There is a general trend in the country to narrow the scope of who can be an independent contractor and to provide such individuals more “rights” concerning their employment, or engagement. More States are passing laws addressing such matters and Illinois has enacted such a statute giving more protections for freelance workers. The law is entitled the Freelance Worker Protection Act (FWPA) and it mandates, among other things, that an entity provide a written contract with an independent contractor. It also provides for specific administrative and judicial relief. The law becomes effective July 1, 2024.
A “freelance worker” is someone engaged as an independent contractor to provide services or products in Illinois or for a company located within the State; the amount paid to the person must be at least $500. Interestingly, the law specifically excludes people retained by construction contractors or subcontractors. It also excludes “employees,” as defined under State law. The construction exclusion is interesting because the construction industry has been one targeted by Departments of Labor as being a hotbed of misclassification issues.
The written contract must contain appropriate contact information. It must also describe, with specificity, the products and services provided by the freelance worker. It must reference the value of these services and the manner of compensation (e.g., hourly, lump sum) that will be paid for the services. The payment date must also be included and cannot be later than thirty days after the products are delivered or services provided. Interestingly, the Illinois DOL will produce a model contract.
The law explicitly tries to protect independent contractors. It forbids the hiring entity from changing/reducing the agreed-upon compensation in exchange for the timely payment of that money. It also prohibits any employer action designed to penalize the independent contractor or prevent him from pursuing his rights under the law, such as threats, harassment or retaliation. There is a two-year statute of limitations.
This law is yet another in a trend of recent vintage. States are seeking to protect independent contractors, who, it could be argued, should be able and allowed to protect themselves by negotiating a contract with the hiring entity. Or not doing so. Although this law has some good intentions, the overriding issue in any of these cases will be whether the person is a bona fide independent contractor in the first place.
So, nothing really changes, does it?