This is fucked up but not because of a Government regulation which has good intentions and not because of Upwork who is trying to reduce its client's co-employment risk. All freelancers come across this situation over time and all are amazed but it is very reasonable.

The labor laws in place are to safeguard companies from using employees in a fulltime manner but treating them as freelancers so they dont pay the 10% employer tax, or sick leave or vacation or minimum wage or overtime. Once you start hitting over 30 hrs/week, and for more than 3 months workign for the same company- you are hitting the red warning flags that either the IRS is going to start asking questions about why they're not getting the employer tax, if th freelancer claims unemployment they are going to look for the last employer. and the freelancer might himself decide to sue the client claiming he was misclassifed as a contractor.

In this case all he has to do is enroll in the payroll service, pay a little more in taxes and reduce the co-employment risk to his client in exchange for more regular work. If not diversify your client base.