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Before Assembly Bill 5 (AB5) passed throughout California in 2019, making it illegal to misclassify an employee as an independent contractor to avoid paying benefits or wages, employers were dangerously toeing the line. Since, AB5 has significantly curtailed an employer’s ability to do so, as misclassification comes with significant legal exposure and penalties for employers throughout California.
Now, Los Angeles city’s new Freelance Worker Protection Ordinance, which went into effect July 1, 2023, adds another layer of requirements for businesses that work with independent contractors.
Here is what Los Angeles freelancers need to know about the new ordinance.
Los Angeles City Contracts Between a Freelance Worker and a Hiring Entity Must Be in Writing
As of July 1, 2023, the city’s new ordinance applies to “Freelance Workers,” also referred to as independent contractors, who do not otherwise have the same protections as employees under federal, state, and local laws.
The Freelance Worker Protection Ordinance requires an entity regularly engaged in business or commercial activity to create contracts between the company and independent contractors where the work performed within the City of Los Angeles entitles the Freelance Worker to payment of $600 or more in the calendar year.
The contract must be in writing and include:
- The name, address, phone number, and e-mail of the Hiring Entity and Freelance Worker.
- An itemization of all services to be provided, the value of those services, and the rate and method of compensation.
- The date by which the Hiring Entity must pay or how the date will be determined.
The Hiring Entity must provide full payment of the contract on or before the date specified in the contract. If the contract does not specify a due date or if there is no written contract, no later than 30 days after the services are rendered.
Other important compliance details include:
- Written records of the contracts and payments, and any other records that demonstrate compliance with the ordinance, must be kept for at least four years.
- Hiring Entities are prohibited from retaliating against Freelance Workers who oppose practices prohibited by the ordinance, participate in proceedings related to the ordinance, lawfully seek to enforce rights under the ordinance, and/or assert or attempt to assert rights under the ordinance.
What are the Penalties for Violating the Los Angeles Freelance Worker Protection Ordinance
When a Hiring Entity violates the Los Angeles Freelance Worker Protection Ordinance, a Freelance Worker can file a complaint with the Office of Wage Standards of the Bureau of Contract Administration within the LA City Department of Public Works, or bring a civil action for violation of the ordinance.
Damages a Freelance Worker may pursue for violations of the Los Angeles Freelance Worker Protection Ordinance include:
- An award of $250 if the Freelance Worker requested a written contract before commencing work and the Hiring Entity refused.
- If the Hiring Entity fails to timely pay for the services, the Freelance Worker “shall be awarded” damages up to twice the amount that remains unpaid under the contract.
- For any other violations of the ordinance, the Freelance Worker “shall be awarded” the greater of the value of the contract or the work performed.
- The Freelance Worker may be entitled to attorneys’ fees and costs.
Contact Our Skilled Employment Law Attorneys in Pasadena to Schedule a Free Consultation Today
If you believe your rights are being violated as a freelance worker, or if you are being misclassified as an independent contractor instead of an employee, contact our experienced Los Angeles County employment law attorneys to discuss your unique workplace circumstances today.
Our employment law firm and bilingual staff offer services in both English and Spanish and are available now to discuss your case during a free consultation by calling (626)-396-9900 or contacting us online.