PROTECTIONS FOR FREELANCE WORKERS IN LOS ANGELES
The Los Angeles City Freelance Worker Protections Ordinance, effective July 1, 2023, seeks to provide assurances to freelance workers that they are “treated fairly and receive the compensation they are due.”
What does the Ordinance require?
Primarily it requires a written contract between the “hiring entity” and the “freelance worker” for work valued at $600.00 or more.
Definitions:
A “Freelance Worker” is any individual or entity composed of no more than one person that is hired by a Hiring Entity to provide services for compensation. Excluded from this definition are certain professionals where it is already required to have a written agreement to provide services in exchange for compensation, (e.g. attorneys, architects, and engineers).
A “Hiring Party” is a person or entity regularly engaged in business or commercial activity but does not include entities that hire app-based drivers for transportation or delivery services. The ordinance excludes any freelance worker that:
- is required by law to have a written agreement to provide services in exchange for compensation (e.g. attorneys);
- is already an employee of the hiring entity;
- agrees to perform services for the hiring entity at no pay; or
- has employees other than the one individual who is the sole legal and beneficial owner.
What protections are provided?
- Hiring Parties are required to provide Freelance Workers with a written contract for all agreements valued at $600.00 or more, either by itself or combined with previous oral or written agreements between the parties in a calendar year.
- Hiring Parties are required to provide full payment by the date specified in the written contract, or no later than 30 days after work is completed if no date is specified in the contract.
- Both parties must retain written records for no less than four years, including contracts, payment records, and anything else showing compliance with the contract.
- Hiring Parties may not punish, penalize, retaliate, or take any adverse employment action against any Freelance Worker for exercising their rights.
Complaints For Violations
A Freelance Worker may file a complaint with the Bureau of Contract Administration, Office of Wage Standards (OWS), or bring a civil action in a court of law to enforce or recover damages for violations. Complaints filed with the OWS must be submitted no later than the one-year anniversary of the alleged violation.
If the OWS receives a complaint, it will inform the Hiring Party of the alleged complaint and their obligations under the law. The OWS will also request relevant documents from the Hiring Party and provide them to the Freelance Worker, who may choose to file a claim in Court. If the Hiring Party does not provide the requested documents within 20 calendar days, Freelance Workers receive a “rebuttable presumption” in their favor when they file a lawsuit in court. The Hiring Party will then have the burden to establish there was no violation.
Available damages or remedies for a Violation
A Freelance Worker that prevails in Court with a claim shall be entitled to all reasonable attorney’s fees and costs, injunctive relief, and other remedies as deemed appropriate by the Court. A judge may also award additional damages.
The Office of Wage Standards has published a summary which provides more information and can be found here.
What Should I do Now?
As most businesses will qualify as a “hiring entity”, and many of the independent contractors providing services to those businesses will qualify as “freelance workers” the “Hiring Entities” should carefully review the Ordinance and review any contractual arrangements to ensure that the obligations under the Ordinance are followed.
If any contract does not conform to the ordinance, the hiring entity should take the necessary steps to provide a written contract and maintain the requisite documents.
CHANGES TO FAIR CHANCE ACT REGARDING CRIMINAL HISTORY
In 2018, California enacted the Fair Chance Act (FCA) that prohibits employers with five or more employees from asking about a job applicant’s conviction history before making a job offer. Once a conditional offer has been made, if the employer intends to deny employment conditionally offered because of the applicant’s conviction history, the employer is required to make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific job duties. An employer is then required to notify the applicant of the adverse information obtained and allow the applicant an opportunity to respond before rescinding a conditional offer of employment.
On October 1, 2023 changes to the FCA will take place.
Modifications to Definitions
Employer: The modified regulations significantly expand the definition of employer to include:
- joint employers
- entities that evaluate applicant’s criminal history on an employer’s behalf or as the employer’s agent
- staffing agencies
- entities that procure workers from pools or availability lists.
Applicant: Two new categories of employees have been added:
- existing employees who have applied for or indicated a specific desire to be considered for a different position with their current employer; and
- existing employees who are subject to a review and consideration of criminal history because of a change in ownership, management, policy, or practice.
Consideration of Criminal History Prior to Conditional Offer of Employment
Employers are prohibited from including statements in job advertisements, postings, applications, or other materials that persons with criminal history will not be considered for hire.
There are certain jobs where the employer is required by law to conduct criminal background checks and are exempt from the FCA, however such exemptions do not apply where the law requires another entity, such as an occupational licensing board, to conduct the check.
Also, if an applicant voluntarily offers information about the applicant’s criminal history prior to receiving a conditional offer, the employer must not consider such information.
Potential Rescission of Conditional Offer Based on Conviction History
If an employer intends to rescind the conditional offer, it must follow specific procedures:
A. Initial Individualized Assessment
If after a conditional offer of employment is made, and the employer subsequently decides to deny the applicant the employment position based solely or in part on the applicant’s conviction history, the employer must have made a reasoned, “evidence-based determination” whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.
- The employer shall consider: (1) the nature and gravity of the offense; (2) the time that has passed since the offense; and (3) the nature of the job held or sought.
- Evidence of rehabilitation or mitigating circumstances voluntarily provided by the applicant must be considered during the initial assessment.
B. Notice of Preliminary Decision and Opportunity for Applicant Response
- Evidence of rehabilitation or mitigating circumstances from the applicant or by a third party at the applicant’s request is optional.
- An employer may not refuse to accept additional evidence voluntarily provided by an applicant at any stage of the hiring process, require an applicant to submit additional evidence, disqualify an applicant for failing to provide any specific type of documents or evidence, require an applicant to disclose the applicant’s status as an abuse survivor, or require an applicant to produce medical records and/or disclose the existence of a disability or diagnosis.
- Reassessment – When considering rehabilitation or mitigating circumstances evidence, an employer may consider:
- the applicant’s conduct during incarceration, including participation in work and education or rehabilitative programming;
- the applicant’s employment history since conviction or sentence completion, community service and engagement since the conviction or sentence completion;
- any other rehabilitation efforts, or any other mitigating factors.
FCA Claims Subject to FEHA Procedures
Applicants and employees may file a complaint for investigation by the California Civil Rights Department (formerly DFEH) and may obtain an immediate right-to-sue notice.
What Do I do Now?
- Determine whether the entity falls within the expanded definition of “employer”.
- Determine whether the “applicant” falls within the two new categories of applicants.
- Train and educate hiring personnel to ensure compliance.
- Revise job advertisements and postings as necessary to eliminate improper references to criminal history.
- If a declination of employment based on the applicant’s criminal history is going to be made, ensure all of the procedural requirements are followed.
This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2023.