What You Need To Know About The Freelance Workers Protection Act
On August 4, 2023, Governor J.B. Pritzker signed the Freelance Worker Protection Act (“FWPA”). The FWPA requires certain contracts with independent contractors to be in writing. Here is what to know:
What is a “freelance worker”? A “freelance worker” as anyone hired or retained as an independent contractor to provide products or services in Illinois or for any Illinois-based entity in exchange for compensation of at least $500 (either in a single contract or in the aggregate of all contracts during the last 120 days). The FWPA defines “freelance worker” as a “natural person,” which is an “individual human being.” Construction workers, employees of construction contractors, and traditional employees are excluded from this definition.
Does a contract with a “freelance worker” need to be in writing? Yes. Hiring a freelance worker to provide services or products valued at $500 or more requires that the agreement be memorialized in a written contract. The contract must, at a minimum, include: (1) the name and contact information of both parties including the mailing address of the contracting entity; (2) an itemization of all products or services to be provided, the value of the products/services, and the rate and method of payment; (3) the date by which the contracting entity must pay the freelance worker, on a date no later than 30 days after the product or service has been provided; and (4) the date by which the freelance worker must provide a list of products/services rendered under contract, if necessary to meet the contracting entity’s internal processing deadlines for purposes of timely payment.
When is payment due? A contracting entity must pay the freelance worker within 30 days after the freelance worker has completed the services or delivered the product. Additionally, once the freelance worker has started preparing the product or service under the contract, the contracting entity cannot ask the freelance worker to accept less compensation than the amount specified in the contract as a condition of timely payment.
When does the FWPA take effect? The FWPA’s effective date is July 1, 2024, which means contracts after that date that are within the FWPA will need to comply with the law.
Action Plan
Contracting entities need to determine whether any independent contractors currently providing services fall within the definition of a “freelance worker.” The distinction between an “employee” and “independent contractor” is not always an easy one. Contracting entities should also be prepared to process payroll for freelance workers in accordance with the FWPA. Freelance worker contracts also need to be retained for two years following execution of those contracts.
If you need legal assistance with making your company compliant with the FWPA, we can help! Please contact Donald S. Rothschild or Brian M. Dougherty for expert assistance in making sure your business is compliant today.
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Donald S. Rothschild
Brian M. Dougherty
Goldstine, Skrodzki, Russian, Nemec and Hoff, Ltd.
835 McClintock Drive, Second Floor
Burr Ridge, Illinois 60527
(630) 655-6000
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