The rise of freelancing and the “gig economy” over the last several years has made many people keenly aware of how late- or nonpaying clients affect independent workers. In fact, the Freelancers Union reports that almost half of independent workers … "/>

How the Freelancer Payment Protection Act Would Impact Newsrooms and Freelancers

The rise of freelancing and the “gig economy” over the last several years has made many people keenly aware of how late- or nonpaying clients affect independent workers. In fact, the Freelancers Union reports that almost half of independent workers had trouble getting paid for their work last year.

The organization launched a #getpaidnotplayed campaign and created website called The World’s Longest Invoice to put a human face on the issue (last we checked, the tally was nearing $16 million). On May 22, the Freelancer’s Union delivered the invoice to lawmakers in Albany in support of the Freelancer Payment Protection Act. The Act would offer some of the protections afforded to traditional workers, helping independent workers in New York state collect from nonpaying clients.

The Assembly Bill passed in June 2011, and the Senate Bill is currently in the Labor Committee. The Freelancers Union is hosting a volunteer phone bank over the next few weeks to try to sway undecided legislators.

Our big questions is: If passed, what would the Freelancer Payment Protection Act mean for organizations, especially newsrooms?

We turned to Donald Siegel, Dean of the School of Business and Professor of Management at the University at Albany, SUNY, for an economist’s perspective. “It’s hard to be opposed to it,” he says. “The only concern that I would have is the cost of implementing this legislation.” That cost would likely fall to the Department of Labor and, by extension, taxpayers.

The act could also have an unintended consequence of increasing the cost of doing business with freelancers, he adds. “If you think about it from the organization’s perspective, they may be having trouble with their own suppliers or customers,” he explains. “You are increasing the cost of hiring a freelance worker, so it could reduce the demand for freelance labor.” Of course, the impact would be minimal or nonexistent on organizations that are paying freelancers in the timeframe outlined in the contract.

“Maybe just the threat alone is enough to change people’s behavior,” he continues. “I suspect that a lot of these organizations that aren’t paying people on time are doing so because they know the only recourse that these workers have is small claims court.” A writer in Minnesota recently blogged about taking a client to small claim’s court, but many freelancers choose not to go that route because of the time and headaches involved in collecting relatively small amounts of money.

Overall,  Siegel predicts that the Act will pass and have a positive impact. “Freelancers can be more certain they’re gonna get paid and that makes them more confident,” he says. “Workers are protected by organizations like the Department of Labor, and extending that protection to freelancers seems fair.”

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