Client Insight: California’s Freelance Worker Protection Act Takes Effect on January 1, 2025

California recently enacted the Freelance Worker Protection Act (FWPA), a new statute designed to establish comprehensive guidelines for the engagement and compensation of independent contractors. The FWPA covers nearly all California companies that engage freelancers for professional services and introduces significant new contract requirements. The FWPA applies to contracts entered into or renewed on or after January 1, 2025.

With this new freelancer law, California joins Illinois, New York, New York City, Los Angeles, Minneapolis, Seattle and Columbus, Ohio, in imposing specific requirements for engagements with freelance independent contractors.

Key Points

The FWPA:

• • takes effect on January 1, 2025, and will apply to all new and renewed contracts from January 1, 2025, forward – it does not apply retroactively;
  • applies to virtually all businesses in California engaging freelancers for professional services;
  • mandates comprehensive written contracts with specific, detailed provisions; and
  • imposes penalties and damage awards (including a private right of action) if a company is found to violate the law.

Who Does the Law Cover?

The FWPA applies to independent contractors providing professional services for $250 or more, either in a single contract or when aggregating all contracts with the same hiring party over the past 120 days.

Professional services is defined in California Labor Code Section 2778(b)(2) and covers a wide range of fields including marketing, graphic design, writing, photography, and translation. Nearly all businesses in California are subject to this law, with exceptions only for government entities and individuals hiring for personal services.

What Does the Law Require?

Written Contracts

Employers must create detailed written contracts that outline the specific terms of engagement. These documents must include comprehensive details such as:

• • full names and contact information of both parties;
  • detailed description of services to be provided;
  • exact compensation terms and payment dates; and
  • submission requirements for service documentation.

Document Retention

Companies are required to retain these contracts for a minimum of four years, creating a robust paper trail for each freelance engagement.

Payment and Compensation Protections

The law mandates timely compensation, requiring payment either:

• • on the date specified in the contract; or
  • within 30 days of service completion if no specific date is set.

Critically, employers cannot:

• • reduce agreed-upon compensation as a condition of payment;
  • demand additional services or intellectual property rights not originally contracted; or
  • retaliate against freelancers who assert their rights under the new law.

Enforcement and Potential Consequences

A freelance worker or a public prosecutor may bring a civil action to redress violations of the FWPA. Potential remedies include:

• • recovery of up to twice the unpaid amount;
  • additional $1,000 penalty if a written contract is refused;
  • damages equal to the contract’s value;
  • injunctive relief; and
  • potential recovery of legal fees and costs.

Preparing for Compliance

Businesses should take proactive steps to adapt to the new requirements:

1. 1. Identify freelance workers in your organization.
   2. Determine whether any freelance workers provide “professional services” addressed in the FWPA.
   3. Review and update existing contractor agreements to ensure they include all information required under the FWPA.
   4. Train management on new legal obligations.
   5. Ensure timely payment according to contract terms.
   6. Establish robust record-keeping processes.

Conclusion

As California continues to enact worker-protection legislation, businesses must proactively adapt to these new requirements. Consulting with legal counsel can provide additional guidance on implementing these changes and mitigating potential risks. Contact your Gunderson attorney if you have any questions regarding the FWPA, or any other employment law matters.