A Growing Gig Economy
The traditional workforce isn’t working any more. Since the COVID-19 pandemic disrupted the typical business day for millions, people at all levels of employment reevaluated their professional priorities and decided to rewrite how they’d like to show up for work. People left large corporations, numerous startups were born, and the gig economy exploded.
Across the country, more than 83 million people are working freelance positions in 2026 — that’s practically half of the nation’s entire workforce! This growing model is changing the way startups hire employees and source new talent.
This workforce restructuring also led to efforts to protect freelance workers. Often working smaller jobs than a typical independent contractor, legal contracts are less common, and the scope of the work can be unclear. To ensure this workforce sector is protected – and employers assume their share of responsibilities – many states are beginning to establish protections like the Freelance Isn’t Free Act.
Freelance Laws Across the U.S.
Different states and cities have varying rules regarding freelance contract requirements. Pay special attention your startup operates or if your freelancer resides in the following areas:
States
New York – Work totaling $800+ in a single contract or within 120 days
Illinois – Work totaling $500+ in a single contract or within 120 days
California – Work totaling $250+ within 120 days
All above regulations also specify payments must be completed within 30 days of completion unless otherwise noted in the contract.
Cities
Columbus, Ohio – Work totaling $250+ within 120 days
Minneapolis, Minnesota – Work totaling $600+ annually or $200+ in one week
Seattle, Washington instated the Independent Contractor Protections Ordinance, which offers protections for contractors. This regulation requires hiring parties to provide any and all disclosures before entering into a contract, and covers workers receiving more than $600 in one year.
Freelance Laws In Process
While typical employee classifications exist in other areas, other states including New Jersey, Georgia, Missouri, and Kansas are in the process of ratifying their own versions of a Freelance Isn’t Free Act.
What Should Freelance Contracts Outline?
This agreement must include the names and mailing addresses of both parties, the services to be provided, the value of outlined services, the rate and method of compensation, when payment is due, and the deadline for the freelancer to submit an invoice.
Use clear language to specify project expectations, deliverables, and what items are owned by which party. This protects hiring personnel by ensuring each requested item is covered, and protects freelancers from scope creep and unpaid work.
Confirm Proper Employment Classification
Employment classification varies depending on the state in which business is conducted. While most states determine employment classification by either the Common Law Test or the ABC Test, some use only portions of the ABC Test. Some states’ Employment and Labor divisions require contractors to obtain their own worker’s compensation insurance or exemption certificates.
Regardless of where your startup hiring occurs, it’s important to double check your state’s employment laws at the time of hiring. With many shifts during recent years, staying abreast of employment law changes can keep your startup compliant.
Ensure Compliance When Hiring Contract-Based Work
At HJF Law, our goal is to support startups along their business journey. When it comes to hiring employees, contractors, or freelancers, let us review your contracts to ensure that your employees are classified correctly. We’ll also review your contracts to make sure they are set up to protect you and the individuals you hire.
If you are a founder actively sourcing new talent, feel free to reach out to our expert team of startup attorneys at (917) 267-8184. You can also visit hjflaw.com/contact to schedule a free consultation.