Senate Bill 988: Enhanced Protections for Independent Contractors

Senate Bill 988, also known as the Freelance Worker Protection Act (FWPA), brings significant changes to the rights of freelance workers (i.e., independent contractors) in California starting January 1, 2025. This legislation establishes clear contract guidelines, ensures timely payments, and prevents retaliation against freelance workers. By creating a stronger legal framework, SB 988 enhances transparency and fairness, addressing many challenges freelancers face in their professional transactions. Here’s what you need to know about the key provisions and protections.

Freelance Workers and Hiring Parties

Under SB 988, a “freelance worker” is an individual or single person, whether or not incorporated or employing a trading name, hired as an independent contractor to provide professional services valued at $250 or more, either in a single contract or aggregated during the immediately preceding 120 days. The act only applies to professional services encompassing various fields, including marketing, human resources, graphic design, writing, and more, as specified in California Labor Code Section 2778(b)(2).

Almost all companies that hire independent contractors are subject to the FWPA, regardless of company size. A “hiring party” refers to any person or organization in California that engages a freelance worker, excluding government entities, foreign governments, or individuals hiring for personal, family, or household purposes.

Mandatory Contractual Requirements

SB 988 mandates that all agreements between hiring parties and freelance workers be documented in writing. These contracts must include:

• Names and addresses of both parties
• An itemized list of services with their value, along with the rate and method of compensation
• The payment due date or the mechanism for determining it
• The due date for the freelance worker to submit a list of services rendered to facilitate timely payment.

It is worth noting that employers cannot compel independent workers to waive any provision of the FWPA. A waiver is deemed contrary to public policy and is, therefore, void and unenforceable. Additionally, hiring parties must retain contracts for a minimum of four years.

When it comes to payments, the law states that compensation must be made by the date specified in the contract or, if unspecified, no later than 30 days after the completion of services. Once a freelance worker has commenced services, hiring parties cannot demand acceptance of reduced compensation or additional services as a condition for timely payment.

SB 988 prohibits hiring parties from retaliating or discriminating against freelance workers who assert their rights in the following ways:

• Oppose any practice prohibited by the Act
• Participate in proceedings related to the enforcement of the Act
• Seek to enforce their rights under the Act.

If an independent contractor experiences violations, they can file a civil action to seek remedies, including statutory damages, attorney’s fees, and other appropriate relief.

Implications for Hiring Parties and Freelance Workers

Hiring parties must revisit their contracts with independent contractors and revise them, if necessary, to ensure compliance with the new requirements. As an independent contractor, familiarize yourself with the provisions of SB 988 to fully understand your rights under this new law applying to all contracts entered into or renewed on or after January 1, 2025. 

Contact a California Employment Lawyer Today

Contact a California employment lawyer for personalized guidance if you have questions about SB 988 or need assistance with related issues.