California Assembly Bill 5 - Upwork Comment

[Miriam H]

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Trasie S wrote:

Please see my latest comment on this thread. 

AB5 requires that clients and companies convert all California freelancers to W2 employees on January 1. I have put the details in the latest comment, but the correct answer is that for us to legally continue to use the platform after January 1 we need to become Upwork employees and receive W2 income from Upwork Payroll. 

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I did see your comment, however I don't agree with your assessment (again, not a lawyer). 

[Trasie S]

I have a meeting with a lawyer tomorrow to try to make real sense of this all. 

What I wasn't aware of before I started digging is that what I wrote about Upwork offering clients and freelancers its Upwork Payroll W2 services has always been part of its offerings to help clients correctly classify the freelancers they hire. This wasn't a reaction to AB5, but a long term policy (even before AB5, California had pretty clear laws governing the difference between an employee and a contractor). 

[Miriam H]

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Trasie S wrote:

I have a meeting with a lawyer tomorrow to try to make real sense of this all. 

What I wasn't aware of before I started digging is that what I wrote about Upwork offering clients and freelancers its Upwork Payroll W2 services has always been part of its offerings to help clients correctly classify the freelancers they hire. This wasn't a reaction to AB5, but a long term policy (even before AB5, California had pretty clear laws governing the difference between an employee and a contractor). 

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Yes, I was aware of the W-2 offering from Upwork. If you are able to share any insights, post meeting, that would be great. The fact remains, for most freelancers on this site, Upwork is an escrow agent. Their normal course of business is connecting freelancers with clients, by that measure I would think any work I perform effectively passes test 2. Now, for larger enterprise clients, I have a different view.

Speaking for myself, so many of  my projects have been short term and the majority (in my non-legal opinion) do pass the second test (i.e. not in the normal course of business - I provide technical/business writing) - I don't see how I would ever be an employee. Furthermore, I work with a lot individuals and entrepreneurs, who are paying out of pocket.   It sounds like you and I may have different clients/backgrounds.

All this said, I am fully prepared that large companies, who want to work with me, will only do that via W2, which is fine with me. I recall from this thread, your prespective is different. 

[Elizabeth R]

Do you have any more details, post-meeting? I just received an email from Upwork about this as well. I heard about the law earlier this year but kind of brushed it off, as most of my fellow freelancer pals in California didn't seem concerned and I don't really understand the law myself.\

Thanks so much!

Elizabeth 

[Greg C]

I came across this and believe that many freelancers on upwork should be covered by this exemption:

Professional Services Exemptions

AB-5 provides carve-outs for the following “professional services:” (1) marketing professional; (2) human resources professional; (3) travel agent; (4) graphic designer; (5) graphic artist; (6) fine artist; (7) freelance writer; (8) barber or cosmetologist; (9) esthetician; (10) electrologist; (11) manicurist; (12) payment processing agent; and (13) IRS licensed tax professional.

To qualify the professional service provider must:

• Have an established business location (may be home);
• Have any required business license or occupational license;
• Have the ability to negotiate rates;
• Maintain the ability to set hours outside of project completion dates;
• Engage in the same type of contract work with other companies, or must hold themselves out to other potential customers; and
• Exercise discretion and independent judgement in their work.

NOTE: There are additional restrictions. For instance, cosmetologists must set their own hours, set their own rates, select their clients, schedule their own appointments, process their own payments, be paid directly by their clients and keep their own book of business.

https://www.nfib.com/content/legal-compliance/labor/understanding-ab-5-californias-new-independent-c...

[Penny P]

This bill goes a lot deeper than what you see on the surface---you cannot take one aspect of the rules as tere are 3 biggies in the A,B,Cs and then the Borello Laws that determine employee or IC.  What is the official statement by UpWork?

[Preston H]

re: "What is the official statement by UpWork?"

I'm not Upwork, but I regularly read the Community Forum and Upwork announcements.

I can't recall seeing an "official statement" from Upwork on this topic.

I don't think it is necessary for them to make an officail statement.

To be perfectly frank, only a tiny percentage of Upwork's freelancers actually live in California, and only a tiny percentage of those work in a way that could even conceivably fall under the jurisdiction of this California law.

[Trasie S]

Penny, 

Upwork released a statement last winter basically saying that the law was going to go into effect and California freelancers need to do what they need to do to get their work done. It was a completely agnostic approach that threw the ball into the court of the California freelancers. I no longer remember exactly what it said, but the general idea was we need to figure it out. 

More than a year has now passed since the legislation passed, and almost 11 months since it has gone into effect, and I would hope that by now everyone has structured their business in a way that allows them to continue to service their clients. I would assume that by now everyone understands the difference between the ABC test and the Borello law and bids on jobs accordingly. 

Personally, I ended up getting a local business license as a sole proprieter and I have every client sign a contract that includes clauses that make clear my status as a freelancer / independent contractor (one of the Borello requirements). I had to pivot to technical writing from project management as the PM jobs I was taking are a huge grey area in the Borello test, but found that I can actually charge more as a Technical Writer. That pivot worked well for me, although it means more work finding new clients because I can no longer take on the long-term projects that I did in the past. Nor do I want to, I freelance for the flexibility, if I wanted to work for a client I would go back into an office...

I wish you well, between AB5 and Covid these are trying times for all of us.

[Mary I]

AB 5 was overturned by CA Legislators a few months ago. It is now defunct.

[Trasie S]

"AB 5 was overturned by CA Legislators a few months ago. It is now defunct."

That is incorrect. 

Governer Newsome provided exemptions for some types of workers, but it is still in place for many other types of freelancers, myself included. 

If it were overturned then we wouldn't be voting on Prop 22.