Last Updated on November 12, 2024

As the gig economy continues to grow, California has taken a significant step toward protecting freelance workers with the passage of the Freelance Worker Protection Act (Senate Bill 988, or SB 988). The bill will impose minimum requirements, effective January 1, 2025, for contracts between hiring parties and freelance workers. This new law introduces important changes that businesses and independent contractors must understand.

Below, we break down the key provisions of SB 988 and what they mean for freelancers and the businesses that hire them. 

What Is SB 988?  

The Freelance Worker Protection Act is designed to protect independent contractors in California by establishing clear guidelines for contracting, payment, and enforcement. Specifically, it ensures that freelancers—who are often vulnerable to delayed payments and unclear contract terms—receive timely compensation and have legal recourse in the event of disputes.  

This law will impact businesses that engage freelance workers as well as the freelancers themselves. Here’s what you need to know: 

Who Does SB 988 Apply To? 

SB 988 applies to independent contractors who meet the following criteria: 

• They are paid $250 or more for a single project or engagement.
• They are individual workers (i.e., not part of a company or collective entity). 

Freelancers earning less than $250 per contract or working in certain exempt industries may not be covered under this law.  

Key Provisions of the Freelance Worker Protection Act 

1. Written Contracts Are Required : One of the most important aspects of SB 988 is its written contract requirement. Freelancers must have a contract with the hiring business that outlines the following: 

• Names and contact information of both parties (the freelancer and the hiring entity). 
• A detailed, itemized list of services to be performed, their corresponding value, and the method of compensation (whether hourly, per-project or another arrangement). 
• Due dates for the freelancer to report completed work for payment. 
• Payment due dates or a formula that determines when payment will be made. 

This contract must be kept by the hiring party for a period of four years, ensuring that both parties have a clear record in case of disputes. 

2. Timely Payment Requirements: SB 988 mandates that businesses pay freelancers within 30 days of the completion of services if no payment date is specified in the contract. If a contract includes a specific due date for payment, businesses must honor that deadline. This ensures that freelancers are not subjected to delays in receiving compensation, which is a common issue in many industries. 

 3. No Conditional Payment Based on Reduced Compensation: Under SB 988, businesses are prohibited from conditioning payment on freelancers accepting lower compensation or making post-completion changes to the contract. Freelancers should not be forced to accept revised terms after they have already completed the agreed-upon work. This provision safeguards freelancers from being pressured into renegotiating their pay or terms after they’ve delivered their services. 

4. Retaliation Prohibited: The law also includes strong protections against retaliation. Businesses are prohibited from retaliating against freelancers who assert their rights under the law, including requesting timely payment or enforcing the terms of their contract. Freelancers can confidently exercise their legal rights without fear of losing future business opportunities. 

What Does the Freelance Worker Protection Act Mean for Businesses? 

If your business hires freelance workers, SB 988 requires you to make some important changes to your processes: 

1. Ensure Written Contracts Are in Place: You must establish a written agreement for every freelance engagement that meets the detailed requirements outlined above. 

2. Track Payment Due Dates: Make sure that all freelance work is compensated within the timeframe specified in the contract or within 30 days if no date is provided. 

3. Review Payment Policies: You must avoid conditioning payment on renegotiation or reducing compensation, and make sure contracts reflect fair terms. 

4. Prepare for Legal Compliance: As the law provides civil recourse for non-compliance, businesses must be vigilant about meeting these obligations to avoid legal consequences. 

Implementing these changes will help protect your business from potential legal claims and foster a more transparent, fair relationship with your freelance workers. 

How MyHRConcierge Can Help You Navigate SB 988 Compliance

As the Freelance Worker Protection Act, or SB 988, takes effect on January 1, 2025, it’s essential for businesses to update their contracting processes and for freelancers to understand their newfound rights.  

With MyHRConcierge’s tailored HR services, we make sure you’re not only compliant but also set up for success in the evolving human resources landscape. Contact us today contact us today at ccooley@myhrconcierge.com, 855-538-6947 ext 108, or, schedule a free consultation below to ensure your organizations are prepared for 2025 and beyond: