How to Navigate the New Illinois Freelance Worker Protection Act (FWPA)
The recently enacted Illinois Freelance Worker Protection Act (FWPA) goes into effect on July 1, 2024. It requires non-governmental persons and entities contracting with freelance workers to provide written contracts and timely paid compensation. Failure to do so under FWPA leaves the persons or entities vulnerable to administrative and civil actions for violations.
Overview
The FWPA defines a freelance worker as a natural person who is hired or retained as an independent contractor by any non-governmental person or entity to provide products or services in Illinois, or for an entity in Illinois, where the amount paid is at least $500. This includes in a single contract or in the aggregate of all contracts within a 120-day period. The definition of freelance worker includes individuals engaged by construction contractors and subcontractors.
Hiring Party Obligations
The FWPA requires the freelance worker and the contracting entity to enter a written contract that includes, at a minimum, the following:
- The name and contact information of both parties, including the hiring party’s mailing address.
- An itemized list of all products and services provided by the freelance worker, including the value of the products and services and the rate and method of compensation for such products and services.
- The date on which payment is due. This must be no later than 30 days after the products or services are provided.
- The date by which the freelance worker must submit the list, if the hiring party requires a list of products and services rendered to timely compensate the freelance worker.
The FWPA requires that the Illinois Department of Labor (IDOL) make available model contracts for use by the public at no cost. The hiring party must provide a copy of the written contract to the freelance worker and provide a copy to the IDOL upon request. The hiring party must retain the contract for at least two years.
Prohibitions
Once the freelance worker begins performing the contracted services, the FWPA prohibits a hiring party from conditioning timely payment on the freelance worker’s acceptance of less compensation than agreed upon in the written contract.
The FWPA also prohibits a hiring party from taking any action to penalize a freelance worker for exercising their rights under the FWPA, or any action that is likely to deter the worker from exercising such rights. This includes any threats, intimidation, discipline, harassment, discrimination, or retaliation.
Enforcement
The IDOL is tasked with enforcing the FWPA. Under the FWPA, a freelance worker may file an administrative complaint with the IDOL or a civil action within two years of the date the final compensation was due. The IDOL is duty bound to investigate every complaint. A hiring party’s failure to timely respond to the IDOL will result in a rebuttable presumption of liability in any subsequently filed civil action.
Penalties
Penalties and damages under the FWPA depend on the type of violation. For claims based on a failure to provide timely pay, freelance workers may recover double the amount of the underpayment, along with the recovery of attorney’s fees and costs. Violation of the statutory requirement to enter into and provide the freelance worker with a written contract will result in a statutory damage award equal to the greater of $500 or the value of the underlying contract. Additionally, for violations of the discrimination prohibitions, freelance workers may recover the amount of the underlying contract for each violation, along with costs and attorney’s fees.
The Illinois Attorney General may initiate or intervene in a civil action and may request a court to impose civil penalties not exceeding $5,000 for each violation, or $10,000 for each repeat violation within a five-year period, as well as enter judgment for monetary damages to the state, restitution, and equitable relief. This includes any permanent or preliminary injunction and temporary restraining order.
Levin Ginsburg attorneys can help evaluate your employment or potential employment issues to keep you in compliance with state and federal law. Please contact Levin Ginsburg Attorney Mitchell Chaban for more information.
