Barack Obama Sir Martin Sorrell WPP

#FreelanceIsntFree: nonpayment issue brought to NYC government


By Doug Zanger, Americas Editor

March 10, 2016 | 5 min read

The Freelancers Union, based in New York City, continued its advocacy for the issue of nonpayment to freelancers at a recent NYC City Hall hearing. A bill, introduced by city council member Brad Lander, with the support of Sara Horowitz, executive director of Freelancers Union and other organizations, addresses the chronic issue of nonpayment and is intended to build in legal protections for the growing number of freelancers in New York City. This is the first bill in the nation to address the issue and it is especially acute in the city which, according to the organization, has 1.3 million freelancers.

The action is part of the wider #FreelanceIsntFree campaign started last September by the Freelancers Union. Horowitz, a labor lawyer by training, has been relentless in her efforts to bring freelancer issues to the national conversation — even getting an audience with US president Obama, who discussed the issue of nonpayment for freelancers. According to the Freelancers Union, 8 out of 10 freelancers get “stiffed” by “deadbeat clients” — and annually, an unpaid freelancers loses an average of $6,000 of income due to nonpayment.

“For freelancers, this is one of the most important issues,” said Horowitz. “We tell people to build an American dream, we tell them to be entrepreneurial, and then the group that’s doing that, we make sure to clip their wings without any security.”

In this proposal, New York City-based freelancers would have rights to secure back pay, if they are not paid on time. Additionally, any work for more than $200 would require a written contract that outlines the work to be done and specific payment date. Workers would then need to be compensated within 30 days of the payment date. If payment is not on time, workers could then file complaints with the Office of Labor Standards, who would then investigate, mediate and possible levy penalties on those breaking the law, including attorney’s fees.

As of 2015, according to “Freelancing in America: A National Survey of the New Workforce,” 53 million Americans, more than one in three workers, or 34 per cent of the US workforce, are freelance. Intuit reported that by 2020, 40 per cent of US workers will be freelance.

“The 53 million Americans who are freelancing already contribute more than $700 billion to our national economy and help US businesses compete and find the skills that they need. This is just the start: The connected era we live in is liberating our workforce. The barriers to being a freelance professional — finding work, collaborating with clients and getting paid on time — are going away,” said Fabio Rosati, former CEO of Elance-oDesk (now Upwork), referencing the report.

Though Rosati seemed optimistic about the “getting paid on time” issue, there are still clearly some more hurdles to navigate. Longer pay cycles, for example, is a particularly thorny issue for freelancers who rely on 30-day cycles to live. Most notoriously, some companies have instituted pay cycles as long as 120 days — good for their own cash flow, but potentially devastating for their suppliers, freelancers included. The impact goes just beyond a single freelancer or small shop working to establish itself in the industry.

Martin Sorrell, chief executive of WPP noted in a 2015 Ad Age article, that the practice turns suppliers into lenders. “I don’t think our purpose is about banking — we’re not a bank — or extended payment terms or agreeing to supply payment terms in low-interest conditions.”

Invoice pay services BlueVine and Fundbox, for example, offer services to help freelancers and small businesses keep cash flow moving, but can be costly, with one report noting that financing APRs for the services can range from 23 per cent to 64 percent, effectively negating the benefit of establishing cash flow in the first place.

The bill in New York City still has a ways to go before it could reach the full city council, but Horowitz underscored its importance to the “creative class” there.

“If New York City wants to keep the people who work here, who are creative and work day in and day out, the number one thing for workers is getting paid,” she said. “We’re just putting in the very basic safeguards. I’m not persuaded this is going to cause any major disruption.”

Source: International Business Times

Barack Obama Sir Martin Sorrell WPP

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