3 Federal Freelancer Laws Every Gig Worker Must Know

Navigating the world of freelancing requires not only talent and dedication but also a solid understanding of the legal landscape that governs independent work. Among the most critical aspects are the federal freelancer laws, which outline the rights, responsibilities, and protections for freelancers in the United States. These laws cover areas such as wage standards, tax obligations, and workplace safety, providing a framework that freelancers must adhere to in order to ensure compliance and protect their professional interests.

According to the IRS and the courts, a freelancer is defined as an individual who is self-employed, providing services to clients on a contract basis, and typically not bound to a single employer long-term. Freelancers are often independent contractors who bear their own tax responsibilities, set their own schedules, and provide their own tools or materials necessary for their work. It is crucial for freelancers to understand their responsibilities, as these duties include negotiating clear contracts, managing their own taxes, and ensuring compliance with applicable laws. This article explores three key federal freelancer laws affecting freelancers: the Fair Labor Standards Act, the Internal Revenue Code, and the Occupational Safety and Health Act, offering essential insights for anyone working independently.

1. Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) primarily governs wage and hour standards, including minimum wage, overtime pay, and recordkeeping. While the FLSA typically applies to employees, it can impact freelancers, especially in determining worker classification. The law distinguishes between employees and independent contractors, with employees entitled to benefits like minimum wage and overtime pay, which are not required for independent contractors. Independent workers must ensure they are correctly classified according the these federal freelancer laws, as misclassification can lead to legal and financial consequences for both the freelancer and the hiring entity. Proper classification affects tax obligations and eligibility for certain workplace protections.

2. Internal Revenue Code (IRC)

The Internal Revenue Code (IRC) outlines the federal tax obligations of freelancers, treating them as self-employed individuals. Freelancers are required to pay both the employer and employee portions of Social Security and Medicare taxes, known as self-employment taxes. This is in addition to income tax on their earnings. The IRC mandates that freelancers keep accurate records of their income and expenses, file quarterly estimated tax payments, and report earnings using the appropriate IRS forms, such as Schedule C and Schedule SE. Proper compliance ensures freelancers avoid penalties and remain in good standing with the IRS.

3. Occupational Safety and Health Act (OSHA)

The Occupational Safety and Health Act (OSHA) sets standards to ensure safe and healthful working conditions for workers, which can extend to freelancers, particularly when they work on-site at a client’s location. While OSHA primarily applies to traditional employees, freelancers may still be protected under certain circumstances, especially if they are working in hazardous environments or using specific equipment. Freelancers should be aware of their right to safe working conditions and can report unsafe practices to OSHA. It’s also essential for freelancers to negotiate contract terms that include provisions for a safe working environment, reflecting OSHA’s standards.

There are other local and state laws that protect freelancers and also impose some responsibilities. In New York City, The “Freelance Isn’t Free Act” mandates that any freelance work agreement worth $800 or more must be in writing. This contract should clearly outline the scope of work, payment amount, and payment schedule. One of the key provisions of the Act is the requirement for timely payment; freelancers must be paid within 30 days of completing their work unless a different period is specified in the contract. If the hiring party fails to pay on time, the freelancer has the right to seek double the amount owed as damages, plus attorney’s fees.

Freelancer responsibilities under this Act include ensuring that contracts are detailed and in writing, understanding the terms and conditions of the agreement, and maintaining proper records of the work performed and communications with clients. Freelancers must also be proactive in seeking legal remedies if they face non-payment issues. Additionally, they should be aware of their rights to protection against retaliation if they assert their rights under the Act. These responsibilities are vital for freelancers to secure fair compensation and to protect their business interests effectively.