This is incorrect. These companies do not simply set up contracts between companies and walk away and they aren't necessarily project based (especially for Upwork and Toptal). Nor are the contracts necessarily short term (some go on for years). These companies collect payments on behalf of the freelancers that work underneath them and some take an undisclosed percentage or added cut on top. I'm a member of Upwork, Toptal and Gigster, so I'm basing this off my actual experience.
Reviewing AB5's ABC test, I see nothing that prevents these companies from failing at least one if not all the provisions (you need to be compliant in all 3):
1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact
2. the worker performs work that is outside the usual course of the hiring entity's business
3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity
> Also many freelancers already have LLCs or business so this is business level contracting corp to corp on these sites.
This is not necessarily the case. I definitely didn't have an LLC when I started freelancing. It costs $800/year in California and doesn't offer much benefit to a freelancer.
Edit: It looks like in the case of Upwork, they're using the "professional services" exemption from AB5 and offering to W2 workers like a staffing agency:
> And if you look at the text of the law there's various mentions about -- around professional services being excluded. So that's one component of it. The second component of it is the fact that we actually also are payrolling services. So we would -- we call it freelancing but some of the work in Upwork is under a 1099 some of the work on Upwork is done through a W-2. Through our product offering we have called Upwork Payroll.
https://www.fool.com/earnings/call-transcripts/2019/11/07/up...