Yes, it is plausible that there is a potential regulatory issue.
Even if it is the key issue, that in no way excuses this horrible treatment, or passing it off as a mere "communication should have been clearer".
Complete, absolute failure to contact the worker using your platform in any way?!?
Nope, absolutely unacceptable.
All UpWork needed to do was to say something like "This work profile, with many projects on a single employer is passing the threshold of 1099 vs W-2 employment, and as such we cannot continue supporting this hiring/working pairing as a freelance intermediary due to regulatory issues. BTW, we have a W2 Payroll solution that you can sign up for immediately to solve this problem. More details here...".
The fact that UpWork did no such thing indicates clearly to me that they are not in fact concerned about regulatory issues, but merely using them as an excuse to upsell, while trying to lock-in their worker base by keeping them in the dark. IOW, completely unethical practice.
As a biz owner currently using freelancers on several platforms, Upwork just got crossed off my list (just as I'll never intentionally use Uber).
The time frame isn't completely explicit in Wallace's account, but the references to discovering it "this week" and spending "all day" Thursday-before-2pm getting to the bottom of it could indicate a timeframe as short as:
(1) Wednesday PM, Wallace finishes "several assignments" for this one client, marking them done in the system - and that on top of the other "dozens" of jobs he's done for them in the last few weeks, including "rush" jobs, flips his account into the "compliance concern" status which hides him from that one client.
(2) Thursday AM, friend at agency says, "hey, we can't seem to hire you for more gigs"; Wallace says, "that seems wrong, ask Upwork"; agency quickly responds, "they can't explain, ask on your end".
(3) Wallace finally reaches someone at Upwork after lunch Thursday PM, getting the unsatisfying explanation, then posting his angry tweetstorm 2:21PM Thursday/8th.
Taking a day or two to explain an exceptional situation, or perhaps a situation that's part of a brand-new policy adopted under legal pressure, is not necessarily an awful failure.
We don't really know if there might have been other explanations that would have come a few hours later, or that he missed somehow.
It's even possible the status of his account was some short-term temporary "gray out" status, that nudges freelancers/buyers to diversify their counterparties, and that this gray-out status almost always results in a "cure" quickly with no explicit communication required.
I would prefer explicit transparency in such situations... but could also understand why the company might be a little coy about directly coaching freelancers. (If they get that coaching even just a little wrong, according to some later interpretation of the contractor rules, it could wind up being used as additional evidence against them.)
If they are anything but completely stupid (admittedly, not unheard-of for startup jockeys), they have competent legal counsel, who can explicitly draw the boundaries for them and write the appropriate notices.
Relying on some kind of quasi-plausible timing/delay issue, as does the parent comment, it's even less of an excuse.
The more I see, the more clear it is that Upwork are
If they were going to give proper notice of what they were doing, they should have done so simultaneously with shutting off service. If not, they're also wrong.
It really has narrowed down to two choices:
1) Upwork are completely incompetent to even perform their primary functions
2) Upwork are playing a very unethical game.
Either way, they are not qualified to operate their business, and shouldn't be hired from either side.
The contractor/employee "boundaries" are somewhat fuzzy, and subject to later (re-)interpretation. You might think you're safe, but then lose a regulatory/court case later! They might have to look at things case-by-case once a certain risk threshold is met.
As far as we can tell, he learned the details from Upwork within 12-48 hours of when the issue was discovered. That's not so bad!
He wasn't prevented from appearing to other buyers during that period – just the single buyer with whom repeated jobs jeopardized his independent contractor status.
Tempest in a teapot. Wallace's anger at the communication is legitimate, but he's likely misinterpreting the root causes, and the downstream demonization of Upwork is out-of-proportion with the particulars.
Legal issues are always somewhat 'fuzzy' and subject to judgement -- it's why we have judges. And this is not that fuzzy, the IRS has published clear standards for decades and it's well litigated. Nothing about that prevents a company from defining the boundaries of it's behavior and communicating clearly & behaving ethically.
Timing is utterly irrelevant here. The ONLY reason he found out is that he had the good luck to have a well-placed friend who could see the issue AND had a communication side-channel. Absent that luck, he'd be permanently screwed.
We've got no data on what other customers were able to buy or not, and it is also irrelevant -- particularly for a contractor primarily occupied with a single buyer, who would not have tuned his marketing to the broader market, and due to Upwork's unethical behavior would have no notice that he needed to.
"...in a teapot"? BS! A scaled business like this is a large system, and this is an example of how the system works, and limits the range of possible root causes.
In Upwork's case, it is either one of two things.
1) A sloppy mess of incompetence and make-it-up-as-you-go-along supported by ill-invested venture funds. Or,
2) A management that has specifically decided to implement a system of unethical behaviors in hopes of extracting higher profits regardless of the cost to it's users.
Either way, they are either unqualified to be in biz, or unqualified for anyone to do biz with.
I'm left wondering why you are such an eager and persistent apologist for this behavior, grasping any straw to excuse it . . .
Even if it is the key issue, that in no way excuses this horrible treatment, or passing it off as a mere "communication should have been clearer".
Complete, absolute failure to contact the worker using your platform in any way?!?
Nope, absolutely unacceptable.
All UpWork needed to do was to say something like "This work profile, with many projects on a single employer is passing the threshold of 1099 vs W-2 employment, and as such we cannot continue supporting this hiring/working pairing as a freelance intermediary due to regulatory issues. BTW, we have a W2 Payroll solution that you can sign up for immediately to solve this problem. More details here...".
The fact that UpWork did no such thing indicates clearly to me that they are not in fact concerned about regulatory issues, but merely using them as an excuse to upsell, while trying to lock-in their worker base by keeping them in the dark. IOW, completely unethical practice.
As a biz owner currently using freelancers on several platforms, Upwork just got crossed off my list (just as I'll never intentionally use Uber).