You know that here at All Freelance Writing we’re incredibly picky about what we will and won’t promote. For example, we won’t sell out to content mills that exploit writers, and we won’t send you to job leads at marketplaces we consider shady.
Speaking of freelance marketplaces, there was actually only one we were willing to openly support — Elance. I’m sad to say that’s no longer the case. In fact, I strongly recommend against using the site due to a recent feature they launched — the only way these sites are going to start respecting the rights of independent contractors is if you vote with your feet and leave or stop supporting them as we’re doing here. (However, that’s just my opinion. I’m not calling for an Elance boycott or anything that severe, although it would be nice to see more freelancers stand up and make themselves heard on these issues in other ways.)
What did Elance do that has them on my shit list? Well, they did something much like Odesk — they now provide a tool that enables clients to act in a Big Brother capacity, potentially crossing the line between client and employer without taking on the responsibilities that come with that (no friends, those costs and responsibilities still rest on your shoulders).
Here’s the gist:
Elance has launched a feature called Work View. As Elance themselves put it “clients can view the work as it progresses and provide timely input and guidance.” What does that really mean? It means clients get to view a stream of your work as it’s completed — they know when you’re working, whether you’re there at your computer or not working on their project, etc. by feeding them screenshots. Yes, screenshots are taken from your private machine and fed to clients.
The Pathetic Attempt at Logic
Why would Elance do this? They’re doing it under the guise of wanting to help both freelancers and clients. As with Odesk, I’ll say that might very well be their intention. I doubt there was any malice… just poor decision-making. The idea is that feeding screenshots guarantees hours for buyers, and if you agree to the intrusive oversight they’ll guarantee the payment for hours you were proven to have worked.
What’s the problem with this?
The tool enables clients to cross a line. When someone chooses to hire independent contractors they have to give up certain rights — like overbearing control over the worker. In exchange they save money. They don’t have to pay half of your Medicare and Social Security taxes, worker’s compensation insurance, overhead costs, or benefits for example.
On the other hand, what you get as a freelancer is freedom. You control when, where, and how you work. The client doesn’t get to monitor how a job is done — they get to evaluate you based on the end result. For that freedom you also make sacrifices. You take on increased taxes. You have to cover all of your own benefits (you don’t get paid vacation or sick time, health insurance paid partially by an employer, employer contributions to a 401k, etc.). You take on the overhead costs of your job in most cases (with freelance writers that means you’re buying your own computer, office supplies, and maybe renting an office or giving up an area of your home to dedicate it to work).
When clients cross the line in too many factors based on IRS guidelines, they become an employer instead (and having a contract stating otherwise is not enough to change that). If you choose to work in that relationship, you do so knowing the client will have more control as an employer and that they’ll also take on more of that financial burden.
This tool, like Odesk’s, allows clients to cross quite a few of these lines without taking on the financial burdens they would be required to as employers.
How this Tool Crosses a Line
Below is a list of factors that are considered when determining your legal status as an employee or independent contractor (and your resulting financial obligations and freedom or lack thereof). I’m also going to share how this tool might enable buyers of your freelance writing services to cross the line from client to employer. These are based on the common law rules laid out by the IRS — factors that determine your level of independence versus employer-like control over your work. [source]
- Can the buyer determine when and where you complete your work? If so, they lean towards employer status. — Being able to monitor your computer activities means a client has the ability to determine when you work (for example, they might insist that you work during specific hours which they can verify by monitoring you, even if the work could be done just as well at another time). It also means they can dictate where you work (in front of your computer where they can watch your progress — if you normally do your brainstorming or outlining by hand somewhere other than in front of the computer for example, you’ll be shit out of luck).
- Can the buyer dictate what tools and equipment you have to use in completing your work? If so, again they lean towards employer status. — Clients have the ability to require the use of this tool. If you don’t agree to the invasive oversight, they can opt to automatically rule you out for a gig. That is a case of requiring a specific tool (and an unnecessary one) to be used by workers.
