Illinois Freelance Workers? Get Ready for the New Law
Are you engaging with freelance workers in Illinois? On August 4, 2023, the Illinois Governor signed the Freelance Worker Protection Act (FWPA) into law. This statute enacting protection for freelance workers is the latest in the United States to address this growing group of workers. Effective July 1, 2024, the law requires providing written contracts, timely payments, and access to recourse in the event of a violation.
Under the law, a Freelance Worker as a “natural person who is hired or retained as an independent contractor by a contracting entity to provide products or services in Illinois or for a contracting entity located in Illinois,” where the worker receives $500 or more in a year. Freelance Workers do not include (1) individuals performing construction services, (2) construction workers who are employees of contractors, or (3) workers who qualify as employees under the Illinois Wage Payment and Collections Act.
The FWPA focuses on three important components—written contracts, compensation, and a private right of action.
Beginning July 1, 2024, the terms of the contract between the contracting entity and a Freelance Worker must be written and either a physical or electronic copy must be provided to the Freelance Worker. The contract must at least include the following terms:
- Name and contact information of all parties, including the mailing address of the contracting entity;
- Itemization of all products and services;
- The value of those products and services;
- The rate and method of compensation;
- Date that the contracting entity must compensate the Freelance Worker; and
- Date of when a Freelance Worker must submit a list of products or services if required by contracting entity.
Timing of Compensation
The new law requires that the workers are to be paid the contracted compensation amount on or before the date the compensation is due under the terms of the contract. Even under the terms of the contract, the contracting entity must make payment no later than 30 days after the products or services are provided. If the contract does not specify when the hiring party must pay the contracted compensation or the mechanism by which the date will be determined, compensation shall be due no later than 30 days after the completion of the Freelance Worker's services under the contract.
Access to Recourse
Finally, Freelance Workers will have the ability to bring complaints under this law. There is a private right of action available through a complaint procedure. A Freelance Worker can submit evidence of a violation to the Department of Labor (“DOL”) regarding the contracting entity’s alleged wrongdoing. The contracting entity must respond to the DOL’s notice of complaint within 20 days. Failure to respond within 20 days creates a rebuttable presumption of fault in any civil action pursued by the Freelance Worker. Complaints by the Freelance Worker must be brought within two years after the final payment was due. Of note, Freelance Workers are also permitted to file suit in circuit court, even if the administrative remedies have not been exhausted, and class claims are permitted under the statute as well.
It is important for employers who are contracting entities in Illinois or engaging with Freelance Workers in Illinois to review their engagements to comply the FWPA by July 1, 2024. If you have any questions about this or other workforce issues, please contact one of Honigman’s Labor and Employment attorney’s here.