Signed into law on August 4, 2023, the Freelance Worker Protection Act (FWPA) (HB1122) provides robust protections to freelance workers through the security of written contracts and timely compensation.
Under the Act, “freelance worker” is defined as any natural person hired or retained as an independent contractor by a non-governmental entity in Illinois, or for an Illinois-based entity, for services or products worth at least $500 (either in a single contract or in the aggregate of all contracts during the last 120 days).
This definition specifically excludes employees covered under the Illinois Wage Payment and Collection Act and individuals engaged in construction services, including employees of contractors who engage in construction, as outlined in the Illinois Employee Classification Act. All foreign, federal, state, and local government entities, including school districts, are also excluded under the Act.
Mandatory Written Contracts
Central to the Act is the requirement for a written contract between the freelancer and the contracting entity. This contract must, at minimum, include the following:
- The name and contact details of both parties, including the contracting entity’s mailing address.
- An itemized list of services or products provided, inclusive of payment rates and methods.
- The due date for payment, should not exceed 30 days after service or product delivery.
- The date by which the freelancer must submit a list of products and services rendered to the contracting entity if required for timely compensation.
Contracting entities are further required to both provide a copy of the contract to the freelancer and retain a copy for a minimum of two years.
Prohibitions and Protections
Importantly, the Act strictly prohibits contracting entities from conditioning timely payment on the acceptance of an amount less than originally contracted once performance by the freelancer has begun. Likewise, payment must be made within 30 days of completion of the contracted services or the delivery of products by the freelancer.
The Act also prohibits contracting entities from penalizing freelancers for asserting their rights under the Act. This includes any form of threatening, intimidation, harassment, discrimination, or retaliation.
Enforcement and Penalties
Freelancers may file complaints with the Illinois Department of Labor or initiate civil action within two years of the date of overdue compensation. Penalties for violations include double the amount of underpayment, statutory damages, and recovery of attorney’s fees.
The Illinois attorney general is also empowered to intervene and impose fines for violations including a civil penalty not to exceed $5,000 for each violation, or $10,000 for each repeat violation within a five-year period.
Recommendations for Employers
Employers should review their current contracting and payment processes to ensure compliance with the Act’s written contract and 30-day payment requirements. While Illinois is at the forefront of this movement, other states and cities across the United States are observing and enacting similar laws to protect freelance workers. Employers are advised to stay informed about such developments and ensure their practices remain compliant, not only in Illinois but in other jurisdictions as well.
Please contact a member of the Labor and Employment Group at AGHL with any questions: Jim Pirages, Eileen Caver, Evan Bonnett, or Maryjo Pirages Reynolds.
