In 2024, California passed the Freelance Worker Protection Act (AB 701), which came into effect on January 1, 2025. This law fundamentally changed what clients can require in freelance contracts — and what they cannot. If you're a freelancer in California, or contracting with California-based clients, you need to understand these protections. Many clients aren't yet compliant, and some are deliberately trying to get around the new rules.
What is a Freelance Worker Protection Act?
The Freelance Worker Protection Act applies to any individual performing work in California as a 'freelancer' (someone retained for a specific project, not an employee). The law imposes strict requirements on written contracts: they must use clear language, cannot include overly broad non-competes, must limit liability to the amount paid for the work, and must include fair payment terms. The Act also restricts confidentiality clauses and makes certain common practices (like unilateral termination for convenience) subject to written agreement.
Red flags to watch for
AB 701 restricts non-competes sharply. Any non-compete must be narrowly tailored and time-limited. Broad non-competes are likely unenforceable.
AB 701 requires written agreement for at-will termination. Unilateral termination clauses may be void unless both parties explicitly agree.
AB 701 requires liability to be limited to the amount paid for the work. Uncapped or disproportionate liability clauses are prohibited.
AB 701 restricts overly broad confidentiality. Clauses trying to prohibit you from using general skills or public information are unenforceable.
AB 701 requires clear language. Deliberately obscure or overly complex contracts may be unenforceable.
Best practice (and implied by the Act) is clear definition of work scope. Ambiguous contracts leave room for disputes.
Your legal rights
The Freelance Worker Protection Act (Labor Code §2750.3 et seq., effective January 1, 2025) imposes mandatory requirements on contracts with freelancers in California: (1) Written agreement required for any non-compete; (2) Liability limited to compensation paid for the work; (3) Confidentiality clauses cannot cover general skills or public information; (4) Unilateral at-will termination clauses must be explicit and agreed in writing; (5) Clear, legible language required throughout the contract. Violating these terms may make clauses unenforceable, and the law is subject to ongoing litigation as clients and contractors interpret its scope.
Questions to ask before you sign
- 1Does this contract include a non-compete? If so, what is the geographic area and time limit?
- 2Can you terminate this contract without cause or notice, or must you provide a specific notice period?
- 3What is the maximum liability each party accepts, and how is it calculated?
- 4Are there confidentiality or non-disclosure terms? What information is covered and what is excluded?
- 5What is the exact scope of work, deliverables, payment schedule, and project timeline?
- 6Have you explained any unusual terms or jargon in the contract, or can you provide a simplified summary?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.