**Direct Contracts

Why would I use Direct Contracts vs. my current method (getting paid via PayPal, check, etc.)?
Thanks for your question. Freelancers have told us they’d like to have one secure place to invoice clients and receive payments. Direct Contracts makes it easy to get paid by your clients who don’t have a full account on Upwork and just need access to review your invoices and make payments. With Direct Contracts you also get the protection of escrow and if a dispute arises we will be happy to help. 

What’s the cost for me as a freelancer?
Thanks for your question. Freelancers are charged a 3.4% payment processing fee. For example, if your earnings are $100 you’ll be charged a payment processing fee of $3.40 USD. You are not charged a freelancer service fee, only the 3.4%. Clients are charged low fees.

Can I have hourly and fixed-price contracts with Direct Contracts?
Thanks for your question. Yes, we support both hourly and fixed-price contracts.

What requirements/restrictions are there with Direct Contracts?
On the freelancer/agency side:

• If terms of the contract need to be changed you must cancel and create a new contract with updated terms

On the client side:

• Billing method must be PayPal or credit card 

• If terms of the contract need to be changed the freelancer must cancel and create a new contract with updated terms

• Clients cannot initiate a contract -- the freelancer must

• No ability/need to create an Upwork account with Direct Contracts. You can access the contract via the email you receive from Upwork. If a client decides to create an Upwork client account, new contracts with that freelancer will be subject to freelancer service fees and client payment processing fees.

Where do I go to initiate a Direct Contracts contract?
Thanks for your question.  From the main navigation bar click on the paper airplane icon (beside the bell) to go to Direct Contracts.

Can I send the contract details page URL on my browser directly to my client?
Thanks for your question. Since your client does not have an Upwork account they need a specially generated link to be able to access the contract information. You can find this link by going to the “Contract Details” page, clicking on the three dots icon (...) and selecting “Share contract link.”

How do I make changes to the contract?
Direct Contracts can be edited by you until your client accepts the contract and funds the project. If a change in terms or scope is needed after that, please reach out to your client to discuss. You can then cancel the existing contract and create a new one.

How do I cancel the contract?
Thanks for your question.  From the main navigation bar click on the paper airplane icon (beside the bell) to go to Direct Contracts. Find the contract you want to cancel, click on the (...) and you’ll see an option to “Cancel Contract” and include a personalized note.

What happens if a client cancels a Direct Contracts project while in progress?
Thanks for your question. If your client cancels a contract with you, any money deposited into escrow will be returned to them. If you need to dispute a canceled contract, you can contact our customer support team to initiate the dispute by clicking on the “Get help” menu in your contract details page.

Will the client submit feedback for this contract?
Thanks for your question. Sharing feedback is not an option with Direct Contracts.

How does this affect my Upwork activity metrics (e.g. JSS score, # of contracts, $ earnings, Top Rated status)?
Thanks for your question. Since your client and you will only be using Upwork for invoicing and payments, any Direct Contracts will not impact your Upwork reputation metrics (for example your Job Success Score or Top Rated status). These contracts also will not be included in your other Upwork profile stats, such as total earnings, number of jobs, etc.

Does this get included in my U.S. tax information that Upwork provides me at the end of the year?
Thanks for your question. In most cases U.S. freelancers—including those who earned more than $600—will not receive a Form 1099-MISC or other tax form from Upwork or their clients. However, there are three important exceptions:

• If you’re an U.S. freelancer enrolled in Upwork Payroll you’ll receive a W-2

• If you are a U.S. freelancer who receives over $20,000 and have more than 200 transactions you’ll receive a 1099-K

• You live in a U.S. state that requires a 1099-K if you reach a certain earning threshold. In these cases, we will send you the 1099-K, if required.

In addition, your client may decide to issue you a tax form if they believe they are required to do so.

How do I switch my current contracts to this option?
Thanks for reaching out. Existing contracts on Upwork cannot be changed to a Direct Contracts contract.

If needed, am I able to issue my CL a refund? If yes, is it possible to issue a partial refund vs. a full refund?
Yes, you can issue a full or partial refund.

[[[INTERNAL NOTE: At launch, the feature will not be in the product, but we should still honor these requests if they come into the CS queue.  We plan on having this feature up on the product to allow FL self-service within 2-4 weeks of launch.]]]

Is there a Messages room where I'm able to communicate with my CL?
No, however you may wish to discuss with your client the best way to communicate (email, another messaging option, etc.)

How many milestones can we add to a Direct Contract?

The limit is five milestones, and you may create a new Direct Contract if you need to add more milestones.

