DISCLAIMER: I AM NOT A LAWYER. I AM NOT AN UPWORK REPRESENTATIVE. THIS POST IS STRICTLY MY PERSONAL ANALYSIS OF THE UPWORK TERMS OF SERVICE AND MAY NOT BE CONSTRUED AS LEGAL ADVICE.
There has been recent discussion on sub-contracting. Always, part of the answer is that it is prohibited on Hourly contracts. The reason given is that a Freelancer (FL) cannot permit another person to use their freelancer account, which includes tracking time (see this and that). Also, subsection 3.2 of the Terms of Use agreement stipulates that the FL or Agency must disclose to the Client who will do the work before they begin to work. So, the logical interpretation is that one cannot sub-contract on Hourly jobs, because of prohibitions regarding the Work Diary. But that interpretation is based on an incomplete set of information.
I direct your attention to the Optional Service Contract Terms agreement. When agreeing to the Terms of Service, a user agrees to the Optional Service Contract Terms agreement, which essentially says that a Client auto-approves (approval can be revoked by the Client) sub-contracting or outsourcing by the FL or Agency that they hired. Of course, the Terms of Use agreement, subsection 3.2, mandates that the Client be notified before such activity.
Now, the only issue is the Work Diary permissions restriction. Enter expense reimbursement on Hourly contracts. A FL can submit expenses for reimbursement (such as materials). The Client must approve the request for the reimbursement to be paid, which is governed by the Hourly, Bonus, and Expense Payment Agreement with Escrow Instructions chapter of the Terms of Service (critical note - standard fees for both Client and FL apply). From what I can find, there are no restrictions on what qualifies as an "expense", so outsourced labor qualifies.
To recap:
- All entries in the Work Diary must be the actual work of the person who owns the account.
- The Client must know what work will not completed by the entity whom they hired.
- Clients must actively revoke authorization for sub-contracting/outsourcing. This is on a per contract basis.
- Expenses can be submitted for a reimbursement request on Hourly contracts.
Based on the above premises, I conclude that a FL can outsource/sub-contract on Hourly contracts, as long as they adhere to the following requirements:
- Pior to sub-contracting or outsourcing any work, the Client must be informed about the specifics* of what tasks/deliverables will be not be done by the FL.
- All work that is not performed by the FL may not be entered into FL's Work Diary.
- The expense for any labor not completed by the FL must be carried by the FL.**
*It is not clear that the Client must know the identity of the entity who actually will perform the work. The text of subsection 3.2 of the Terms of Use agreement only states that the Client is required to know whether the work will be performed by FL.
**A client may elect to reimburse FL for the expense by approving a reimbursement request. The payment will still be subject to the standard fees for both Client and FL.
CAUTION: The mods have, numerous times (here are two by Valeria: 1 & 2 ), stated that outsourcing is disallowed on Hourly contracts for the reasons that I listed at the beginning. It would be fair to interpret this as Upwork's official position: sub-contracting on Hourly jobs violates the ToS. Thus, even if the FL adheres to the above restrictions, they may struggle in the case of an investigation to convince Upwork that they abided by the rules.
ETA: Everyone, please let me know your thoughts. Did I miss anything relevant in the ToS that I should have considered? Mods, can you have your legal team weigh in? Can/will the ToS be revised to consolidate or clarify the rules regarding sub-contracting / outsourcing?
