Is your business prepared for the compliance challenges of 2025? Of the 72.7 million people who practice their trades, crafts and professions outside the confines of a traditional payroll job, 27.7 million do so full time. With the rapid evolution of the workforce, HR managers and compliance officers must stay ahead to avoid falling into legal traps.

Here’s your roadmap to avoid the top compliance traps of 2025 when hiring freelancers.

Freelancer Protection Laws

The rise of freelancer protection laws presents a unique challenge. Starting with New York City’s Freelancer Isn’t Free Act in 2017, cities like Minneapolis, Seattle and Los Angeles as well as states such as Illinois, New York and California have adopted legislation to safeguard freelance workers.

These laws typically require businesses to document their relationship with freelancers by mandating contracts. A contract must include essentials such as contact information, services provided, compensation details and payment terms.

However, differences in local requirements, like Seattle’s notice of rights for freelancers or Illinois’ 30-day payment provision, mean that businesses can’t take a one-size-fits-all approach.

Collaborating with legal experts to ensure compliance across different jurisdictions is critical. Regularly review local and state laws to ensure all contracts and processes meet specific requirements.

Overlooking these details can lead to lawsuits, potential double damages and costly legal fees.

Intellectual Property and AI Challenges

AI adds complexity to intellectual property (IP) rights. Previously, disputes centered on whether freelancers were independent contractors. Now, AI-generated content introduces new risks:

• Copyright issues: AI tools might claim ownership over content, and some outputs might not qualify for copyright protection.
• Ownership conflicts: Determining who, if anyone, owns AI-generated content becomes tricky, especially if freelancers or AI tools assert claims or copyright laws do not protect AI-generated content.
• Confidentiality risks: Freelancers using AI tools might inadvertently expose sensitive business information.

AI-generated content can sometimes lead to disputes over ownership — neither the freelancer nor the company may have full rights if AI tools assert claims or if copyright laws do not protect AI-generated content at all. Copyright law protects human-generated content and may not protect works generated by AI. For example, an AI-generated image was not given copyright protection and is used in a comic book. The coordination and arrangement of the comic book including written and visual elements was protected, but the image was not.

Confidentiality is also a growing concern. When freelancers use AI tools, there’s a risk that confidential information might be inadvertently shared or misused. Traditional non-disclosure agreements may no longer suffice. Consider adding a guideline prohibiting proprietary information from being used with generative AI models such as ChatGPT. As AI platforms train from information that is input, a freelancer can unknowingly expose information.

When you engage freelancers, strengthen your contracts with clauses on IP ownership, originality and AI usage and develop clear guidelines on when and how AI can be used. You should regularly monitor the quality and originality of freelance submissions, utilizing plagiarism checkers and human reviews.

To protect your intellectual property rights, consult with competent attorneys and update contracts to address AI-related issues. Include clauses for:

• IP ownership
• Originality assurance
• AI tool usage
• Enhanced confidentiality

Monitoring Content Quality

Ensuring content quality and integrity is vital. AI tools, while powerful, can sometimes produce inaccurate or subpar work. Additionally, concerns about plagiarism are more relevant than ever.

Solution: Implement a robust quality assurance process:

Regularly review freelancer submissions
Utilize plagiarism detection software
Encourage freelancers to verify AI-generated content
AI offers fantastic opportunities, but it also introduces risks around IP rights and confidentiality. By adapting your practices and proactively addressing these challenges, your company can safely leverage AI’s benefits.

The compliance landscape is rapidly changing. By understanding potential pitfalls and implementing strategic solutions, your business can thrive in 2025 and beyond.