Additional FAQs for Hourly Contract launch

How is my payment for hourly work protected with Direct Contracts?
Thanks for your question. After you and your client agree to create a contract and set a weekly rate and time limit, we’ll estimate the weekly total and require your client to deposit that amount into Upwork’s secure escrow account.  Once your client funds the deposit, we will notify you and you can confidently begin work knowing your payment is secure. Note: Payment protection does not cover work additional hours beyond the set weekly limit or expenses.

How does Upwork calculate the security deposit and weekly charge to the client?
Thanks for your question. To start, we calculate the deposit by simply multiplying your rate against the weekly limit that has been set. For example, if your rate is $10/hr and your weekly limit is set to 40 hours, we will set the deposit as $400 (or $10/hr x 40 hours). After the first week, the weekly charge depends on how many hours were invoiced in the previous week.  

When does my client get charged each week?
Thanks for your question.  We will charge your client for the previous week each Monday.
(Internal note: 2:30pm UTC; same as marketplace hourly rules)

Can I log additional hours from what I previously defined as my weekly limit?
Thanks for your question. Yes, you may invoice more hours than what you initially set as your weekly limit. Keep in mind, however, that these hours are not protected by Upwork Payment Protection if the client declines them.

When do I get paid for my work?
Thanks for your question. Once your hours have been submitted for invoice, payment will be reflected in your Upwork balance the following Friday as long as your client doesn’t dispute the hours.
(Internal note: Same as Faster Payouts for Top Rated FLs in the marketplace)

Can you use Time Tracker with hourly Direct Contracts?
Thanks for your question. The Time Tracker feature is not an option with Direct Contracts. With hourly Direct Contracts, you and the client agree to a weekly limit on hours. Before releasing payment, the client can also review the manual hours invoice so they can reach out to the freelancer with any questions and, if needed, file a dispute.

Does my client have to manually approve my hours each week?
Thanks for your question. We automatically charge your client and process your payment each week. Your client has the option to review hours before your payment is released and can file a dispute if an issue arises.

Why am I paying freelancer fees instead of just using this and paying a 3.4% payment processing fee on all my Upwork contracts?
Thanks for your question. Direct Contracts is a separate product from the rest of the Upwork marketplace and does not include the same features as traditional accounts. As a result, it does not cost us as much to offer and maintain, and we are able to extend those savings to you. In general, charging fees is a critical part of Upwork being able to  continue to grow and bring new clients to our marketplace. With Direct Contracts, we only charge a payment processing fee because freelancers are bringing their own clients. Note: Direct Contracts cannot be used with clients who already have an account on Upwork.

In lieu of COVID-19 why aren’t you reducing/eliminating freelancer fees and only charging a  3.4% payment processing fee?

Thanks for reaching out. While we are working to help those impacted by COVID-19, we cannot eliminate freelancer fees. These fees enable us to maintain and grow Upwork so clients continue to offer the remote jobs that are especially needed right now.

Why would I use this vs. my current method?

With Direct Contracts, you and the freelancer get Upwork escrow protection in addition to the ability to easily make payments through Upwork. Freelancers feel assured because you’ve deposited the project funds into a third-party escrow partner and you don’t have to worry about paying for a project that doesn’t get completed or filing tax forms.  If during the contract you want to cancel it, you can request to cancel and get your funds returned back to you. You’ll also get dispute assistance should a problem arise.

I thought Direct Contracts included no fees for clients, but I was charged a fee. Why?

Thanks for your question. Clients do pay a payment processing fee. It’s 3% of the freelancer’s fee when you use a credit card, debit card, or PayPal. For example, if your freelancer invoices you for $100 and you pay with a credit card or PayPal, you’ll pay a $3 processing fee (3% of $100).

If you use your checking account, you’ll pay a flat $0.50 USD for each payment you make.

Do I have to create an Upwork account?
Thanks for your question. No, you will not have to create an Upwork account. Any time action is needed on your part we will send you an email and link to the webpage where you can take the needed action.

Do you store my payment information? How do you keep my payment information secure?
Yes, [provide standard security answer]

How do I view my contract?
Thanks for your question. When you accept the contract, you’ll receive an email confirmation. That email will have a link to allow you to view the contract and request cancellation in case you decide to cancel an active contract.

I accidentally deleted the link to the contract, how can I regain access?
Thanks for your question. If you can’t find another email from us with the link, we are happy to resend you an email with it. Just let us know!

How do I make changes to my contract?
Direct Contracts can be edited by the freelancer until you as a client accept the contract and fund the project. If a change in terms or scope is needed after that, please reach out to your freelancer to discuss. They can cancel the existing contract and create a new one. You also always have the ability to cancel a contract.

If I needed to file a dispute, is there a deadline for when this would need to take place?
Thanks for your question. For Direct Contracts, any dispute needs to be filed within 7 calendar days of canceling a contract.

