Know Your Rights as a Freelancer

The IRS uses a 20-factor test to determine if someone is an independent contractor or an employee. Key factors include: • Behavioral control: Does the hiring party direct how the work is done? • Financial control: Who pays for supplies? Can you set your own rates? • Relationship type: Is it permanent or project-based? Do you receive benefits? If most factors suggest employee status, you may have misclassification rights. The test is nuanced and fact-specific, consulting a tax professional is recommended.

California AB5 (2020) fundamentally changed independent contractor classification using the "ABC test": (A) Control: The worker is free from direction and control by the hiring entity (B) Scope: The worker performs work outside the usual business of the hiring entity (C) Independence: The worker is customarily engaged in an independently established trade All three conditions must be met. California has the strictest freelancer classification law in the US, offering strong protections to gig workers and independent contractors.

New York's Freelance Isn't Free Act (2016) protects independent contractors with strict payment requirements: • Written contracts required for contracts over $800 • Payment due on agreed dates or within 30 days • Penalties for non-payment: interest at 1.5% per month plus recovery costs • No non-disparagement clauses without payment compensation • Clear dispute resolution procedures New York sets a strong precedent for freelancer payment protection. Similar laws are emerging in other cities.

Payment terms vary by industry and client relationship: • Net 15: Payment within 15 days (common for small projects) • Net 30: Payment within 30 days (industry standard for many freelancers) • Net 60: Payment within 60 days (common for enterprise clients) Always negotiate payment terms upfront and include them in your contract. Late payments are common, knowing your rights and having clear terms reduces disputes.

Non-compete clauses are treated very differently across states: • California: Generally unenforceable (Labor Code §16600), with narrow exceptions • Florida, Texas, New York: Enforceable if reasonable in scope, duration, and geography • Blue-pencil doctrine: Some states will rewrite overly broad restrictions • Trade secrets exception: Most states allow protections for actual trade secrets Before signing a non-compete, know your state's rules. Broad non-competes can severely limit your ability to work.