2025 Brings Added Protections for Independent Contractors with the Freelance Worker Protection Act (FWPA)
Several years after the California Supreme Court’s decision in Dynamex Operations W. Inc. v. Superior Court and the enactment of AB 5 significantly modified the standards for determining independent contractor status in California, the FWPA adds Section 18100 et seq. to the California Business and Professions Code and imposes minimum requirements for contracts between a hiring party and a freelance worker. The law applies to contracts entered into or renewed on or after January 1, 2025.
The FWPA requires hiring parties and freelance workers to enter into written contracts for the retention of services. Each contract must include: (1) the name and mailing address of each party; (2) an itemized list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation; (3) the date by which the freelance worker must provide the hiring party with a list of services rendered to meet the hiring party’s payment processing deadlines; and (4) the date on which the hiring party must pay the freelance worker or the mechanism by which that date is determined. It further provides that, unless otherwise required by law, the hiring party must pay the freelance worker: (1) on or before the date compensation is due pursuant to the contract; or (2) if no specific date is provided in the party’s agreement, no later than 30 days after the completion of the freelance worker’s services under the contract. Once a freelance worker has started performing services under the contract, the hiring party cannot require the freelance worker to do either of the following as a condition of timely payment: (1) accept less compensation than the amount stated in the contract; or (2) provide more goods or services or grant more intellectual property rights than agreed to in the contract. Hiring parties are prohibited from discriminating against or taking other adverse action against freelance workers for enforcing or attempting to assert rights provided by the FWPA.
The FWPA does not limit existing contract law, e.g., it does not prevent freelance workers from enforcing oral contracts or recovering under the doctrine of promissory estoppel, and provides for examples of evidence that may be used to evidence the existence of a contract between the parties in such instances.
A hiring party is defined as a person or organization in California that retains a freelance worker to provide professional services, except certain government entities and individuals hiring services for the personal benefit of themselves, their family members, or their homestead. Freelance workers are defined include persons or organizations composed of no more than one person, whether or not incorporated or employing a trade name, that are hired or retained as bona fide independent contractors by a hiring party to provide professional services in exchange for an amount equal to or greater than $250, either by themselves or when aggregated with all contracts for services between the same hiring party and independent contractor during the immediately preceding 120 days. Professional services include those services defined by Labor Code 2778(b)(2).
The FWPA may be enforced through a civil action asserted by freelance workers or a public prosecutor. Damages to a freelance worker include: (1) an amount equal to the value of the contract or work performed, whichever is greater, if the hiring party violates any provision of the FWPA; (2) an additional $1,000 if the freelance worker requested a written contract prior to commencing work under the contract and the hiring party refused; and (3) up to twice the amount that remains unpaid at the time payment was due if the hiring party failed to pay the freelance worker the contracted compensation by the time required (if the freelance worker requested a written contract prior to commencing work and the hiring party refused, the amount unpaid is determined by the rate the freelance worker reasonable understood applied to the work). In addition, a prevailing plaintiff may recover reasonable attorneys’ fees and costs, injunctive relief, and any other remedies deemed appropriate by the court.
This legal update and any use of its information does not create an attorney-client relationship. Nothing contained on this website should be considered legal advice for any specific employer or employment situation. Consult legal counsel before taking any action as a result of information contained herein.
