New Requirements for Working With Independent Contractors in Los Angeles

In California, there are independent contractors and employees. Employees have different legal rights and obligations than independent contractors. Typically, independent contractors do not receive many of the protections employees receive. However, California is taking steps toward ensuring independent contractors are protected. Recently, a new ordinance became effective in Los Angeles, which aims to protect freelance/independent workers against delayed payment, non-payment, and underpayment. The law, called the Freelance Workers Protection Ordinance, became effective at the start of July 2023. This ordinance is like other requirements in Minneapolis, New York, and Seattle. It is vital that employees and employers understand who is covered under the new law, who is excluded, and what is required under the new ordinance. Below, we discuss who is covered under the Freelance Workers Protection Ordinance, who is excluded, and what is required under the new law.

Who is Covered Under the Freelance Worker Protection Ordinance?

Regarding workers, the Freelance Workers Protection Ordinance applies to freelance workers. According to the law, this is someone or an entity whose interests are held by one natural person and whose work is done by one natural person. If you fit this description and are hired as a bona fide independent contractor to work for a hiring entity in the City of Los Angeles in exchange for compensation, you are covered under the ordinance.

The following are the workers not covered by the Freelance Workers Protection Ordinance;

• Freelance workers who already cannot work for compensation before entering into a written agreement
• A freelance worker who is already an employee of a hiring entity under L.A. Municipal Code Section 187 et seq.
• Freelance workers who do not expect to be paid
• Freelance workers with employees other than the person who is the sole owner

When it comes to employers, the Freelance Workers Protection Ordinance covers hiring entities. According to the ordinance, a hiring entity is one that is regularly engaged in business or commercial activity. If an entity operates or owns a trade or business or represents itself as engaging in a business or trade, it is regularly involved in business or commercial activity.

What is Required Under the Ordinance?

If a hiring entity and an independent contractor reach an agreement and the services rendered are valued at $600 or more in a calendar year, the contract must be in writing. The following is the information that should be included in the written agreement;

• Names, mailing addresses, contact numbers, and email addresses of the hiring entity and independent contractor
• All the services to be provided, their value, the rate of compensation, and the compensation method
• The deadline for making payment or how such a date will be determined 

According to the law, an independent contractor must be paid on or before the specified date. If the contract does not have a specified date, the law requires that payment be made 30 days after the freelance worker has completed their work.

Both parties must keep written records of the contract, including payment records, for at least four years. Finally, the Freelance Worker Protection Ordinance provides damages for workers if the ordinance is violated and prohibits retaliation.

Contact a California Employment Lawyer

Contact a California employment lawyer if you need more information on the Freelance Worker Protection Ordinance.