Illinois became the first state to enact protections for Freelance Workers
ABSTRACT: Illinois Governor J.B. Pritzker signed the Freelance Worker Protection Act (HB 1122), making Illinois the first state to enact protections for freelance workers. What are freelance workers and how does this affect their rights?
In August, Illinois Governor J.B. Pritzker signed into law the Freelance Worker Protection Act. The FWPA makes Illinois the first state to enact protections for “freelance” workers. Generally speaking, a “freelance worker” is an independent contractor, and the statute defines a “freelance worker” as a person who is hired as an independent contractor for goods or services over $500. However, the FWPA excludes: (1) individuals performing construction services, (2) employees of contractors performing construction services; (3) traditional employees; and (4) all government entities.
The FWPA provides freelance workers with the following basic rights and protections – mandatory contracts, thirty-day payment terms, payment agreement protections, anti-retaliation rights, and access to double damages.
If freelance workers are retained, a written contract must be provided and this contract must be retained for two years. The FWPA requires the Illinois Department of Labor to provide a contract template on its website for public use. Whether or not the template is used, the contract must include: (1) the name and contact information of both the contracting entity and the freelance worker, including the mailing address of the contracting entity; (2) an itemization of all products and services to be provided by the freelance worker, the value of the products and service, and the rate and method of compensation; (3) the date on which the contracting entity must pay the freelance worker, which shall be no later than 30 days after the products or services are provided; (4) the date by which a freelance worker must submit a list of products or services rendered under the contract.
Thirty Day Payment Terms
Importantly, the FWPA mandates the date which the freelance worker is to be paid must be no later than 30 days after completion of the work specified in the contract.
Payment Agreement Protections
In addition to the 30-day payment mandate, entities may not contract or negotiate payment terms less than the original contract amount. Negotiations to pay something less than the contracted amount in exchange for faster payment are therefore prohibited.
The FWPA provides that no entity shall threaten, intimidate, discipline, harass, deny an opportunity, or take any other action that is likely to deter a freelance worker from exercising their rights under the FWPA. Freelancers may file a complaint with the Illinois Department of Labor for violation of this act, up to two years after payment was due. After such complaint is filed, the Director of Labor must send the freelance worker a copy of: (1) the contracting business’s response; (2) anything attached to the response; (3) materials informing the worker about his right to bring suit in court; (4) anything else about the status of the complaint.
Double Damages Provision
To enforce the above stated provisions, the FWPA allows freelance workers to recover double the amount of any underpayments, and to seek injunctive relief and other remedies. Prevailing freelance workers may also be able to recover costs and attorney’s fees.
When hiring freelance workers, it is essential for businesses operating in Illinois to understand written contracts and prompt payment terms must be provided. Freelance workers are independent contractors (normally hired on a temporary basis) for products/services worth over $500.
Businesses should refer to the Illinois Department of Labor’s website for a form contract (not yet available as of early October 2023) and ensure freelancers are paid on such contracts within 30 days.The FWPA will take effect on July 1, 2024.