If your Florida-based business hires freelancers across state lines, this could impact you.

Freelancers, also known as independent contractors, play a critical role in today’s flexible workforce—but new laws in California, Illinois, and New York are tightening the rules. If you’re hiring out-of-state workers in these states, your business must comply with new written agreement requirements.

At Polaris Tax & Accounting, we help businesses stay compliant and protect themselves from tax and legal exposure—especially when hiring independent contractors in other states. Here’s what you need to know:

What Changed?

California, Illinois, and New York have each enacted new “Freelance Worker Protection Acts” designed to enforce written contracts and timely payments for freelancers. These laws are already in effect and apply to most private businesses hiring freelancers in those states—even if your company is located in Florida.

If your Florida-based business hires an independent contractor who lives in, or provides services to a client in, CA, IL, or NY—you may be subject to these new rules.

When Are You Required to Use a Contract?

A written contract is now legally required when payments exceed:

  • $250 in California
  • $500 in Illinois (within 120 days)
  • $800 in New York (within 120 days)

These contracts must include:

  • Full names and addresses of both parties
  • A detailed description of services and compensation
  • The rate and method of pay
  • A payment due date (or method of determining one)
  • The freelancer’s deadline for submitting their invoice or work record

You may use electronic or paper contracts, but you must retain them for 2 to 6 years depending on the state.

Who Is Covered by These Laws?

These laws primarily apply to freelancers and sole proprietors—individuals operating without a formal business entity like an LLC or S corp.

  • California’s law covers freelancers in certain professions (writers, designers, photographers, etc.)
  • Illinois excludes incorporated businesses (LLCs, Corps)
  • New York broadly applies to all freelance individuals

Bottom line: If you hire someone in one of these states to write content, design graphics, consult, or provide other independent services—you likely need a contract.

What Are the Penalties for Non-Compliance?

Failing to comply can lead to major financial consequences:

  • Double damages for late or missed payments
  • Attorney fees and court costs
  • Statutory penalties, including:
    • Up to $1,000 per violation (CA/IL)
    • Up to $25,000 in New York for repeated violations

For small Florida businesses who may be casually hiring freelancers via platforms like Upwork or Fiverr, this can create unintentional legal risk.

What Florida-Based Businesses Should Do

Even if you operate 100% from Florida, working with out-of-state freelancers means you should:

✅ Use written freelance agreements that meet each state’s requirements
✅ Pay on time, with clear records of work and payment dates
✅ Keep signed agreements for the required timeframe (2–6 years)
✅ Avoid retaliating if a freelancer asserts their rights under these new laws
✅ Talk to your accountant or attorney before hiring across state lines

How Polaris Can Help

At Polaris Tax & Accounting, we regularly advise business owners on:

  • How to structure contracts with independent contractors
  • 1099 compliance and safe recordkeeping
  • Multi-state contractor issues
  • Entity protection and tax strategy

If you’re unsure whether your current freelance hiring practices are compliant—especially if you’ve hired anyone in California, Illinois, or New York—we can help you assess risk and make adjustments.

📍 Serving Plantation, FL and remote clients across the country.

👉  Schedule a consultation today and protect your business from costly penalties before they happen.