Being a freelancer or working in the gig economy is gaining popularity across the globe. More and more people in the US are quitting their regular jobs to embrace a freelancer’s life. According to a survey, by 2027, around 86.5 million people will work as freelancers. And this will make up for over 50.9 percent of the total workforce in the US.
Another report suggests that in 2019, around 35% of the US workforce came from freelancers, which accounts for 57 million people. However, the rules of freelancing and the laws that govern it are very different from the regular law. If you are a freelancer too, here are a few laws that you should know about!
The Business Law
Freelancers come under the classification of business owners rather than as employees. So, the employment act does not apply to them. Instead, it is the Business Law that they should know about! As a freelancer, you should be aware of the Law for Business Owners and Entrepreneurs and consult a business lawyer if you were to land in trouble.
Besides that, all the contracts and agreements you sign will be applicable as a business entity rather than as an employee. So, none of the employment laws will apply to you. You should also understand the various laws that govern Independent Contractors and Freelancers in your state.
Local Law 140
This is one law that you should be aware of and thorough with. A law created with the sole aim of protecting the interests and rights of the freelancers. Local Law 140 protects all freelance workers. The Local Law 140 is also popular as the Freelance Isn’t Free Act. It identifies freelancers as an organization with only one person, whom an independent contractor hires for a gig. This act that came into practice in 2017 protects the rights and interests of the freelancers.
One of the most common challenges freelancers pay is finding clients who do not dupe them. Defaulting freelancer payments is commonplace, as there was no written contract or agreement made with freelancers. And there was o law governing the rights of freelancers. That is when this law came into practice. The payment could be for a project, on a retainer basis, or any other legally acceptable terms of payment. This ensures freelancers get full payment, protection from any retaliation, and has a written contract in place. A violation of this law will invite a civil penalty of $25,000 or more.
AB5 Gig Worker Law
California Assembly Bill 5 or AB5 is popular as the gig worker law. The reason for that is simple and self-explanatory. It came into effect on January 1, 2020. The law states a company that hires independent contractors or freelancers needs to reclassify them as employees, but with a few exceptions. Under this law, the companies will have to undergo a three-pronged test to prove that the person working for them will qualify as independent contractors and not a full-time employee.
While this law’s prime reason was to regular recruitments and employee management at aggregator firms like Lyft, Uber, and DoorDash, it applies to other companies. As this law requires companies to register their freelancers as employees, they get the same rights in a few aspects like minimum wage, rest breaks, business expense reimbursement, and other benefits that an employee has rights to according to the California State Law.
Intellectual Property Rights
The US law ensures that the creators of the work retain credit for it. In an attempt to make it happen lawfully, they have the Intellectual property act in place, which covers four aspects, i.e., copyright, trademark, patent, and trade secret. Each of these terms has a distinct purpose of serving. For instance, copyright is for original creative work, the patent is for useful products, machines, manufacturing, etc. A trademark is to protect the brand of a business. A trade secret is for protecting business information.
KFC’s recipe can be a trade secret and revealing it is a violation of the law. Similarly, as a freelancer, your client can use creatives they paid for. But if they decide to repurpose it for a project that they did not pay you for, it would be a violation of the copyright act.
These are just a few laws that support the interests and rights of freelancers across the US. There are many more benefits and laws that protect your interests. So, make sure you read on and consult your legal advisor before taking up a gig!