backport of commit 4b159416ff

backend/remote/backend.go

@@ -888,6 +888,13 @@ func (b *Remote) VerifyWorkspaceTerraformVersion(workspaceName string) tfdiags.D
 
 	workspace, err := b.getRemoteWorkspace(context.Background(), workspaceName)
 	if err != nil {
+		// If the workspace doesn't exist, there can be no compatibility
+		// problem, so we can return. This is most likely to happen when
+		// migrating state from a local backend to a new workspace.
+		if err == tfe.ErrResourceNotFound {
+			return nil
+		}
+
 		diags = diags.Append(tfdiags.Sourceless(
 			tfdiags.Error,
 			"Error looking up workspace",

backend/remote/backend_test.go

@@ -629,8 +629,15 @@ func TestRemote_VerifyWorkspaceTerraformVersion_workspaceErrors(t *testing.T) {
 	defer bCleanup()
 
 	// Attempting to check the version against a workspace which doesn't exist
-	// should fail
+	// should result in no errors
 	diags := b.VerifyWorkspaceTerraformVersion("invalid-workspace")
+	if len(diags) != 0 {
+		t.Fatalf("unexpected error: %s", diags.Err())
+	}
+
+	// Use a special workspace ID to trigger a 500 error, which should result
+	// in a failed check
+	diags = b.VerifyWorkspaceTerraformVersion("network-error")
 	if len(diags) != 1 {
 		t.Fatal("expected diag, but none returned")
 	}