A tale of two cities (and their approaches to late payments)

In news of the obvious, it’s hard to be a freelance rock star when you’re cold. It’s mid-November in Scotland and I haven’t put the heat on. I can’t. Par for the course when you’re self-employed thanks to late payment. This is the deal you sign up for when you go out on your own. Still, it would be nice not to shiver all the time.

While there is some recourse for the self-employed regarding late payments, those options are neither easy nor practical for one-man bands. Nor, in reality, are they often advisable. In practice, asserting your rights as a freelancer means losing the contract and never seeing the overdue payment either.

It’s time for some fresh thinking. Let’s take a look at two recent initiatives designed to combat late payments to freelancers and the self-employed, one in the US and one in the UK.

New York: the Freelance Isn’t Free Act

In October the New York City Council passed a piece of legislation called the Freelance Isn’t Free Act. It is a thing of beauty.

Under the Freelance Isn’t Free Act, the self-employed and freelancers in New York City can now count on the following protections:

  • Contract payments are now due within 30 days. 30. Not 60. Not 90. Not when Carol from Accounts gets back from holiday. 30.
  • Clients cannot try to negotiate a smaller payment after the work is completed.
  • Clients cannot discipline, harass, or discriminate against a contractor who avails themselves of their rights under the Act.
  • All clients must work to a written contract for projects valued at more than $800.
  • Freelancers can file a complaint about non- and late-paying clients to the NYC Department of Labor Standards.
  • Late- and non-paying clients can have penalties levied against them, on top of the contract payments due, in small claims court.

New Yorkers do not beat around the bush. In passing the legislation, the NYC Council labelled late payment to the self-employed as “wage theft”. Words that are music to my cold ears.

How did this piece of legislation come about? You know what I’m going to say. It came about because people organised. This was a grassroots initiative by and for the people who needed it.

The wonderfully abbreviated Freelancers Union, which is exactly what it sounds like, took the practical lead on the legislative process. They ran a colourful campaign which used facts and figures to support their call for legislation. The campaign took a positive, constructive, and cooperative approach: they went into City Hall looking to work with people, not bitch at them.

Critically, though, they did not allow facts and figures to do the job. They physically got up and they got out:

Together, we rallied for a city-wide Day of Action, brought gig economy issues to the fore at Civic Hall, showed up on the steps of City Hall to usher the bill into consideration, and testified before City Council about why we need better protections for freelances. Finally, over 8,000 freelancers signed the Freelance Isn’t Free petition to push the bill to the vote.

Organising, cooperating, and advocating together got results. Imagine that.

UK: the Small Business Commissioner

In contrast to our tough-talking New York counterparts, small businesses here in the UK have already been promised a dedicated government advocate, called the Small Business Commissioner, who will help us deal with issues of late- or non-payment.

We’ve been waiting, in fact, for quite a while.

The office of the Small Business Commissioner was created as part of the Enterprise Act 2016, a catch-all piece of business support legislation. Amongst other duties, this individual will “consider complaints by small business suppliers about payment issues with larger businesses that they supply.”

The scope of what that specifically means is up to you. The government is currently consulting on what sort of payment disputes the Commissioner should handle, and indeed, who should be eligible to use the service at all. The consultation closes on 7 December.

After that, it is anyone’s guess when the Small Business Commissioner will actually get to work. It’s not as if the UK government has anything large and time-consuming planned for early 2017.

The idea for the Small Business Commissioner was first proposed in the summer of 2015 and yet, as 2017 approaches, the government is still consulting on what the Commissioner should do. That does not suggest that late- and non-payment to small businesses is an issue which the government is addressing with any sense of urgency.

There is also the obvious question of why an unpaid freelancer should have to escalate nonpayment to a national authority based in London, not a local advocate in their own community.

There is one other problem with the UK approach to small business nonpayment. The office of the Small Business Commissioner has promised to be big on “dispute resolution” and mediation. Thanks to a recent experience in my personal life where “dispute mediation” was used in a completely inappropriate manner, I’ve gone off the concept for good. Here’s why.

Dispute resolution processes are non-adversarial and work from the position that both parties are equally guilty. Mediation forces you to sit down at a table with the party which has plunged a knife in your back and play nice to them. At the end of the session the knife is still in your back and the problem is not resolved, but the mediator in the centre feels very useful.

Playing nice with your wage thief is not going to make you stop shivering. When you are owed money, written contract or not, the process should be adversarial and aggressive. It also needs to be fast. Very fast. Having to arrange a physical mediation session through a third party in a faraway city only delays the resolution – if, indeed, there is going to be one – even longer.

So: right idea, wrong way to go about it. While the New York City council allowed the people worst affected by late- and non-payments to lead the way in establishing practical support, Westminster is now approaching its third calendar year of statements, consultations and formalities. When it comes to self-employed people who just want to put the heat on, the UK needs to skip the self-serving niceties and be a little bit more New York.

About the author

Heather Burns is a digital law specialist in Glasgow, Scotland. She researches, writes, publishes, consults, and speaks extensively on internet laws and policies which affect the crafts of web design and development. She has been designing and developing web sites since 1997 and has been a professional web site designer since 2007. She holds a postgraduate certification in internet law and policy from the University of Strathclyde. Learn about hiring Heather to write, speak, or consult.