California’s governor signed into law SB 988, which is known as the “Freelance Worker Protection Act.” SB 988 establishes new contractual protections for freelance workers starting January 1, 2025.

Under SB 988, a “freelance worker” is defined as any person or organization hired or retained as an independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than two hundred and fifty dollars. The bill incorporates the definition of “professional services” under Labor Code Section 2778, which encompasses a range of creative and intellectual services such as marketing, human resources, travel agent services, creative fields (graphic design, fine arts, and writing), licensed professionals, and other specialized performers. 

SB 988 provides various protections for freelance workers entering into or renewing contracts on or after January 1, 2025. Key provisions of SB 988 include the following:

• Payment Requirements: Hiring parties must pay freelance workers as specified in their contracts, or within 30 days after services are completed if no payment date is set. Additionally, once work has commenced, a hiring party cannot require as a condition of timely payment that the freelance worker either accept less compensation than the amount of compensation specified by the contract, or provide more goods or services or grant more intellectual property rights than agreed to in the contract.
• Written Contracts: All agreements must be documented in writing, and hiring parties are required to retain these contracts for at least four years. Written contracts must include the following: (1) the name and mailing address of each party; (2) an itemized list of all services to be provided by the freelance worker, including the value of those services and the rate and method of compensation; (3) the date the hiring party will pay the freelance worker or the mechanism by which the date shall be determined; (4) the date which a freelance worker shall submit a list of services rendered under the contract to the hiring party to meet the hiring party’s internal processing deadlines for purposes of timely payment of compensation.
• Anti-Discrimination Measures: Hiring parties cannot discriminate or take any adverse action against a freelance worker for asserting their rights under SB 988.
• Legal Enforcement: Freelance workers or public prosecutors can take legal action for violations, with potential damages including attorney fees and penalties for unpaid compensation.

In light of SB 988, California employers should re-visit their contracts with independent contractors that qualify as freelance workers to assess compliance with SB 988.