The nation’s largest city just passed a law that will change the way employers do business with independent contractors.
Under the new law, any agreement with an independent contractor for services that pays more than $800 in a 120-day period must be in writing. The contract must contain the name and mailing address of both the hiring party and the contractor, an itemization of all services to be performed, the value of the services, the rate and method of pay and the date by which the hiring party must pay. If no date is specified, the contractor needs to be paid within 30 days of the job being done.
Hiring parties that violate this law can face fines and lawsuits and can even be ordered to pay double damages and attorney fees.
While this law only applies in New York City, there’s no good reason to think other places won’t follow suit.
The law provides the occasion for another reminder that if you are supplementing your workforce with independent contractors, you need to be sure they’re really “independent.” In other words, if you’re exercising significant control over them in terms of scheduling and how they’re paid, and restricting who else they can work for, they’re employees. Employers that misclassify employees as contractors in order to avoid complying with minimum wage, overtime and benefits laws will get hit hard by the law everywhere.