Freelance Writing - Legal Aspects

Legal Aspects

Many periodicals and newspapers offer the option of ghost signing, when a freelance writer signs with an editor but their name is not listed on the byline of their article(s). This allows the writer to receive benefits while still being classified as a freelancer, and independent of any set organization. In some countries this can lead to taxation issues (e.g., so-called IR35 violations in the UK). Ghost signing has little bearing on whether a writer is a freelancer or employee in the US.

Freelancers often must handle contracts, legal issues, accounting, marketing, and other business functions by themselves. If they do choose to pay for professional services, they can sometimes turn into significant out-of-pocket expenses. Working hours can extend beyond the standard working day and working week.

In Europe, the perceived disadvantages of being freelance have led the European Union to research the area, producing draft papers that would, if enforced, make it illegal for companies or organizations to employ freelancers directly, unless the freelancer was entitled to benefits such as pension contributions and holiday pay. In the UK, where the terms of integration into the EU have and are being hotly debated, this would lead to a significant reshaping of the way freelance work is dealt with and have a major impact on industry; employers would be required either to give freelances the contractual rights of employees or employ only freelancers already being employed by agencies or other organizations granting them these rights. However, the White Papers that recommend such moves have not yet been adopted in the EU, and the potential impact on UK employment laws is being opposed by key UK organizations lobbying the government to negotiate over the acceptance of EU legislation in such areas. The legal definition of a sole trader requires that he/she must have more than one client or customer which promotes the freelancing ethos.

In the U.S. in 2009, federal and state agencies began increasing their oversight of freelancers and other workers employers classify as independent contractors. The U.S. Government Accountability Office (GAO) recommended that the Secretary of Labor have its Wage and Hour Division "focus on misclassification of employees as independent contractors during targeted investigations." The increased regulation is meant to ensure workers are treated fairly and that companies are not misclassifying workers as independent contractors to avoid paying appropriate employment taxes and contributions to workers’ compensation and unemployment compensation.

At the same time, this increased enforcement is affecting companies whose business models are based on using non-employee workers, as well as independent professionals who have chosen to work as independent contractors. For example, book publishing companies have traditionally outsourced certain tasks like indexing and proofreading to individuals working as independent contractors. Self-employed accountants and attorneys have traditionally hired out their services to accounting and law firms needing assistance. The U.S. Internal Revenue Service offers some guidance on what constitutes self-employment, but states have enacted stricter laws to address how independent contractors should be defined. For example, a Massachusetts law states that companies can hire independent contractors only to perform work that is "outside the usual course of business of the employer," meaning workers working on the company's core business must be classified as employees. According to this statute, a software engineering firm cannot outsource work to a software engineering consultant, without hiring the consultant as an employee. The firm could, however, hire an independent contractor working as an electrician, interior decorator, or painter. This raises questions about the common practice of consulting, because a company would typically hire a management consulting firm or self-employed consultant to address business-specific needs that are not "outside the usual course of business of the employer."