California Expands Protections for Freelance Workers

Effective January 1, 2025, companies using freelance workers must comply with the Freelance Worker Protection Act (“FWPA”). FWPA was signed by Governor Newsom on September 28, 2024 as Senate Bill (“SB”) 988. FWPA passed with a 70-0 vote in the State Assembly and a 34-3 vote in the State Senate.

According to a press release by one of the bill’s authors, State Senator Scott Weiner, freelance workers make up 39 percent of the total U.S. workforce and contribute $1.35 trillion to the economy. Additionally, only 25 percent of freelance workers reported having written contracts.

FWPA applies to contracts entered into or renewed on or after January 1, 2025. FWPA defines “freelance worker” as a person hired as an independent contractor to provide professional services of $250 or more within a 120 day period. FWPA defines a hiring party as any person or organization that retains a freelance worker to provide professional services, except government entities and individuals hiring services for themselves, their family members, or their homes.

Businesses Must Use a Written Contract for Freelance Workers

Any hiring party retaining the services of a freelance worker for more than $250 must use a written contract. The hiring party is required to provide a signed copy of the contract to the freelance worker, and to retain that contract for a minimum of four years.

The contract must include the following components:

• The name and mailing address of each party.
• An itemized list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation.
• The date on which the hiring party shall pay the contracted compensation or the mechanism by which the date shall be determined.
• The date by which a freelance worker shall submit a list of services rendered under the contract to the hiring party to meet the hiring party’s internal processing deadlines for purposes of timely payment of compensation.

Note that even if a hiring party fails to provide a written contract, the freelance worker may still enforce an oral contract, or recover under the doctrine of promissory estoppel.

Prompt Payment

Payment by the hiring party to the freelance worker is due either on the date due in the contract, or if the contract does not specify a compensation date, no later than 30 days after the freelance worker has completed the services under the contract. 

No Renegotiation After Contract as Condition of Payment

After a freelance worker has began providing services to a hiring party under a contract, the hiring party may not require as a condition of timely payment that the freelance worker (1) accept less compensation than specified in the contract or (2) provide more goods or services, or grant more intellectual property rights than agreed to in the contract.

Anti-Retaliation

A hiring party may not discriminate or take any adverse action against a freelance worker to enforce the protections of the FWPA, assert any rights under the FWPA, or participate in any enforcement proceedings.

Private Right of Action and Statutory Penalties

Freelance workers may bring a civil action to enforce any of the provisions of the FWPA. A freelance worker that brings a lawsuit and wins is entitled to reasonable attorney’s fees and costs as the prevailing party. The FWPA also provides that if a hiring party refuses to provide a written contract upon request, a freelance worker is entitled to statutory damages of $1,000. Additionally, if the hiring party fails to timely pay the freelance worker, the freelance worker is entitled to damages of twice the amount that was unpaid at the time payment was due.

Restaurant owners who use freelance workers for any purposes, including marketing, website design, or consulting, should evaluate their contracts to comply with the FWPA, and should seek counsel to minimize their risk.