Do I need to enter in my billing information for each contract?
No, you may select your saved payment method when you activate a contract, or you can also just add a new payment method.
For hourly contracts, you can replace the payment method while the contract is active.
For fixed-price, you can replace payment for coming milestones, but not for the funded milestones.

How do you handle the U.S. tax filings?
To learn more, click here. 

How many milestones can we add to a Direct Contract?

The limit is five milestones, and you may create a new Direct Contract if you need to add more milestones.

How does Direct Contracts arbitration work and its fees?

Fixed Price Direct Contracts do not follow the same process as marketplace contracts. Arbitration is not available for these. If the parties are unable to reach an agreement, the funds in escrow are returned to the client and we will review the FL for a possible credit.

FAQs for the DC hourly contracts and the deposit

What happens if I put more money into escrow than I end up needing for my project?
We’ve built the system so that when you close your contract, we will automatically start processing your escrow refund. You don’t have to do a thing –– just remember to close the contract. Then, the following Monday (at noon UTC) you’ll see that any leftover escrow has been returned to your billing method.

I made a deposit in order to start this Hourly Direct Contract. My freelancer billed me for their hours and I was charged again! Did the FL charge me twice?! How do I get my deposit back?

In order to start an Hourly Direct Contract, you’re required to make a deposit into escrow. This is simply a deposit that allows you to start the contract, not the actual funds that go to your freelancer. The deposit will go back to you once the job is complete and you close out the contract. 

Once the job starts, your freelancer will bill the hours they work according to the agreed terms of the job. Once you are billed for those hours (the following Monday), you’ll then have the opportunity to review the hours completed by your freelancer:

• If you don’t agree with the hours billed, you can file a dispute

• If you do agree with the hours billed, no action is needed. You’ll automatically be charged (we will use your billing method on file). 

In regards to your original deposit, once the job is complete, simply close the contract and we’ll automatically refund the escrow deposit. Please note that escrow refunds are processed once on Mondays at noon, UTC. If you close your contract after that time, your refund will be processed on the next Monday.

REACTIVE ONLY

I want to join Upwork as a client. How do I do that? How does that impact my contract with this freelancer?

Direct Contract CL to Upwork CL Flow

The DC CL simply goes to log in to Upwork > types in the email address they use for DCs > a security code gets emailed to them > enter in code > then they are brought to this screen to “upgrade” to the full Upwork experience where they will create a password & security question answer.

Agent notes: 

We have a new specific error message in the UI for Client payments rejected by our fraud management tool Forter: "The payment method you submitted could not be authorized. Please try using another one or contact Customer Support."

This exact message is not shown for any other error, so in case users report this, please advise them to try another CC. Also, please avoid using the term "Forter" as this internal-only info.

Funds and Escrow Flows

Funds Held in Escrow

• FL submits a payment request to receive funds
• CL has the following options: 
• Accept - immediately releases payment to FL
• Decline - funds remain held, FL can make changes & request payment again or file a dispute
• No Action - system will automatically release funds to FL in 14 days
• CL can cancel the contract (funds remain held)
• FL has 7 days to file a dispute
• If no dispute filed after 7 days, system automatically refunds Escrow to CL

No Funds Held in Escrow

• No option for CL to cancel contract or file a dispute

• If CL contacts us requesting a refund, we will make a basic attempt to get information from the FL on the client’s claim. We cannot force a refund

Client-initiated Direct Contracts allow FLs to post URLs to their personal networks/sites so that CLs can send them a Direct Contract proposal/invite.

User experience:

1. New icon that allows FL to get URL/post invite on social media

2. Modal opens with URL/post buttons

3. If prospective CL clicks on URL/button, they will be redirected to a landing page

4. They will then go through a 3-step process, submitting details re: their proposal (proposal detail, budget, and review). They can allow the FL to decide the budget later if the CL is unsure of the cost of the project. Changes to contract details can also be made later by the FL, which the CL will have a chance to review

5. FL will receive an email regarding the proposal, or they can manage it directly via their contract list

6. FL can either create the contract or decline the proposal

7. If the FL decides to create a contract, they will go through the normal create flow with the information the CL submitted already pre-filled (e.g., contract title, description, amount, etc)

Clients can issue a bonus payment on hourly contracts. With fixed-price contracts, the freelancer has to create a new milestone or contract. After the client pays a bonus, he is charged immediately, and on success of the charge, funds are immediately sent to the freelancer.

How issue bonus on a Direct Contract:

Direct Contracts with Freelancers

Direct Contracts with Clients

Direct Contracts CS Training Deck

How to Create and Manage a Direct Contract (for freelancers)

How to Accept and Fund a Direct Contract (for clients)

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