Fees
If hiring parties fail to comply with the law, freelance workers have the right to take legal action. The law provides for the recovery of reasonable attorney’s fees and costs, ensuring that workers are not discouraged by litigation costs even when the amount in dispute is small.

Workers may also request:

• Injunctive relief
• Financial penalties, including:
  • $1,000 for refusing to provide a written contract.
  • Up to double the unpaid compensation for delayed or withheld payments.
  • Damages equal to the value of the contract or work performed (whichever is greater) for any other violations of the FWPA.
• Any other remedies deemed appropriate by the court

Conclusion
The Freelance Worker Protection Act is a powerful new weapon in the arsenal for independent contractors. It effectively levels the playing field for contract workers. Asserting the independent contractor defense used to be a no-brainer for employers. Now, with the FWPA, employers will have to think twice. Workers shouldn’t get overconfident however. The usual requirements to collect and keep evidence apply. Workers should continue to gather detailed written records and communications with the hiring party, as well as any other proof relating to their claims. Also, workers will still need to present their case at trial or a hearing and persuade a judge or hearing officer. Finally, it should be noted that contract law is one of the most complicated areas of law. In law school, where most classes are only 1 semester long, contracts is typically a full-year class. Workers should consider consulting with an attorney before moving forward with a FWPA claim.