Beginning July 1st, the city of Los Angeles introduced additional legislation to California’s already-strict rules for hiring and utilizing independent contractors or freelancers. The Los Angeles Freelance Worker Protections Ordinance, which aims to safeguard these workers from pay malpractice, including delayed payment, non-payment, and underpayment, applies to and LA-based businesses or entities hiring independent contractors to perform work in LA valued at more than $600 per year.
This new ordinance mandates that the freelancer/independent contractor and the hiring entity enter into a written contractual agreement that contains names and contact information for both parties, an itemized list of the services rendered, the value of those services, the payment due date, and the rate of pay and method of compensation, which must be delivered in full on or before the specified due date (no later than 30 days from the date the contracted services are completed).
Additionally, both the hiring entity and the freelancer/independent contractor must store written documentation including the contractual agreement itself and any related documentation related to the arrangement for at least a 4-year period.
It is recommended that business entities that plan on, or currently are, partnering with freelancers/independent contractors in the LA area take a close look at their current policies and practices when it comes to these partnerships and consult with their legal representation to ensure the proper agreements are in place. These businesses should also monitor their mailboxes for communications from the Office of Wage Standards of the Bureau of Contract Administration (the enforcing agency) related to the ordinance, as responses may be required and time-sensitive. Claims must be sent to the Office of Wage Standards of the Bureau of Contract Administration for investigation within 1 year of the violation. Business entities have 20 days to respond to claims before a rebuttal presumption of violation is obtained and litigation may proceed, but the ability for a freelancer/contractor to sue privately is not contingent on the complaint being filed through the aforementioned Office.
Exceptions to the ordinance only apply under the following circumstances:
When hiring ridesharing, transportation, or delivery services via an app (Uber, Lyft)
When a written agreement of service is already legally required
When the freelancer or contractor is already employed by the business/entity
When the freelancer or contractor agrees to unpaid work for the business/entity (volunteering)
When the worker being hired does not meet the definition of “freelancer” or “independent contractor” under the law (for example, if the worker employs others beyond the one person who is the “sole legal and beneficial owner
Please reach out to us if you have questions regarding this new requirements or any other requirements around contractors.