- Can the buyer determine what subcontractors you’re allowed to hire, or can they insist that all work be done by you personally? Yet again, it leans towards employer status. — And also yet again, this tool gives buyers the potential to exercise that kind of control if they require that the work be done on your machine which is being monitored. Generally as a freelancer you’re allowed to subcontract your work if you so please, and the end client doesn’t have to be consulted about that beforehand as long as you deliver the promised work by your deadline.
- Can the buyer dictate where you have to buy certain products or services in order to do your job? If so, it also leans towards them being an employer and not a client. — This one doesn’t necessarily apply as directly since you aren’t paying for the service as far as I can tell.
- Can the buyer tell you what order you have to complete your work-related tasks in? Again, if so it leans towards employer status. I would argue that being able to monitor your progress in this way gives them the right to dictate sequence — something they couldn’t do if they weren’t essentially looking over your shoulder up to five times per hour (how often the screen shots are taken). It allows them to monitor whether you’re working exclusively on their project or sharing time between several projects for example — as a freelancer it’s your right to do that if you want to as long as you meet your contracted deadlines for each project. Monitoring services put clients in a position where they can demand you stop and focus exclusively on their work instead of fully controlling your schedule. And that’s key… they can. It doesn’t even matter if they do. According to the IRS, “The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work…. The key consideration is whether the business has retained the right to control the details of a worker’s performance or instead has given up that right.” So as long as that right exists, you lean towards employee status.
- How much instruction or training is given to the worker? The more instruction or more detailed the training, the more likely it is the buyer falls under employer status. — This is another one that’s less clear cut though. The IRS acknowledges that sometimes companies aren’t in a position to instruct the worker (for example, when they hire someone with extremely specialized knowledge that they don’t have themselves). So a lack of strict instruction alone doesn’t mean you automatically have independent contractor status. Does this tool affect the level of instruction? I’d argue that it offers that right or opportunity to the buyer whether they choose to exercise it or not… by viewing work in progress instead of the finished project, they naturally are able to step in with increased instructions during the process.
- How does the buyer evaluate the work? If work is evaluated based on how it’s done (during the work process), that leans towards employer status. — As a freelancer you’re contracted for end results. That’s generally what a client is able to evaluate your work based on. They generally do not evaluate your work throughout the process before that work is completed.
- Does the worker make a significant investment or do they have a lot of unreimbursed expenses? If so, there’s a better chance they fall under independent contractor status. — However, not all businesses require a significant investment (like freelance writing) so that alone doesn’t assure your status as an independent contractor. The tool doesn’t directly impact this one point, but I’m including it so you have a better overview of the entire determination process of employee vs independent contractors. Contractors also aren’t generally reimbursed for expenses to the same degree as employees, but unless your buyer is reimbursing fees you might pay to the freelance marketplace, this shouldn’t be a problem for you.
- Does the worker have the ability both to earn a profit and suffer a loss? If you don’t have profit and loss potential, you’re more likely to be classified as an employee. — This is another big issue with these freelance marketplaces stepping in with “guaranteed payments.” They’re directly interfering with this issue by taking away a worker’s ability to suffer a loss. Losses are a reality of business. Yes, it might sound appealing on the surface to have payments guaranteed. But newsflash: that’s what contracts are for. If you aren’t taking a financial risk, it might play a role in you giving up your status as an independent contractor. Personally, I find this kind of meddling incredibly insulting to freelancers — as though marketplaces are saying you’re not capable of running your business so they’ll take you under their wing if you agree to what I would consider inappropriate observation of your work in exchange. At the same time, they affect your profit potential. Hourly rates freelancing are not always based on 60 minutes. Hourly rates are quoted very often based on an expected turnaround time. If you happen to do an outstanding job and finish the work more quickly, you’re not paid less for being good at what you do. On the other hand, if you occasionally misjudge a time estimate and it takes you longer to finish a project, then the client isn’t billed for additional hours at your hourly rate. You eat that cost. That is what profit and loss with hourly contracting is all about folks.
