Free-lancing or Fee-lancing? How to Keep Penalty-Free With Your Freelancers Under New California Law

The Freelance Worker Protection Act, which takes effect on January 1, 2025, sets minimum requirements for hiring independent contractors in California. Under the Act, a hiring party engaging a freelance worker for services totaling $250 or more (either at one time or over an aggregated 120-day lookback) must provide the worker with a written contract detailing compensation terms, deadlines, and service expectations to ensure clarity and protect workers from delayed payments or demands for additional work beyond the original agreement without extra pay. Freelancers must be paid on the agreed upon date or, if unspecified, within 30 days of completing the work. Contracts must be in writing and be retained for at least four years. The Act does not apply to when individuals hire services “for personal benefit of themselves, their family members, or their homestead.”

Employers working with independent contractors should review and update their practices and their standard freelancer agreements to comply with the Act’s requirements. The requirements of the Act are non-waivable, and non-compliance could result in a private civil action or prosecution. Failure to provide a written contract prior to work even after the freelancer requests it will result in a penalty of $1,000. Failure to pay the freelancer by the time required will result in damages up to twice the unpaid amount. Retaliation against the freelancers for invoking rights under the Act results in damages equal to the value of the contract or the work performed, whichever is greater.