This blog post was updated in June 2024 to reflect the Act's passage into law.
A bill to ensure that freelance workers are paid by their clients in a timely manner takes effect July 1, 2024. Introduced by State Representative Will Guzzardi (D-Chicago) and State Senator Cristina Pacione-Zayas (D-Chicago), the Freelance Worker Protection Act requires that freelancers be paid for their services within 30 days of completing their work. According to Sen. Pacione-Zayas, “Freelance workers deserve the same dignity other workers receive, including being offered the basic respect of timely compensation for their labor.”
What Does the Act Require?
Workers who serve as independent contractors practically always enter into a contract with a hiring client for their labor. This Act now makes it a legal requirement that freelance work be governed by a written contract. Further, hiring entities must keep the contract on file for 2 years and be able to produce it to the Illinois Department of Labor (“DOL”) if requested.
Freelance contracts must include certain specific information under the Act, including the following:
- The name and contact information of both parties, including the postal address of the contracting entity;
- An itemized list of all products and services the freelancer will provide, including the value of each and the rate and method of compensation;
- The date on which payment shall be due or the “the mechanism by which such date will be determined” (if neither a date nor a mechanism is specified, the actual payment due date must not exceed 30 days after completion of the freelancer’s work);
- If a list of products or services is needed by the client to compensate the freelancer in a timely manner, the date by which a freelance worker must submit this list.
The Department of Labor will make model contracts available on its website in various languages.
At times, clients have required that a freelancer accept less compensation than originally agreed upon in exchange for timely payment. The Act would makes this practice illegal. Hiring entities are further barred from engaging in any form of discrimination, retaliation, or harassment of freelance workers who attempt to assert their rights under the Act.
Who Is Covered?
“Freelancers” are defined as natural persons who are hired for a job compensated at $500 or more. Construction workers, however, have been carved out of this definition and would not be covered by the Act.
Most businesses will qualify as “hiring entities.” Public employers, however, such as municipal governments or the State of Illinois, are not covered.
What Do Freelancers Need to Know?
When workers find themselves shortchanged, our office often recommends several options for recourse. One is to submit a complaint with the Illinois DOL. This does not require hiring an attorney and, while it may take some time, can be a cost-effective way of recovering otherwise lost compensation.
Luckily, this Act would enable freelance workers to submit a formal complaint to the DOL specifically for violations of this Act. The only caveat is that filing must be done within 2 years of the violation.
Workers may also bring a cause of action in a civil court. They can file a complaint in small claims court without the assistance of an attorney, doing so pro se, or on their own. Jurisdictions differ, but the Cook County Pro Se Small Claims Court handles disputes up to $3,000. Workers can also file a civil complaint in other types of state court.
A successful civil action could entitle a freelancer to double the amount of any underpayments and to injunctive relief. A freelancer might be able to recover attorney’s costs and fees as well.
What Do Businesses Need to Know?
Upon being informed by the DOL of a freelancer’s complaint, a hiring entity will have 20 days to either make full payment or explain why full payment is not due. Failure to respond to the complaint can create a rebuttable presumption of a violation of the Act in any subsequent court proceeding.
If a hiring entity or person is a serial offender of the Act, the Illinois Attorney General is empowered to investigate, which can entail requiring written statements, issuing subpoenas, and conducting hearings. The Attorney General can also bring a civil action against the violator, which could lead the hiring entity to face an injunction, a temporary restraining order (TRO), or monetary damages. Businesses could be subject to civil penalties up to $5,000 for each violation, and up to $10,000 for each repeat violation within a 5-year period.
Both freelancers and the entities that hire them must be aware of these requirements, as the Act is slated to take effect on July 1, 2024.