- Are the worker’s services available to other buyers within the market? — Again, the tool doesn’t directly impact this factor, but I want you to have the full picture. Unless a client insists that you can’t offer services to others, you should be okay on this front. Of course, if you’re not sending full sets of screenshots (you can delete some if they’re irrelevant to the client’s project, but then the time isn’t guaranteed for that 12 minute increment) the client might very well start insisting that you take time away from other tasks that aren’t directly going to their project — something they might be less likely to do if they weren’t monitoring you. Again, it comes down to their rights… not what they necessarily choose to do.
- How is the worker paid by a buyer? Clearly if they’re paid a typical salary, that would fall towards employee status and if they bill per project it would lean towards independent contractor status. What about hourly pay? — Interestingly, the IRS notes that hourly pay in many cases leans towards an employer / employee relationship. That said, there’s also an acknowledgment that some contractors do tend to bill hourly (lawyers and other types of consultants for example). Here’s the concern I have on this one though. Elance (in response to me on Twitter yesterday) put a real emphasis on the fact that this tool is only used regarding hourly pay (as though that made it okay). So let’s be clear. We’re talking about hourly pay, guaranteed pay, and a set weekly pay schedule. Hmmm. That sure seems to lean towards a traditional hourly employee pay model, doesn’t it? It does sound that way to me, and in my opinion that’s a huge strike against this tool. Generally an independent contractor does their own billing on their own schedule and they retain the right to set their own payment terms.
- What kind of relationship do the buyer and worker have? Here are a few other factors related to working relationships that might influence employer or client status in a buyer. — First, the type of contract can play a role. As I mentioned earlier though the actual behavior has more weight than a contract in determining your status as a worker — in other words, an employer can’t force you to sign a contract stating you’ll work as an IC and pay all the taxes and expenses yourself just so they can save money, but then proceed to treat you as an employee. Whether or not the buyer provides benefits also plays a role. If they do, they lean towards employer status. If it’s expected to be a permanent ongoing relationship, that can also lean towards employer status, as can the level of importance of the work to the buyer’s business. If the work plays a key role in the business’ success or failure, then it’s a fair assumption that the buyer will retain the right to exercise more control over the worker and the work.
Whew! I know that’s a lot to digest. If you missed the link earlier, you should read this article from the IRS directly to get a more general overview.
Respect Your Rights
I sincerely hope that freelancers will start respecting their rights as self-employed individuals instead of rolling over every time a company makes warm and fuzzy promises of things like supposedly group insurance or guaranteed pay (not just talking about Elance here).
Elance’s argument to me was that this tool is completely optional. It’s not. If a buyer has the right to discriminate against a service provider because they choose not to accept the terms of this Work View service, then that is not completely optional. Remember, even signing a contract saying you’re an IC while being treated as an employee does not supercede the determination based on the actual working relationship. Opting into this would therefore logically be no different. (And if someone wants to claim it is, please explain because it must be beyond me.) Is Elance directly hurting your independent contractor status? No. But they’re putting a tool in the hands of buyers who may or may not know any better — a tool that allows the buyer to cross that line on the majority of fronts listed above.
What can you do if a client forces you to make too many concessions? Do you just have to sit back and take it, paying more taxes, covering your own benefits, and still giving up control in your own business? No. If you feel that an individual client was really an employer (who should have been covering these costs), you can fill out IRS form SS-8 and let the IRS make an official determination for you based on the unique facts in your case. But please… don’t make the situation worse for freelancers all across the country by essentially telling buyers it’s okay to impose on freelance professionals. If you tell them it’s okay with you, they’ll think it’s okay with the rest of us as well. It’s not. And I hope you have more self-respect than that. If you want guaranteed pay and someone looking over your shoulder while you work, you already have an option for that — become an employee instead.
What do you think of tools like Elance’s Work View service or the similar service from Odesk? Share your thoughts in the comments. My thoughts? I’m incredibly sad to see Elance disregard contractors in this way even if they’re doing so with honorable intentions. And until this tool is killed we unfortunately cannot support them within the freelance writing community.
Disclaimer: I am not a lawyer and this article is not meant to serve as legal advice. Employment law varies based on location. The information cited here is in reference to work completed by U.S. based workers. Please consult an employment attorney if you have questions about your specific situation.