NYC FREELANCE ISN'T FREE ACT

Prior to this pandemic, New York City addressed the magnitude of the "gig economy" and on May 15, 2017, Local Law 140 of 2016 took effect. The law establishes and enhances protections for freelance workers, specifically the right to a written contract, timely and full payment and protection from retaliation.

Turner v Sheppard Grain Enters., LLC 2020 NY Slip Op 20139 Decided on June 23, 2020 Supreme Court, New York County Bluth, J.:

"Background Plaintiff seeks purportedly unpaid consulting fees under a consulting agreement he had with defendant, an agricultural products processor and distributor. He insists his fees were withheld in bad faith based on a non-existent pretextual termination for cause and he is owed over $150,000 in fees plus double damages under New York City's Freelance Isn't Free Act ("FIFA").

Defendant moves to dismiss the third and fourth causes of action on the ground that the Freelance Isn't Free Act does not apply to this case because plaintiff did not perform the work in New York City. Defendant acknowledges that the law is ambiguous on this point and that there are few cases on the scope of the statute but insists that plaintiff has no standing to bring these types of claims. It stresses that defendant only maintains a New York office for notice purposes, plaintiff did not sign the contract in New York City and that plaintiff is not a freelance worker.

In opposition, plaintiff emphasizes that defendant is an LLC with its principal office on Seventh Avenue in New York City. He contends that the agreement was signed by Mr. Song (manager of defendant) in New York City and details work that he performed for defendant relating to tasks based in New York City. Plaintiff acknowledges that defendant does not "mash soybeans" in New York City but argues it is the place where much of defendant's work is done.

Plaintiff adds that defendant is owned, controlled and run by a private equity firm based in New York City. He argues that a person's residency is not determinative under FIFA and the law is remedial, meaning it should be interpreted broadly to support its purpose. Plaintiff asks the Court to consider how work is performed in the digital age and not to limit the scope of FIFA to a person who is physically in New York City.

In reply, defendant stresses that plaintiff did little to no work in New York City and defendant has little to no operations here. It argues that plaintiff identified two meetings over a three-year period in New York City and that the New York office is only used to receive mail. Defendant argues its "nerve center" is in Phelps, New York, hundreds of miles from the city.

Discussion FIFA defines a freelance worker as "any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation"(FIFA § 20-927). A review of the consulting agreement reveals that this was an agreement where plaintiff would provide his operations management expertise to defendant in exchange for compensation (NYSCEF Doc. No. 32). Clearly, plaintiff qualifies as an independent contractor based on this agreement and falls within FIFA's definition of a freelance worker.

FIFA was passed largely to protect freelance workers who were denied compensation by inter alia imposing double damages on companies that breached agreements (Caitlin M. Baranowski, Freelance Isn't Free: The High Cost of New York City's Freelance Isn't Free Act on Hiring Parties, 12 Brooklyn J Corp Fin & Com L 439, 443 [2018]). However, FIFA does not provide any guidance or definitions as to its scope or applicability. The statute is completely silent on how to assess scenarios such as the one present here: a freelancer based out of state and doing work remotely from out of state for a company whose address (in the agreement) is in New York City but whose business is physically conducted outside the city.

"FIFA does not clarify whether individuals must have physical locations in N.Y.C., mailing addresses in N.Y.C., or simply conduct business regularly in N.Y.C., in order to meet FIFA's definition of freelance workers or hiring parties. FIFA may apply to work performed outside N.Y.C. depending on the particular circumstance, including whether some of the work is performed in N.Y.C, whether the freelance worker was hired or retained in N.Y.C, and whether the hiring party's operations are within N.Y.C." (id. at 456).

In fact, the NYC Department of Consumer Affairs posits (on its FAQ page) that "The Freelance Isn't Free Act is a New York City law. While judges will decide how the Law applies in each case, the Law does apply to work performed inside New York City and may apply to work performed outside New York City depending on the overall circumstances. For example, whether the Law applies may depend on whether some, but not all of the work is performed in New York City, the freelance worker is hired or retained in New York City, or the hiring party has significant operations in New York City" (NYC Consumer Affairs, Freelance Isn't Free Act: Frequently Asked Questions, http://wwwl.nyc.gov/assets/dca/downloads/pdf/workers/FAQs-Freelance.pdf).

Because the law provides no guidance on how to assess the application of FIFA, the Court must consider the purpose and intent of the law in light of the present circumstances. When considering another city law, the New York City Human Rights Law ("NYCHRL"), the Court of Appeals adopted the impact requirement, which holds that "the nonresident plaintiff [*2]must demonstrate that the alleged discriminatory conduct had an 'impact' within the city" (Hoffman v Parade Publs., 15 NY3d 285, 290, 907 NYS2d 145 [2010]).

