Overview

Classifying a worker correctly as an employee or contractor controls how payroll, overtime, and taxes are handled for that individual. By default, every new worker is treated as an employee, and overtime rules are automatically applied based on the relevant work state.

Navigation

• Go to the Workers/HR area.

• Search for the worker by name or ID.

• Open the worker’s profile.

• Click the Payroll tab (or payroll settings section).

Key Features

• Default worker type is Employee, which uses standard employee pay and overtime rules.

• Contractor classification disables system-calculated overtime and uses contractor-specific terms.

• Overtime rules for employees are automatically determined by work state, including remote scenarios.

• Worker type is stored in one classification field for clean reporting and compliance.

Use case: Set or change classification and overtime behavior

Steps

1. Open the worker profile

   • Go to Workers/HR, search by name or ID, and open the worker’s profile.

2. Go to the Payroll tab

   • Click the Payroll tab or payroll-related section to view worker-specific payroll settings.

3. Review current worker classification

   • Find the Worker Type / Classification field.

   • If no changes were made previously, the type should be set to Employee by default.

4. Set as Employee (default)

   • Select Employee if the worker should be treated under standard employee rules.

   • As an employee, overtime rules are automatically calculated based on the work state on the job.

   • Click Save to apply the update.

5. Set as Contractor (when applicable)

   • Select Contractor if the worker should be paid under contractor terms.

   • Once set as contractor, the system stops automatically calculating overtime and premium pay for that worker.

   • Any overtime or premium compensation for contractors must be handled according to your internal policies.

   • Click Save to apply the update.

6. Understand how overtime rules are applied for employees

   • If the job has a work state specified (for example, the physical work location), the system uses that state’s overtime rules for employees.

   • If the job is remote and does not list a work state, the system uses the worker’s primary work state address to determine which state’s overtime rules apply.

   • This logic ensures overtime is calculated consistently for employees, whether on-site or remote.

   • For workers classified as contractors, this overtime calculation logic does not apply; overtime is not auto-calculated.

FAQ

• What is the default worker type?
  The default classification is Employee, which uses standard employee pay and applicable overtime rules.

• Does changing a worker to Contractor affect past payroll?
  No. It affects payroll behavior going forward; existing historical records remain as originally calculated.

• Can I switch a worker back from Contractor to Employee?
  Yes. Open the worker profile, change the classification back to Employee, and save. Overtime will then be calculated according to the job’s work state or the worker’s primary work state if the job is remote.

• How are overtime rules determined for remote employees?
  For remote jobs where the job’s work state is not set, the system uses the worker’s primary work state address to determine which overtime rules apply.

Pro-Tip

Before changing a worker from Employee to Contractor (or back), confirm with HR, legal, and finance stakeholders to avoid misclassification and potential tax or compliance issues. Always verify that the job’s work state (or the worker’s primary work state for remote jobs) is accurate so overtime is calculated correctly for employees.