Effective January 1, 2025, SB 988 provides new protections for freelance workers.

"Freelance worker" is defined as an individual or single-person organization, incorporated or not, which a hiring entity engages "as a bona fide independent contractor to provide professional services" of $250 or more, either singly or combined with services in last 120 days.

SB 988 adopts Labor Code 2788's 15-part definition of professional services, covered in What's New In 2021: California's Newest Independent Contractor Law Part 3 (October 10, 2020). For a freelancer providing any such services, valid independent contractor status requires:

• A written contract identifying: the parties' names and mailing addresses and all services the freelancer will provide, including value and rate/method of compensation; date of payment or how date will be determined; and date freelancer must submit list of services in order to be paid on time;
• A freelancer can also establish a valid contract by terms stated in texts and emails between the parties and the hiring party's oral representations;
• The hiring party must pay by the date in the contract or, if none, within 30 days after the work is completed. The hirer may not pay less than agreed or require the freelancer provide additional goods or services beyond those contracted; and
• The hiring party may not retaliate.

SB 988 does not apply to state and federal governments or foreign entities or individuals engaging services for themselves, their families, or their homestead.

Take-Away:

A company that wishes to hire an individual or single-person company as an independent contractor must determine if the prospect falls under Labor Code 2788's 15 professional services categories and, if so, document the relationship in a written contract fulfilling all SB 988 requirements.

For further assistance, please contact one of our attorneys, Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Annual Virtual Seminar for Employers: Friday, January 17, 2025, Friday, February 28, 2025: Covering Employment Legal Essentials and New Workplace Laws
• What's New In 2025: Unsplitting Hairs: Race Discrimination Clarified (November 8, 2024)
• Not So Fast: Using Earned Vacation Time No Longer a Paid Family Leave Prerequisite (November 1, 2025)

Helena Kobrin
November 20, 2024