The legal shifts shaping the freelance economy in 2025
The freelance workforce continues to surge globally, with the US boasting 76.4 million freelancers in 2023—a figure expected to reach 90.1 million by 2028. In parallel, the EU sees its freelance population climbing, with 27.97 million freelancers in 2023 projected to expand dramatically by 2030.
As businesses increasingly rely on freelance talent, understanding the complex legal frameworks shaping these relationships becomes critical.
In this article, we’ll explore the latest legal updates impacting freelancers and the organisations that work with them, in order to help navigate these evolving workforce challenges effectively.
Key Legal Changes to Watch in 2025
Recent and upcoming legislative developments aim to provide clarity, protection, and structure to the freelance economy. Here are some of the most significant:
Massachusetts: Evolving Contractor Classification
Massachusetts remains one of the most stringent states regarding independent contractor classification, applying the ABC test to determine worker status. Recent court rulings in 2024 refined how this test is applied, offering critical insights into when a business relationship is classified as employment versus independent contracting.
The cases in question were:
“Patel et al. v. 7-Eleven Inc.” and “Weiss v. Loomis, Sayles & Co Inc”
These rulings examined the contentious 2022 Wage Law and its ABC test, which presumes a worker is an employee unless all three conditions of the test are satisfied by the employer. Massachusetts applies this standard more strictly than most states, making it particularly challenging to classify independent contractors compliantly.
The core issue in both cases was when and how the ABC test should be applied. The debate centered on whether a freelancer, specifically an individual, not a business entity,was genuinely providing a "service" to the employer.
- In Patel, the court found that operating a franchise business does not equate to providing a service to the franchisor, as argued by 7-Eleven.
- In Weiss, the court determined that services provided by a legal entity (e.g. an S-corp) were part of a business-to-business relationship rather than a direct employee-employer arrangement. Notably, the worker in this case had formed the legal entity a year prior to the engagement, emphasising its independence.
Both rulings concluded that the ABC test did not apply, rejecting the claims of employee misclassification.
These cases offer valuable insights into how Massachusetts, and potentially other jurisdictions, assess independent contractor engagements by focusing on the "who" and "what" of the services provided.
New York: Freelance Isn’t Free Act
In 2024, New York expanded protections for freelancers with the Freelance Isn’t Free Act. By May 2025, contracts valued at $800 or more must meet strict requirements, including detailed work descriptions, payment terms, and timelines.
The New York Freelance Isn’t Free Act mandates that agreements between freelancers and businesses, whether in digital or physical format, contain specific key details. Both parties must sign the contract, which should include:
- Work scope: A clear and detailed description of the tasks the freelancer will undertake.
- Payment terms: The total agreed amount, including the rate and method of payment.
- Payment timeline: Defined deadlines to ensure timely payment to the freelancer.
- Contract specifics:
- The full names and postal addresses of both the freelancer and the business.
- A breakdown of all services provided by the freelancer, along with individual rates or values.
- An agreed submission deadline for the freelancer to provide a complete list of all work delivered.
Businesses are obligated to retain these agreements for at least six years, ensuring transparency and accountability in freelance engagements.
California: Freelance Worker Protection Act (FWPA)
Effective January 2025, California’s FWPA will align with New York’s approach, mandating written agreements for freelance contracts exceeding $250. The act specifies clear expectations for service delivery, payment schedules, and other terms, making compliance an absolute necessity for businesses working with independent contractors.
These contracts should outline the following key details:
- Names and addresses: The full details of both the freelancer and the business.
- Service description: A comprehensive explanation of the work the freelancer will perform.
- Submission deadlines: Specific dates by which the freelancer must deliver their work to meet the agreed timeline.
- Payment terms: Including the total amount to be paid and the method of payment.
- Payment deadlines: Clear due dates to ensure prompt compensation.
It’s also important to note that businesses are required to retain copies of these contracts for at least four years.
Netherlands: The Dutch DBA Act
The Dutch Employment Relationships Deregulation Act (DBA), initially introduced in 2016, is undergoing significant changes in 2025. The Dutch government is stepping up enforcement to address false self-employment while offering businesses a transitional year to adapt.
This updated approach ensures the proper classification of the Netherlands' 1.6 million freelancers (ZZP’ers). Employers must assess working arrangements to confirm they reflect genuine self-employment, using government-provided tools and model agreements to avoid misclassification penalties.
| Aspect | Employee | Independent Contractor |
|---|---|---|
| Control and supervision | Direct control over how, when, and where to work | Freedom to set their own schedules and methods |
| Payment | Regular wages; taxes withheld by employer | Paid per project; responsible for their own taxes |
| Benefits | Health insurance, retirment plans, paid leave | Must arrange their own benefits |
| Termination | Often requires notice and may include severance | Can usually be terminated at any time without benefits |
| Tools and equipment | Provided by the employer | Typically use their own tools |
Why legal compliance matters
Failing to adhere to these evolving laws exposes businesses to significant risks, including fines, lawsuits, and reputational damage. These penalties not only impact operational stability but also erode trust with freelance talent.
To remain compliant and protect your business, proactive measures are essential:
- Centralised contract management: Adopt secure systems to standardise and streamline agreements.
- Compliance software: Leverage tools to monitor classifications and flag potential risks.
- Global payment solutions: Ensure payment systems meet local tax and legal requirements.
- Expert guidance: Collaborate with legal experts for routine reviews of freelance engagements.
- Clear communication: Ensure regular and transparent dialogue with freelancers about legal updates.
Preparing for the future
As legal frameworks around freelance work evolve, businesses must adapt to not only remain compliant, but competitive. At YunoJuno, we simplify compliance with innovative tools that ensure worker classifications align with regulations globally. Whether managing existing contractors or onboarding new talent, our platform helps businesses navigate the legal landscape with confidence.
Learn more about how YunoJuno can support your compliance needs and explore our resources for staying ahead of legislative changes.
