If you’re a small business owner hiring a freelance or contractual worker, you may be wondering whether a formal written agreement is necessary. The answer is yes.
In New York, the law requires it. Under the Freelance Isn’t Free Act, all employers must provide contractors with a written agreement that clearly sets out the terms of the relationship—including the employer’s name, the scope of services, and the agreed-upon compensation.
Even beyond legal compliance, having a properly drafted independent contractor agreement is one of the smartest steps a small business can take to protect itself.
What the Law Requires
The Freelance Isn’t Free Act, now expanded statewide, mandates that businesses provide written contracts for all freelance and independent contractor relationships valued at $800 or more, whether that total is from a single project or a series of smaller assignments over a 120-day period.
The agreement must include:
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The name and contact information of both parties
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A detailed description of services to be performed
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The rate and method of compensation
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The payment due date or payment schedule
Failing to comply can expose your business to penalties, interest, and attorney’s fees.
Why Every Small Business Needs a Written Contractor Agreement
Even aside from legal obligations, a written agreement protects both sides by clarifying expectations and reducing the risk of disputes.
It ensures you and your contractor agree on:
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Project scope and deadlines
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Ownership of work product or intellectual property
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Confidentiality and non-disclosure obligations
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Termination terms and notice requirements
A clearly written agreement builds trust, prevents misunderstandings, and demonstrates professionalism—qualities that help small businesses grow strong, lasting relationships with contractors.
Worker Classification: A Critical Issue
Before hiring, it’s essential to ensure that the individual you’re engaging truly qualifies as an independent contractor rather than an employee.
Misclassification is one of the most common—and costly—mistakes small businesses make.
Employers who misclassify workers risk violating:
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New York State Workers’ Compensation Law
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Unemployment Insurance Law
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Federal and state tax regulations
Penalties can include back wages, unpaid taxes, fines, and potential liability for benefits such as unemployment insurance or workers’ compensation coverage.
An experienced employment attorney can help you properly classify your workers, draft compliant contracts, and create systems that reduce risk as your business grows.
The Bottom Line
If you’re hiring a contractual or freelance worker in New York, you are legally required to have a written agreement under the Freelance Isn’t Free Act.
But more importantly, having the right agreement—and the right classification—protects your business from costly mistakes and future disputes.
At Nicotra Law, we help small businesses navigate employment and contractor relationships with clarity and compliance. We draft customized independent contractor agreements and advise employers on proper classification under New York and federal law.
Before you bring on your next contractor, contact Nicotra Law for a consultation.
We’ll help you create agreements that protect your business, your workers, and your peace of mind.