Illinois Enacts the Freelance Worker Protection Act (FWPA)
In Illinois, a new law was enacted that was specifically crafted for freelance workers in the state. This law, known as the Freelance Worker Protection Act (FWPA), allows for more structure and protection, including written contracts and timely compensation for eligible freelance workers.
What is a “freelance worker?”
The FWPA, which will take effect on July 1, 2024, defines a freelance worker as someone hired or retained as an independent contractor. They provide products or services in Illinois or for a nongovernmental person or entity located in the state.
To be covered by the FWPA, the amount paid for the freelance worker’s products or services must be $500 and above. This amount can either be in a single contract or the sum of multiple contracts within a 120-day period. Workers not covered by the FWPA include:
- Employees, as defined by the Illinois Wage Payment and Collection Act
- Contractors and subcontractors in the construction industry, as defined by the Illinois Employee Classification Act
Written contracts between freelance workers and their clients
One requirement of the FWPA is for both parties (i.e., the freelance worker and the contracting entity) to enter into a written contract. At a minimum, the contract must include the following details:
- Both parties’ names and contact information, including the hiring party’s mailing address
- Itemized list of products and services provided by the freelance worker
- Value of the products and services
- Rate and method of compensation
- Important timings (payment due date and submission date of list of services rendered)
In addition, the hiring party must ensure the following:
- Provide a copy of the contract to the freelance worker
- Retain a copy of the contract for at least two (2) years
- Produce the contract upon request of the Illinois Department of Labor (IDOL)
Aside from the contract requirements, the FWPA explicitly prohibits the hiring party from paying less than the contracted amount under the condition of timely payments to the freelance worker.
Under the new law, the hiring party is also prohibited from actions aimed at deterring workers from exercising their rights under the FWPA.
The above are just some of the main points of the FWPA, which offers significant legal protection as well as structure to the freelance work landscape. The complete copy of the Freelance Worker Protection Act or Public Act 103-0417 can be found on the Illinois General Assembly website.
The way forward
The number of freelance workers and independent contractors is growing. It’s only practical to consider this sector of the working population when crafting labor regulations. Doing so helps ensure that these professionals are protected well and can securely offer their products and services.
While Illinois is considered the first state to enact protection laws for freelance workers in the United States, we can expect that more states and countries outside the United States will follow suit, either creating new laws or reinforcing current labor laws to adapt to today’s evolving workforce.