The nationwide growth of the “gig economy” has provoked the enactment of laws aimed at providing economic protection to freelance workers. In May 2023, the Columbus City Council joined this national trend by amending the City’s “wage theft” Ordinance to add obligations upon a “hiring party” that engages a “freelance worker.”
The Ordinance broadly defines a “hiring party” to be “any person, including the City of Columbus, who retains a freelance worker to provide any service” and excludes only governmental entities other than Columbus. A “freelance worker” is an individual, whether or not the person has incorporated or is using a trade name.
Under the Ordinance, a hiring party must provide the freelance worker with a written contract (which may, upon the parties’ agreement, be prepared by the freelancer) for services valued at $250 or more, which can be from either a single engagement or from services provided over a 120-day period. Thus, a hiring party that engages a freelance worker for less than $250, but within 120 days hires the same individual for additional work that will bring the total value of services to $250 or more, must reduce the parties’ agreement to writing.
The contract must include the following:
- The name and mailing address of both the hiring party and the freelance worker; and
- An itemization of all services to be provided by the freelance worker, the value of the services to be provided pursuant to the contract, and the rate and method of compensation; and
- The date on which the hiring party must pay the contracted compensation or, if not a specific date, a provision that payment will be rendered no later than 30 days from when the contracted services are completed.
The hiring party must retain the contract for a minimum of five years.
The Ordinance prohibits any hiring party from (1) requiring a freelance worker to accept less than the contracted compensation as a condition of receiving timely payment or (2) retaliating against a freelance worker for the worker’s exercise of rights granted under the ordinance. It also provides an enforcement and penalty mechanism for violations.
Specifically, an aggrieved freelance worker may file a complaint with the Wage Theft Prevention and Enforcement Commission (“the Commission”), which must then investigate to determine whether a violation has occurred. Commission staff may also work with the parties to try to resolve the complaint.
Upon entry of an adverse written decision by the Commission, the City may pursue any available legal, contractual, or equitable remedies, including, but not limited to:
- Unilateral reduction of tax abatements;
- Recapture of subsidies and abatement benefits;
- Loss of low-interest commercial loan benefits;
- Suspension or revocation of grants; and
- Permanent debarment for City contracts.
Finally, Commission staff must collect data regarding complaints, and in doing so, they must provide a detailed report to the Mayor and City Council. With these new changes—and others on the horizon— businesses and other entities that engage independent contractors will need to be increasingly mindful of their growing regulatory obligations to comply with worker protections that extend beyond the employee-employer relationship. For hiring parties in Columbus, that time is now.
