Enterprise Disaster

[alexanderdoak]

Wow, I can't believe that Upwork just did what they did.  The enterprise client and I spent weeks working on trying to get an agreement in place, but Upwork compliance refused to let us contract.  The only way Upwork would allow us to continue is if I became a W-2 Employee for Upwork, and work for Upwork as a temp agent.  (I'm not doing this.)  This was a complete shock to me, after so many years on the platform.  I turned down other pending offers, and spent countless hours drafting proposals, doing phone interviews, sending emails, just to have it all crumble because of Upwork compliance.

I must ask, does every enterprise client relationship require the freelancer to become a W-2 employee for an Upwork subsidiary?  If not, how is a freelancer able to tell which enterprice clients (or job postings) will have that stipulation?  It's a painful waste of time for me and the client to go through the whole proposal, interview process without knowing what Upwork compliance will say.  Is there any way to predict?  Thanks.

[versailles]

Was Upwork the client?

[wendy_writes]

Rene, RFPs posted by and for Upwork jobs usually indicate that status.  

[versailles]

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@Wendy C wrote:

Rene, RFPs posted by and for Upwork jobs usually indicate that status.  

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 Thus my question.

[alexanderdoak]

No, the client was not Upwork.  The client was a massive multinational corporation with more than 250,000 employees.  But it would make much more sense if Upwork were to build the job posting that way from the beginning, if Upwork were going to insist you become an employee for them.

[petra_r]

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@Alexander D wrote:

No, the client was not Upwork.  The client was a massive multinational corporation with more than 250,000 employees.  But it would make much more sense if Upwork were to build the job posting that way from the beginning, if Upwork were going to insist you become an employee for them.

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 It's a Compliance thing, especially (but not only) in the USA.

In most countries there are fairly strict rules as to what is considered freelance work and what is considered employment and neither the government nor the tax authorities take too kindly to companies "hiring" freelancers when the nature and extent and conditions of the contract should be classified as employment (with all the tax and benefit consequences that brings with it.)

Upwork Compliance exists to protect Enterprise clients from facing serious legal or financial consequences resulting from inadvertently misclassifying workers.

IF the relationship would have to be classified as employment rather than freelancing Upwork offers to arrange the "employment" part so the client and the freelancer / employee can still work with each other AND stay on the right side of the law and the taxman.

Until the conditions of a contract are finalised they simply can't tell if a client - freelancer relationship falls into one camp or the other.

[vladag · Accepted solution]

Hi Alexander,

Thank you for reaching and sharing your concern in the Community. Can you please confirm you're referring to the client from your active offer?

I suspect there's a confusion with the employee classification you were probably advised about by our team, consistent with tax and employment legal standards for the type of engagement related to the offer you received. I'll check with our team and follow up with an update here and also ask our team to share more information with you directly, so please let me know if you are referring to a different offer.

In the meantime, please check this blog article for more information about the classification status I mentioned, which might be the source of the confusion but we'll follow up with a confirmation as soon as possible.

[alexanderdoak]

Yes Vladimir, thank you the link to that article.  That is very helpful.  I guess most of my confusion comes from being told explicitly by the Upwork compliance department that quote, "There is nothing at all that you can do to change the fact that this contract must be an employee relationship.  It's due solely to the nature of the work itself."

The reality (based on the article you shared) is that there are a tremendous number of things that I have done and can do to affect the employee/contractor status.  But I understand it's all entirely subjective, up to the discretion of the compliance team.

[vladag]

Hi Alexander,

I'm glad we've helped clear some of the confusion! For more background, our Enterprise clients have the option to purchase classification services from Upwork for the engagements that they post to the Upwork platform. In this case, the project that you were offered was that of an Enterprise Compliance client.

For each engagement the Upwork Enterprise Compliance Team will determine whether a Freelancer should be classified as an Independent Contractor or an employee. In general, the Upwork Compliance Team assesses factors required by law, such as:

1. Freelancer’s location, work history, and business details

2. Expected deliverables and type of work

3. Contract terms (hourly or fixed-price, payment amount, duration, and other factors)

4. Whether the client needs to control when, where, or how the work is done

In this circumstance, the determination of the Compliance review was that of employment, which triggered the introduction of the Upwork Payroll solution as a means to facilitate the engagement. I will be having your Compliance Specialist reach out to you directly to you to discuss your specific situation further.

Our team will reach out to you and make sure to review and address all of the concerns you shared in your previous communication with our team and your post here. Thanks again for posting in the Community and feel free to follow up if you have any other feedback or concern.