How Can Freelancers Protect Their Right to Get Paid?
What Do Freelancers Want and What Payment Issues Do They Face?
In an independent study done by Freelancers Union and Upwork, they discovered that freelancers:
- will be the majority of the workforce by 2027.
- are increasingly freelancing by choice (to bring in different streams of income, among other reasons).
- update their skills more often than traditional workers.
- enjoy freedom and flexibility.
- create diversified portfolios.
- contribute $1.4 trillion to the US economy.
- share a top concern of income predictability. Therefore, freelancers dip into their savings more often than traditional workers.
The study also discovered that 72% of freelancers are open to crossing party lines for a political candidate who supports freelancers’ interests.
According to Freelancers Union, most freelancers aren't protected by clear written contracts. Only one-fourth of freelancers say they even have contracts. Of the freelancers surveyed:
- 71% face nonpayment or late payments; on average they are stiffed $5968 each year.
- 44% rely on credit cards.
- 25% borrow from family.
- 17% took a job outside of their field.
- 7% receive government assistance.
- 7% sold a car.
NYC Passes a Law to Protect Freelancers
Did you know that New York City passed a law in 2017 to protect freelancers from nonpayment and late payments? You can read the plain language version of the New York law here.
NYC Requires Mandatory Contracts
The NYC freelance law requires mandatory contracts and puts that obligation on the client, not the freelancer. There's a standard 30-day payment term unless otherwise stated in the contract and the client cannot retaliate against the freelancer simply for asking for their money due. Freelancers are offered city legal assistance and double damages which could include attorney fees. Repeat offenders can be penalized up to $25,000.
Freelancers Union is the only freelancer's union I know of and it is only for New York City. But their site has a lot of good information to work from. Although they want to organize each state, our constitution encourages each state to have their own experiments and therefore I believe a nationwide organization would not work. What works in New York City would not necessary work in my state (Florida).
It's Hard to Fight to Get Paid Without Hiring an Attorney
As a freelancer since 2000, I have learned that getting paid can be a huge issue. What can we freelancers do if we don't have a union, or laws like New York City's?
We can always use freelancing sites out there such as Upwork, which supports NYC's freelancing law. But many of us have our own clients who we trust, and we believe they will not burn us once the relationship ends.
The fact is, they often do. And why not? What's to stop them from not paying that last bill? Money is usually tight for them and not paying a bill is very tempting.
If it's under $5000 you can take your debt to small claims court, which keeps attorneys out. But most debts are over $5000, which requires a higher level court, and attorneys and money to pay them unless you represent yourself (fight pro se). The law provides attorneys for criminals, but as a freelancer, you'll have to get your own.
From the research that I've done, I found the best way to prepare for being stiffed might be to have insurance. Attorneys kind of suck; ok, they do suck. They want at least $5000 to start the freaking case, and then carte blanc to continue. There are also attorneys-on-demand services where you pay a monthly fee and then they advise you on your case; they might even write a letter or two and then give you a flat rate to continue per service, if you choose. This is better than carte blanc: at least you know how much it'll cost as your case moves along. But the fees are normally the same as when you just go out and hire an attorney.
How to Protect Yourself From Retaliation
What can freelancers do to protect themselves? From my research, I believe freelancers should take the time to find good insurance that will protect them, including insurance that covers attorney fees. Ideally, the insurance company will be there to help you fight lawsuits brought against you in case of retaliation from your client. Once you ask for your money, suddenly your client will come up with a list of reasons why they shouldn’t pay you and may even believe a simple letter from their attorney will scare you off. Don’t be scared off; be prepared to fight them.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
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© 2019 Joy Campbell