Freelancer

Guide to the Law for Freelancers in the United States

FreelancerIf you are a freelancer (aka independent contractor, subcontractor, contract worker, gig worker, consultant, etc.), you are essentially your own small business, and generally the law treats you as a business, not as an employee. So in general the employment laws don’t apply to you (unless your “client” is misclassifying you as an independent contractor – see below). But business laws usually do apply.

Here we present the laws that apply across the country. There also may be additional laws for freelancers in your state or city. See our Legal Guides for Freelancers in Los Angeles, San Francisco, California (outside LA/SF), and New York State.

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1. General

How do I know which laws apply to me? Is it based on where the client is or where I am?

Laws related to freelancers generally apply based on the freelancer’s location, but they may also apply based on where your client operates.

So for example, if you live in New York State, which has the Freelance Isn’t Free Act, you can benefit from the protections of this law. Or if your client is based in New York State, but you are not, you may also be able to enforce the law against that client.

If you live in California, your clients (and thus you) are subject to the new AB5 Gig Worker Law, regardless of where the client is based.

2. Independent contractor status

How do I know if I am a freelancer/independent contractor?

Determining whether you are an independent contractor (aka freelancer) is sometimes complex, and you may want to get an employment lawyer if you are unsure. Many employers misclassify (whether intentionally or not) employees as independent contractors to avoid paying certain taxes and other benefits. The category you fit into has implications as to the laws that apply, as you will see below.

Here’s what you need to know about freelancer vs employee status.

3. Employment Laws & Freelancers

Do employment laws apply to freelancers?

Generally, no. Freelancers are treated as a business, so business laws apply. Thus employment law does not apply, unless a freelancer is “misclassified” and should be an employee under the standards above.

However, there are minor exceptions in some states or cities. New York City provides that employment discrimination and gender-based harassment apply to freelancers and independent contractors the same as employees.1NYC Admin Code Sec 8-102 California law says that sexual harassment applies to freelancers.2CA Govt Code Sec 12940(j)

Do wage and hour laws apply to freelancers?

Wage and Hour laws generally do NOT apply to freelancers, only to employees.3The National Labor Relations Act (29 USC Secs. 151–169) and the Fair Labor Standards Act (29 USC Secs. 201–219) do not apply.

4. Contracts

What do freelancers need to know about contracts?

One of the most essential things for freelancers is to have solid contracts: for your clients, vendors, and subcontractors. See more about contracts and agreements.

What do I do if the other party violated our contract?

See our Guide to Enforcing Contracts.

5. Payment issues

Help! My client isn’t paying my fees. What do I do?

Most likely this would involve a breach of contract, even if you don’t have a formal written agreement. See our Guide to Enforcing Contracts.

Also, if you or your client is based in New York State (more locations may be coming soon), you may have additional protections to fight off non-payment issues.

6. Business Stuff

What do freelancers need to know about business?

As mentioned above, freelancers are essentially their own business, whether you know it or not. Thus you need to comply with the business laws and regulations.

7. Taxes & filings

How do taxes work for freelancers?

You must make sure to pay federal, state, and possibly local taxes each year. Generally, your taxes are NOT withheld when you get paid, as you are responsible for tracking and paying your taxes. Keep track of all income and expenses, along with receipts. Your clients may ask you to fill out a W9 form, which then allows them to send you (and the IRS) a 1099 form each year showing how much they paid you. But even if you do not, you must still report what you have been paid.

When do I pay tax as a freelancer?

As a freelancer or small business, you actually must pay taxes 4-5 times per year, not just once!

Tax pig with money dollars

If you do NOT have a corporation or LLC (you are a “sole proprietor”), or if you are the sole owner of an LLC: you are generally required to file your tax return (and make payment) by mid April, and then make “estimated” quarterly payments without filing a return by mid June, mid September, and mid January.

If you have an LLC with multiple owners, or you have a corporation: you are generally required to file your LLC/corporate tax return (and make payment) by mid March, then your individual tax return (and make payment) by mid April, and then make “estimated” quarterly payments without filing a return by mid June, mid September, and mid January.

Do my clients need to send me any tax forms at all?

A business client which paid you $600 or more within a calendar year is required to send you a Form 1099-MISC (“1099”) by the following Jan 31 (but even if they don’t, you still must report the income on your taxes), and the business must file the 1099 with the IRS by Feb 28.

To help them fill out the 1099, your business clients may ask you to fill out a W-9 form, which asks for your basic information, including social security number.

However, if you as the freelancer are incorporated (not including LLCs), the business does not need to do the 1099.

The 1099 requirement only applies to clients who have used your services for their business, not for their personal use.

Do I need to send any tax forms for freelancers/subcontractors I hire?

Same as above, but you are the business client, and they are the freelancer. Note: If you have “employees“, you would generally withhold taxes from each paycheck, and send a W-2 the following year by Jan 31.

See more about Taxes.

8. Intellectual property

What is intellectual property?

Intellectual property is any creative work, such as writing, art, design, inventions, etc. See our Guide to Intellectual Property.

What are my intellectual property rights as a freelancer?

Most work done by freelancers (writing, art, design, etc.) falls under “copyright.” If you are doing such work for a client and you have not signed a contract stating that the copyright belongs to the client (“work for hire”), then the copyright by default belongs to you, NOT the client (see Copyright for full explanation).

9. Additional Freelancer Laws in Your State/City

There may be other laws specific to your state, city or county.

For example, New York City recently passed the first protections for freelancers, requiring companies hiring freelancers to use a written contract and increasing penalties for violating the contract.4Freelance Isn’t Free Act

Check out our Laws for Freelancers in New York, and California laws for freelancers.

Recommendations

  • Check out our Resources for Freelancers.
  • To protect your rights as a freelancer, you should get a good contract drafted by a lawyer to spell out exactly what the terms are when a client hires you.
  • It may also be a good idea to form an LLC or corporation to protect your assets and possibly save on taxes.
  • Check out Rocket Lawyer5NOTE: Law Soup Media, Inc. may receive compensation from Rocket Lawyer if you use any of their services., which provides affordable and simple legal services for business & much more. They are currently offering a 7 day FREE TRIAL!
  • Or try to find a good lawyer on your own.

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