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The Future of Work

Why Freelancers Need A Nonpayment Law

Seventy percent of freelancers say they've been stiffed by a client at least once. But so far, they have little legal recourse.

Why Freelancers Need A Nonpayment Law
[Photo: Tooga/Getty Images]

Full-time employees don’t usually have to track down their managers to remind them it’s payday. Paychecks typically come in a regular, timely fashion, every week or two. There are laws governing this kind of thing.

But for the 54 million independent workers who don’t work in full-time salaried jobs (roughly one-third of the workforce), getting paid on time—if at all—can be dicey.

According to newly published data from the Freelancers Union, about half of freelancers surveyed in 2014 reported they had trouble getting paid by one or more of their clients. The average amount lost was $6,390. For the average respondent, that amount represented 13% of their annual income.

If this were to happen to a full-time employee, they would be entitled to file a wage-theft complaint with the Department of Labor. Companies can face stiff penalties for being in violation.

But the Freelance Nation doesn’t have such laws—yet.

Lagging Legal Protections

Sure, a contractor can sue a deadbeat client for breach of contract, but they’re not entitled to attorney’s fees. A lawsuit becomes yet another financial burden for someone who’s already lost thousands of dollars, and there’s no guarantee they’ll be able to collect. The reality is, clients who stiff freelancers rarely face civil or criminal penalties.

Our employment laws have not kept pace with the changes in the economy. By all indications, the freelance workforce is only going to expand as companies increasingly rely on short-term, specialized workers to fill their needs.

But there is no system in place to protect those contractors from clients who don’t pay. Seven out of 10 freelancers report trouble getting paid at some point in their career. If these were traditional employees, we would call nonpayment what it is: illegal.

It’s time to update employment laws for the way we live and work today. Independent workers can’t wait for the federal government to catch up and overhaul labor policy—they need options now. So where to begin?

We used to bang our heads against the wall at the federal level, calling on Congress and various government administrations to pay attention to freelancers’ needs. It’s time we aimed a little bit . . . lower.

Why We Need To Go Grassroots

Instead of starting at the top with federal labor policy, the freelancer movement should start at the ground level, targeting city labor laws. We’ve already seen this strategy bear fruit in the fast-food workers' movement: The first group of McDonald’s workers walked off their registers and fry stations in New York City three years ago. Their demand for a $15 per hour paycheck—double the minimum wage that many were earning—seemed impossible at the time. But organizers stuck to it, and similar demonstrations took place in a handful of other cities.

Fast forward a few years, and now New York, Los Angeles, and Seattle city councils have approved measures for a $15 wage. San Francisco is phasing in a citywide $15 minimum, and several other cities—Buffalo, Rochester, Greensboro, Missoula, and Pittsburgh—are moving toward $15 minimums for city workers.

Even presidential candidates Hillary Clinton, Bernie Sanders, and Martin O’Malley have endorsed the shift toward a higher minimum wage. What started as a city-level campaign became a national movement with implications for the entire economy.

Freelancers in the U.S. can take a page from the fight for $15. Late payment and nonpayment are among the greatest challenges facing independent workers today, and there’s a real opportunity to start fixing the problem by taking a local approach, starting with freelancer-friendly cities.

The movement is in its early stages: Last December, the New York City Council introduced the aptly named Freelance Isn’t Free Act to ensure basic payment protections to the city’s 1.3 million freelancers, similar to what traditional employees enjoy. The proposed legislation would require a business hiring a freelancer to sign a simple contract indicating a payment rate, method, and due date for services performed. Nonpayers could face penalties through the city’s Department of Consumer Affairs. If passed, it would be the first freelancer-specific legislation of its kind in the nation.

We live in a time of incredible innovation. Companies are changing fast and adapting. Workers are changing fast and adapting. Now it’s time for employment laws to change and adapt, too.

Our federal laws don’t change overnight, but our cities are more nimble. Nonpayment affects freelancers in cities across the country; let’s tackle it at the city level. New York City already has a proposal on the table. Who’s next?

Are You Ready To Go Freelance?

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