Moving off of Upwork with a Contractor

Pardon the brief interruption in my series on building distributed teams. I’ve been battling the flu this week and am just now emerging from the fog. Distributed Teams will resume in my next post.

I got this question from a reader and, since it is relatively simple to answer, I’m tackling it while I get back to normal.

The question is:

“I have a contractor that I really like who I found on Upwork (or some other site). We want to keep working together but they want to move off of Upwork and start getting paid directly.  What should I do?”

There are several factors to consider when making the right next move.

  • Is the contractor based in your home country?
  • What are the different ways you can send money?
  • Are there any restrictions on how much you can send in a year without raising alarms with the respective tax authorities?

Normally the reason a contractor wants to move off of Upwork is that the platform is taking a cut of their pay, and they want it all for themselves. Nothing wrong with that. The problem is that for that cut that Upwork is taking, they are relieving you, the employer, of a bunch of hassle: Distribution of funds, legal and intellectual property agreements, dispute resolution and so on.

All of that stuff is worth less to the contractor than it is to you. In order to move away from the platform, you need to be prepared to:

  • Have your own IP agreements with the individual and ensure that they are signed, keeping in mind that if you are working with someone outside your legal jurisdiction they may not matter anyway
  • Wire or otherwise transfer money in some less convenient fashion
  • Get through a dispute with your contractor without anyone else’s help, making sure they can’t torch your code or otherwise hold you hostage

Let’s say you’re paying your contractor $25 an hour, and that Upwork is taking $5. Do you really want to take on all of that burden for $5 an hour? The answer may be yes, because you’re going to pay this person a lot of money over the next year. If so, you should make the move. However, if you like the convenience and are unsure about managing the relationship directly, you can simply propose to bump the pay of the contractor to cover the fees. In our example, you start paying $35 instead of $30 and they net out around $30. Problem solved.

It goes without saying that just because you move off of a platform like Upwork doesn’t mean that the contractor automatically gets all of the fees. You’re incurring new burdens, so you can feel justified in negotiating a rate that is equitable for all but that accounts for the fact that you’ll have to trudge down to Western Union or your bank every 2 weeks to send money.

Hiring directly off of Upwork and similar platforms is done every day. Make sure you understand fully what it means to take on the burden before doing so. Before I started paying direct, I had long conversations with my legal and financial counsel about all of the possible issues that might come into play.