We recently secured a major legal victory in Yean v. Tulip Health Inc. (Index No. 651710/2026, Sup. Ct. N.Y. Cnty.). The ruling—a matter of first impression—expands executive liability for principals and executive officers under the New York City and New York State Freelance Isn't Free Act (FIFA).

Yean significantly expands the legal exposure of corporate officers and startup founders after a New York court ruled that a corporate executive may be a "hiring party", and therefore personally liable, under FIFA. You can access the opinion here.

The decision in Jason Yean v. Tulip Health Inc. and Prita Uppal (Index No. 651710/2026), authored by Justice Gerald Lebovits, imports the traditional employment law "economic realities" test into the independent contractor landscape. This ruling effectively dismantles the long-held defense that a corporate signature completely insulates individual executives from personal liability under FIFA.

The Facts

Plaintiff Jason Yean, a Queens-based health-tech marketing consultant, contracted with Tulip Health, a San Francisco company, for a $7,500 monthly retainer. After paying Yean for several months, Tulip and Uppal tried to renegotiate a lower fee. When Yean would not agree, the defendants refused to pay him for two months of work they had directed him to perform. To avoid protracted dispute, Yean offered to accept pay for just the two weeks he worked in December,— to which the defendants refused including a further reduction to $1,500.

Defendants then asserted multiple inconsistent theories on why compensation was not required: that Yean quit in November; that the agreement expired after 60 days; that Yean's work was unauthorized; that there were slow periods in the previous months which justified not remitting payment, among others. Yean later learned that defendants messaged their mutual contact, a well-respected Chief Marketing Officer at a global medtech company, claiming Yean was demanding money "he was not even owed."

Yean retained legal counsel who brought suit under the NYC and NYS Freelance Isn't Free Acts for nonpayment, breach of contract, and retaliation — naming both the corporate entity and CEO, Prita Uppal, individually.

Defendants moved to dismiss arguing, among other things, that Uppal was a non-signatory to tghe parties agreement and could not legally be categorized as the "hiring party."

Importing the "Economic Realities" Test

One day after oral argument, the decision came down from the court denying defendants' motion to dismiss.

Justice Lebovits rejected the defendants' literal interpretation of the FIFA. Acknowledging a lack of binding appellate authority on the issue, the court looked to the statutory text, which defines a hiring party as "any person who retains a freelance worker to provide any service." Justice Lebovits noted that this language is not, on its face, limited to corporate entities.

To bridge the gap between corporate agency and individual liability, the court drew an explicit analogy to New York Labor Law (NYLL) wage-and-hour jurisprudence. The court held that an individual corporate officer may qualify as a "hiring party" under FIFA if the factual allegations satisfy the "economic realities" test.

In evaluating Uppal's role, the court highlighted that she maintained an ownership interest as the founder and CEO; personally recruited Yean and transmitted the underlying contract; negotiated the length of retention and compensation terms; and directly supervised and controlled Yean’s day-to-day work. Taking these allegations as true at the pleading stage, the court ruled that Uppal qualified alongside Tulip as a hiring party, denying the motion to dismiss the individual nonpayment and retaliation claims.

The court also sustained the retaliation claim, holding that Uppal’s contact with Yean’s former employer after he demanded payment could constitute an adverse action — reputational interference is now actionable retaliation.

Defeating Choice-of-Law and Prior Precedent

The decision also dealt a blow to boilerplate startup contract protections on two other fronts.

The defendants argued that the contract's California choice-of-law clause barred New York statutory claims. The court disagreed, holding that because the clause only referenced "this Agreement," it was narrow in scope. It governed purely contractual claims but could not foreclose independent statutory claims enacted to protect New York freelancers.

The defense relied heavily on StClair v. Sansal, a prior New York City Civil Court ruling that dismissed FIFA claims against individual corporate principals. Justice Lebovits took the rare step of explicitly noting his "respectful disagreement" with StClair, blunting its utility as a reliable defense shield moving forward.

Significance

Yean v. Tulip Health serves as a stark warning to startup founders, venture capitalists, and corporate executives operating in New York. Pervasive control over an independent contractor's budget, workflow, or termination can quickly dissolve the corporate shield. If an executive makes the unilateral decision to freeze a freelancer's pay, they may find themselves defending their personal bank accounts in court.

For practitioners representing freelance workers, the Yean framework provides a powerful blueprint. By meticulously pleading the executive's hands-on involvement, plaintiffs can now routinely survive early motions to dismiss, securing vital leverage for discovery and early settlement negotiations.

Update: After burning through three law firms and losing their Motion to Dismiss, Defendants abandoned their defense and agreed to a confidential settlement (20x the original demand).