Do We Need Payment Protection Laws?

Yesterday, I found a post on About.com’s Freelance Write mentioning a pending law that would provide payment protection for freelancers and other independent workers. Don’t get too excited. The law is currently in the New York Senate and would allow the New York Department of Labor to get involved in payment disputes for residents of that state. It got me to thinking though – would it help us if all states adopted a law like this? Do we need the government to get involved in our payment disputes?

As of right now, if you’re a law abiding citizen, there are only a certain number of things you can do to get clients to pay up and in the end, they still may never pay you. You can threaten, annoy, or publicly berate them. You can hire a collection agency, although you may have to pay a fee and ultimately accept less than what you’re owed. You can file a lawsuit in small claims court, but if the client lives in another state, you’ll probably have to file the suit in their state (small claims court laws vary). Getting payment from someone who really doesn’t want to pay isn’t easy.

But, what if there was a government agency you could involve? A scary letter from a government agency might be the thing to get deadbeat clients to pay up. There are still issues.

What if the client lives in another state?

Or another country? Our clients are often located somewhere else. I can’t tell from the pending New York legislation what happens when the non-paying client is in another state, but there’s a chance the Department of Labor wouldn’t be able to help you get payment from someone out of state. There’s even less of a chance collecting if the client lives in another country.

You would need to have a written agreement.

No more working without a contract if you want the government to help you pursue payment. And it makes sense – without a signed contract that spells out how much you’re supposed to be paid and when, it would be hard to get payment.

You would need contact information.

How often do you get contact information from your client than an email address and a name – a name that may or may not be a pseudonym? Back in the days when I did a lot of work for webmasters I found in a forum, all I had was a screenname and an email address. I sure the Department of Labor would reject my payment protection claim for ‘googleguru4u11.’

State payment protection laws would help certain independent contractors, like those who work for local companies. But I’m skeptical about whether or not it would benefit us. What do you think? Would you like it if your state’s Department of Labor helped you pursue deadbeat clients?

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LaToya Irby is a full-time freelance writer and a graduate of the University of Alabama. She primarily writes about personal finance, freelancing, and other self-employment topics.

2 thoughts on “Do We Need Payment Protection Laws?”

  1. Freelancing should be all about trust and this is why no matter how many big freelance sites today promise payment guarantee for work done, we still read complaints of someone getting stiffed. The situation can only get worse when one is working for offshore clients as arbitration is time-consuming and costly. Should you really pay a membership fee for that? For this reason, I’ve launched the first online marketplace with zero commission – giving more power to both parties to do business on the Web.

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