In a move to support freelance workers, Illinois recently enacted the Freelance Worker Protection Act (FWPA), a comprehensive piece of legislation set to take effect on July 1st, 2024. This landmark law ushers in a new era of protection and fairness for freelance professionals in the state.
Defining Freelance Workers
The FWPA sets clear criteria for freelance workers, defining them as “natural persons” hired as independent contractors by non-governmental entities, whether in Illinois or for entities located in Illinois, with a minimum payment of $500 (either in a single contract or the aggregate of multiple contracts within a 120-day period). The definition excludes traditional employees and individuals engaged by construction contractors or subcontractors.
A New Standard: Written Contracts
One of the most significant aspects of the FWPA is its requirement for written contracts between freelance workers and contracting entities. These contracts must contain essential details, including:
- Contact information for both parties, along with the hiring party's mailing address
- An itemized list of products and services provided, including their value and the compensation rate and method
- The due date for payment, which cannot exceed 30 days after services or products are provided
- The date by which the freelance worker must submit this list if the hiring party demands a list of services for timely compensation
The Illinois Department of Labor (IDOL) will provide model contracts for public use at no cost to make compliance easier. Contracting entities must provide a copy of the written contract to the freelance worker and retain it for at least two years, making it available to the IDOL upon request.
Prohibitions To Ensure Fairness
Once freelance work commences, the FWPA imposes several crucial prohibitions, including:
- No conditioning of payment: Hiring parties are forbidden from linking timely payment to the freelance worker's acceptance of lower compensation than initially agreed upon.
- Protection from retaliation: The FWPA also shields freelance workers from any action by hiring parties designed to penalize or deter them from exercising their rights under the law. This encompasses threats, intimidation, discipline, harassment, discrimination, or retaliation.
Enforcement And Remedies
The IDOL will enforce the FWPA, offering freelance workers two avenues for alternatives:
- Administrative complaints: Freelance workers can file administrative complaints with the IDOL within two years of the final compensation's due date.
- Civil actions: Alternatively, freelance workers may initiate civil actions without first exhausting administrative remedies. Upon receiving a complaint, the IDOL will conduct an investigation, and a hiring party's failure to timely respond will create a presumption of liability in any subsequent civil action.
Penalties and damages for violations depend on the nature of the infraction:
- Failure to timely pay: Freelance workers can claim double the underpaid amount, along with attorney’s fees and costs
- Lack of written contract: Violations of the written contract requirement will result in a statutory damage award equivalent to the greater of $500 of the contract’s value
- Discrimination violations: Actions violating discrimination prohibitions will lead to the recovery of the contract’s value for each offense, associated costs, and attorney’s fees.
The Role Of The Illinois Attorney General
Furthermore, the Illinois attorney general can be crucial in enforcing the FWPA. They may initiate or intervene in civil actions, seeking civil penalties not exceeding $5,000 for each violation or $10,000 for each repeat violation within five years. In addition, the attorney can seek monetary damages for the state, restitution, and various forms of equitable relief, including injunctions and temporary restraining orders.
Ultimately, the Freelance Worker Protection Act indicates a new era of fairness and security for freelance workers in Illinois. With written contracts, prohibitions against unfair practices, and robust enforcement mechanisms, this legislation empowers freelancers to confidently pursue their careers while ensuring they receive fair compensation.
Unlocking Your Business’s Potential With A PEO In Illinois
Illinois’ Freelance Worker Protection Act (FWPA) changes how businesses engage with freelance talent. However, the transition to compliance should not be intimidating. Partnering with a professional employer organization (PEO) in Illinois can be your key to success. A PEO like GMS not only understands the intricacies of the FWPA but also streamlines your workforce management. They offer expert guidance in creating compliant contracts, ensuring timely payments, and protecting your business from potential penalties. Allow us to take on the administrative burdens while you focus on growing your business. Contact us today.