On September 28, 2024, California Governor Gavin Newsom signed Senate Bill No. 988 into law, creating the Freelance Worker Protection Act (FWPA), which took effect on January 1, 2025. The FWPA was enacted to address some of the ambiguities faced by freelancers under the previous and controversial AB 5. (See New Bill Clears Path for Freelance Attorney Independent Contractor Status, published by Erin Giglia and Laurie Rowen.) The bill refines the ABC test to better distinguish between independent contractors and employees, including clearer definitions and specific exemptions for certain professions. This new legislation is a significant step forward for the growing freelance workforce in California, aiming to provide essential protections for independent contractors who often lack the security and benefits of traditional employment. With the rise of gig work across industries like tech, media, and law, freelancers have increasingly become the backbone of California’s economy, making it essential to ensure they are fairly compensated.
The FWPA introduces several key measures to safeguard freelancers, starting with mandatory payment deadlines for businesses hiring independent contractors. Specifically, the law states that the hiring party must pay a freelance worker the compensation no later than 30 days after completion of the freelance worker’s services, unless otherwise specified in the contract. This provision will help freelancers avoid the common issue of delayed or unpaid wages, which can leave them vulnerable financially.
While many contracts involving freelance attorneys – like the one Montage Legal Group requires all hiring law firms to sign – already require payment within 30 days, law firms and other businesses hiring freelance lawyers without clear payment terms must be extra cautious to abide by the 30 day time period.
Additionally, the law requires businesses to issue written contracts for all freelance work that exceeds $250, providing clarity on job terms, expectations, and payment. Given that practically all freelance attorney projects are likely to exceed $250, hiring firms should make sure all projects are covered by written contracts versus verbal agreements.
Beyond financial and legal protections, the FWPA improves transparency for freelance workers by mandating that companies outline dispute resolution processes and job conditions upfront. The law also requires businesses to inform freelancers of their rights, helping to level the playing field between independent contractors and the companies that hire them. By addressing these gaps in protections, the Freelance Worker Protection Act sets a new standard for how freelancers should be treated in California and provides a potential model for other states grappling with similar issues in the modern workforce.
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