**Assembly Bill 5 (AB 5 in California)

FREELANCER - What does this mean for me?

Thanks for reaching out. Unfortunately, we cannot provide tax advice, please consult with a trusted tax advisor.

CLIENT - What does this mean for me?

Thanks for reaching out. Unfortunately, we cannot provide tax advice, please consult with a trusted tax advisor. If you need help classifying those you hire on Upwork, please let us know. We have several different compliance options and will be happy to help!

What is AB 5?

Thanks for your question. California Assembly Bill 5 (AB 5) is still a new law, so although I can provide you with some general information you should reach out to your own advisors for any questions specific to you. In general, AB 5 broadens the definition of who would be designated an employee under California law by making most workers an employee if the worker is controlled by the company it works for, if the worker performs work in the usual course of the company’s business, or if the worker does not have an independently-established business.

Does AB5 apply to me? Does it apply to my freelancer who is in _____? I am a California-based client, does it apply to me?

Thanks for your question. California Assembly Bill 5 (AB 5) is still a new law and I can provide you with some general information. However, you should reach out to your own advisors for any questions specific to you. In general, AB 5 applies to any worker that lives or provides services in California, regardless of where the client is located. Where the client is located does not determine whether AB 5 applies. To clarify:

• AB 5 will apply to any worker who is working in California, regardless of where the client/employer is located, unless an exception to AB 5 applies.
• AB 5 does not apply to workers providing services outside of California, even if the client/employer is in California.

What are the exceptions to AB5?

Thanks for reaching out. California Assembly Bill 5 (AB 5) is still a new law, so while I can provide you with some general information, you should reach out to your own advisors for any questions specific to you. There are some exceptions for professional services work, such as marketing, graphic designers, writers, etc., when the work is done as part of an independent business. There is also an exception for certain business-to-business relationships. When an exception applies, the standard that existed before AB 5 would generally continue to apply. This standard, called the Borello standard, is a multi-factor control test, and is generally agreed to be less strict than the Dynamex standard.

Will clients be able to engage California-based freelancers through Upwork?

Thanks for your question. Yes. In some cases, clients will have to look at whether the worker is an employee under the new standard. In cases where their freelancer should be classified as an employee, clients can leverage Upwork Payroll and other tools to ensure they can start or continue engagements with freelancers within the bounds of California law.

What about my current engagements with California-based freelancers?

Thanks for reaching out. Clients may want to take a new look at current engagements with California-based freelancers. In cases where their freelancer should be classified as an employee, clients can leverage Upwork Payroll and other tools to ensure they can start or continue engagements with freelancers in compliance with the law.

How can clients ensure classification is determined correctly under a new standard?

Thanks for your question. For larger clients who purchase Upwork’s Enterprise Compliance solution, nothing will change, and we will ensure we are classifying California-based freelancers correctly under the new standard. Clients who do not purchase our Enterprise Compliance solution should reach out to their own advisors.

Also, clients may also contract with freelancers residing outside California using our website, which would avoid the new standard altogether.

Will other states have similar bills?

Thanks for your question. It is possible that other states may follow California in some form, but if they do, we will likely not see any drafts until later in 2020 or more likely 2021.

What is Upwork’s Enterprise compliance services?

Thanks for your question. Our classification compliance services are supported by our award-winning, in-house legal team and outside legal experts from across the globe, and we apply an assessment of the factors in the laws based on the freelancer’s location. Here’s an article describing some of the factors considered and the classification process (note that this article is not specific to California). I’ve also attached a high-level overview for your team—Compliance Services and Contractor Compliance Solution.

Email for Freelancers

Email for Clients Version 1

Business + Ent Standard + Large companies customers that are not Enterprise Compliance customers (Enterprise Compliance prospects)

Email for Clients Version 2

Smaller companies that are not Enterprise Compliance prospects or customers but are Upwork Payroll prospects (Payroll prospects)

Client-facing resources:

Flexible Talent vs. Independent Contractor vs. Employee: How to Know What You Need

The At-a-Glance Guide to Writing Compliant Job Posts

Freelancer facing resources:

How to Set Up a Freelance Business in Your State