The Court observes that the NYCHRL contains an entire section (8-101) about the policy of the NYCHRL and it specifically mentions the city's inhabitants. No such language is included in FIFA. But the Court sees no reason to depart from this standard when evaluating whether a non-resident (plaintiff lives in Connecticut and does his work remotely there) should be afforded the protections of FIFA.

Under the impact standard, the Court finds that plaintiff is not entitled to the protections of FIFA because he is not a New York City resident and he performed the vast majority of his work from Connecticut. In fact, the termination letter is addressed to plaintiff at a location in Darien, Connecticut (NYSCEF Doc. No. 33). While plaintiff attempts to document that he went to a few meetings in New York City (NYSCEF Doc. No. 31, ¶ 10), that does not sufficiently establish that he is entitled to the protections of a New York City provision.

Under somewhat analogous circumstances, a federal court found that a housekeeper at an estate in Southampton, New York could not state a claim under the NYCHRL because she could not establish a sufficient connection to New York City (Amaya v Ballyshear LLC, 340 F Supp 3d 215, 221 [ED NY 2018]). The Court found that the termination of plaintiff (a non-NYC resident who did not work in New York City) did not satisfy the impact requirement (id. at 221-22). The Court also concluded that plaintiff's attendance at a few meetings in New York City did not save her claim under the NYCHRL (id. at 222). Also rejected was plaintiff's argument that her discussions and interactions with supervisors based in New York City permitted her to seek the protection of the NYCHRL (id.). The Court stressed that "To accept the Plaintiff's argument that mere interactions with a non-resident plaintiff are sufficient would expand the scope of the NYCHRL to cover all decisions of New York City-based employers regardless of the location of their employees. . . .The NYCHRL's reach is not so expansive" (id.). The Court concluded that the impact of the alleged discriminatory conduct towards plaintiff was felt solely on Long Island (id. at 223).

The Amaya case is instructive here. The fact that plaintiff had a few meetings in New York City, had interactions with supervisors in New York City and that he was fired by an employee (Mr. Chong) based in New York City is not enough to satisfy the impact requirement. Rather, the Court finds that the impact was felt in Connecticut, where plaintiff both lived and worked.

In order to permit plaintiff the protections of FIFA, the Court would have to ignore both his residency status and the work requirements of the job. That would expand the scope of FIFA substantially. Consider if plaintiff lived in California or in London rather than in Connecticut; under his theory, he would be entitled to the protection of FIFA in either location solely because defendant was based in New York City.[FN1] That expansive reading of a New York City-specific provision cannot be embraced. It lacks common sense, rationality and has no bearing on the purpose of this statute. Plaintiff argues that FIFA's purpose was to apply to businesses with any connection to New York City and benefit freelance workers no matter where they did their work; this Court disagrees.

The press release announcing the passage of FIFA mentions "protecting New York City's [*3]gig economy" and cited examples of a film producer and a pattern-maker from the Bronx both of whom didn't get paid after performing freelance work (Mayor Bill de Blasio Signs Legislation Strengthening Protections for Freelance Workers, available at https://ww1.nyc.gov/office-of-the-mayor/news/243-18/mayor-bill-de-blasio-signs-legisation-strengthening-protections-for-freelance-workers [November 16, 2016]). The intention is clear: FIFA was passed to ensure that people working in the city are afforded protection in an economy where workers are increasingly hired for discrete or short-term tasks rather than for full-time employment.

Summary Of course, there may be situations in which non-residents can seek redress under FIFA. The clearest example is when a non-resident is hired to perform work in New York City (see Eelco Van Den Berg v Clinton Hall Holdings, LLC, 2019 NY Slip Op. 32036[U] [Sup Ct, New York County 2019] [involving a resident of the Netherlands bringing a claim under FIFA for unpaid work relating to a mural at a bar in South Street Seaport]). Certainly, if a New York City company hires a non-resident to do freelance work within New York City, then that freelancer can seek protection under FIFA.

Under those circumstances, the impact of the non-payment is felt in New York City because that is where the work took place. But that is not the case here, where plaintiff worked in another state and his only connection to New York City is that at least one employee of defendant was based there.
The Court recognizes that FIFA is not exactly the same as the NYCHRL, a human rights statute that alludes to the city's inhabitants. However, the Court sees no reason to depart from the analysis used to determine the applicability of the NYCHRL when considering the scope of FIFA. In its most basic example, FIFA was passed to help the photographer hired for a photoshoot in Manhattan who was never paid. Its drafters did not think to contemplate that an out of state resident working remotely while out of state would seek its protection and, consequently, FIFA is completely silent about its scope.

There is no doubt that any analysis of FIFA must consider the fact that many freelancers complete tasks remotely, especially given the current pandemic. Interpretation of FIFA must strike a balance that protects New York City residents and those who come to this city to do work without expanding its scope exponentially to cover every person hired to do freelance work for a New York City company regardless of where this work is performed. Because there is no indication that FIFA's drafters sought to include plaintiffs like the one here, the Court grants the motion."