SB 988 Freelance Worker Protection Act Offers Some Protection to Independent Contractors

SB 988 establishes some minimum requirements for independent contracts that already apply to employees. Existing California law provides a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors. Independent contractors receive significantly fewer legal protections compared to workers who qualify as employees under California and federal law. Independent contractors broadly do not receive the protections of the California Labor Code, the Fair Labor Standards Act and other statutes, such as minimum wage, overtime, and other protections and minimum standards.

Effective January 1, 2025, SB 988 creates minimum requirements for employers that hire freelance workers in California, otherwise known as independent contractors. These requirements include requiring a written contract, timely payment and freedom from retaliation.

Specifically, SB 988 would require a hiring party to pay a freelance worker the compensation specified by their contract for professional services on or before the date specified by the contract or, if the contract does not specify a date, no later than 30 days after completion of the freelance worker’s services. The bill would require a contract between a hiring party and a freelance worker to be in writing and would require a hiring party to retain the contract for no less than 4 years. SB 988 also prohibits a hiring party from discriminating or retaliating against a freelance worker for taking any actions to enforce their rights under the statute. Finally, the bill would enable a freelance worker or a public prosecutor to bring a civil action to enforce the requirements of SB 988.

If you have any questions about this new legislation, please contact your usual labor law counsel.