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25005175
Community Member

Hourly sub-contracting loophole?

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:

 

  1. 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.
  2. All work that is not performed by the FL may not be entered into FL's Work Diary.
  3. 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?

8 REPLIES 8
25005175
Community Member

Don't mind this reply. Just shamelessly adding it to re-elevate the post because I forgot to time the posting. ðŸ˜…

I feel like you are looking at Upwork ToS and trying to interpret it.

 

That is not necessary.

Upwork doesn't allow sub-contracting while using hourly contracts.


That's all you need to know.

 

Documentation found here:

https://www.upwork.com/legal

...Does not constitute the totality of how Upwork works.

 

If Upwork moderators came here to the Forum and said:
"Hey everyone: From now on we don't allow G-93 jobs."

 

And then they added filters to automatically delete every job posting for G-93 jobs...

That mean that Upwork doesn't allow G-93 jobs.

If an eager Upwork users carefully read through the ToS documentation and found no reference to G-93 jobs (https://www.upwork.com/legal), it wouldn't mean that Upwork allows G-93 jobs.


One freelancer thinking the written ToS documents located at https://www.upwork.com/legal can be read in such a way as to make an argument that something is allowed or disallowed... does not mean that such a thing IS actually allowed or disallowed.

Preston, I agree that the Upwork can add further restrictions on those in the Terms of Service. Hence the caution statement at the end of the post.

a_lipsey
Community Member

I think you've summarized it in the following, essentially: on an hourly contract, you cannot track any time that is not your own. 

 

That's the gist of it. You can request they reimburse expenses, and those may be outsourcing (if agreed). 

Getting reimbursed for expenses is fine.

 

But if I get reimbursed, I will be charged Upwork fees.

 

So if a project needs additional people working on it, the client can hire those people directly. I regularly work in projects for which clients hire multiple freelancers. That is normal.

sofia2008
Community Member

What would be the point of having an hourly contract to benefit of the Hourly contract protection and incur expenses that are not protected if the client does not pay?

None, I think. But it is an option. I think this would only be fruitful for established relationships between clients and freelancers.

25005175
Community Member

Update: Arjay, Valeria, and Pradeep all confirm that it is a violation of the ToS to sub-contract without the Client's permission. However, none of them weighed in (at time of post) on whether that permission is given by default or not.

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