This is a reminder post that if you have agreements with freelancers or other single individual independent contractors in California providing professional services to your company totaling at least $250, be aware of Senate Bill 988 (SB 988).This new bill, effective 1/1/25, requires that freelance and/or independent contractor agreements of a single person or organization of no more than one person, must be in writing. This requirement applies to both new agreements and existing agreements you may have had in place prior to 2025. In short, independent contractors and their arrangements pre-2025 are not grandfathered. The written agreement requirements include:
- Names of both parties
- Itemized list of services, their value, and compensation method
- Payment due date or mechanism to determine due date
- Due date for contractor to report completed services
Important note: Once work has begun, the hiring party may not require the freelancer to accept less compensation nor provide more services than agreed to in order to receive timely payment.To comply, first assess your freelancers and independent contractors to determine if they meet the state’s definition of “Independent Contractor” under the ABC Test. If they do, prepare an agreement which includes the above criteria for each contractor and have agreements executed. Provide a copy to each contractor and retain copies of each for your files for a period of at least four years. |