Change employment type—employee to contractor, contractor to employee

Teammates with more than one Gusto account can switch between profiles, as long as they use the same personal email for all profiles.

If someone is paid as both an employee and a contractor in the same year, they’ll need a W-2 for employee payments and a 1099 for contractor payments. Make sure their payments are recorded under the correct profile in Gusto.

Use the dropdowns below to learn more. Use CMD + F or CTRL + F to find words in the article.

Change a US employee to a US contractor
  1. Dismiss the US employee profile in Gusto.
    • They'll be removed from future payroll in Gusto, and;
    • After their dismissal date, they'll be considered inactive—you're only charged for months an employee was active (even if partially).
      • Heads up: Because we bill in arrears (for the month prior), you'll typically still see an employee-charge on the invoice that comes immediately after someone is dismissed.  
  2. Add the person as a US contractor. 
    • You're only charged the monthly per-contractor price ($6, or $12 based on plan type) in the months you pay the contractor. 
Change a US contractor to an employee (US or global)

Heads up: Offer letters and background checks cannot be sent if you're using the steps below to change employment type. If you need to send either, fully dismiss the contractor, and add them as an employee.

  1. Go to People and select Team members.
  2. Find the US contractor, and click their name to view their profile.
  3. From the Work tab, find the “Work” section and click Edit.
  4. In the gray box, click change worker type of country.
  5. Under “Worker type” select Employee.
  6. Confirm, or change the country.
  7. Confirm or re-enter their personal email.
    • This is the email address that will be used to sign in to Gusto and receive personal info.
    • The email address cannot be the same as another employee's email.
  8. Click Save and continue.
  9. Enter new work information, like:
    • Where they'll work from
    • Work state
    • Job title
    • Department
    • Manager
  10. Enter the contractor end date, and start day as an employee for your company.
  11. Click Save and continue.
  12. Skip to Step 8 (add compensation details) in these instructions to complete the rest of the onboarding.

Error message help

If you see an error saying 'the SSN already exists,' check if there’s another employee profile with the same SSN as the person you're trying to add.