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Convert from contractor to employee in 24-hours

Ensure legal compliance with foreign labor laws, avoid risk of contractor misclassification, and correctly classify talent across 180+ countries with Horizons. 

Convert Contractors

Why should you convert from contractor to employee?

Hiring contractors may lead to misclassification risks. By engaging contractors for continuous time periods you face financial liabilities, including penalties, unpaid taxes, legal fines and reputational damage. 

Contractors are not entitled to perks and benefits. To provide a contractor with perks like health insurance, retirement savings options, and paid time off, you must first turn that contractor into an employee.

Calculate Your Worker Misclassification Risk

Why do businesses convert contractors to employees?

Builds Profitability

A contractor who consistently clocks a certain number of hours signals efficiency. This translates into cost-effectiveness when they become an employee

Mitigates Risks

Converting from independent contractor to employee mitigates risks associated with misclassification and labor law compliance

Retains Expert Talent

As a contractor’s tasks expand, they accumulate specialised knowledge. Transitioning them to a full-time position ensures you retain their expertise

Convert your contractor to employee in 24-hours with Horizons

Why should you choose an EOR to convert contractors to employees?

01.

Lesser Administrative Burden

By entrusting an EOR to manage employment-related operations such as payroll, tax compliance, and benefits administration, you can significantly reduce administrative workload

02.

100% Compliance Assurance

EORs have expertise in navigating the complexities of different labor laws. They ensure that the contractor to employee conversion is legally compliant, mitigating the risk of misclassification and associated penalties

03.

Streamlined HR Processes

EORs handle all administrative tasks related to employment, such as payroll, tax withholding, and benefits administration, making the transition smooth and hassle-free for both the employer and the contractor

04.

Quick and Seamless Onboarding

EORs can expedite the onboarding process, reducing the time it takes to convert from contractor into a full-time employee, and enabling them to contribute to the company’s objectives more quickly

05.

Better Benefits Administration

EORs like Horizons provide access to benefits like health insurance, social security, and paid time off, making the transition more attractive to the contractor

Calculate the misclassification risk
of your worker

Assess the risk of wrongly classifying an employee as a contractor and avoid penalties for your business.

Where does the worker live?
Do the workers have the autonomy to determine their own work schedules and methods, without being bound by attendance regulations?

Horizons Tip

For maintaining a contractor's independent status, it's crucial that they keep the freedom to decide when, where, and how they execute their tasks, provided they achieve the deliverables in the contract. Overly detailed oversight and exerting control can risk the perception of misclassification. Prioritizing a contractor's independence in their work approach is key to ensuring they remain classified as such.

Does the contractor have elements, like a company email, that blend them into your organizational structure?

Horizons Tip

Contractors ideally should maintain a distinct identity from company employees. Blurring the lines by integrating them too closely, such as giving them a company email, may increase misclassification risks. It's vital to ensure contractors retain autonomy in their work while fulfilling contract terms, avoiding over-management or excessively close monitoring that could jeopardize their independent status.

Can the contractor engage with other businesses or clients while working with the company?

Horizons Tip

Restricting a contractor's ability to work with other clients might be indicative of an employee-like relationship with them. The more freedom and flexibility a contractor possesses in deciding their work arrangements and client engagements, the less they resemble traditional employees. A 'yes' implies they're free to take on other projects or clients, while a 'no' suggests they're exclusively committed to your organization during the tenure of their service.

Who is responsible for supplying the necessary tools and bearing the expenses for delivering the services?

Horizons Tip

When a contractor invests in and utilizes their own tools and covers their operational costs, it further establishes their independence. On the contrary, if the company provides all necessary equipment and bears regular costs, it might lean towards an employer-employee dynamic, potentially raising misclassification concerns.

Does the company provide training to the contractor?

Horizons Tip

Offering training to contractors can blur the lines between them and regular employees. Independent contractors typically come on board with their expertise, and training them might hint at a deeper integration with the company. It's essential to maintain clarity to ensure their independent status isn't compromised.

Is the contractor receiving the same perks and benefits as your regular employees?

Horizons Tip

Extending employee-like benefits such as health insurance, retirement plans, stock options, and allowances to contractors can blur the boundary between them and salaried employees. While benefits can be an enticing offer, it's essential to differentiate between contractors and employees to avoid potential misclassification. Ensure that the benefits provided align with the contractor's independent status.

For how long do you anticipate the contractor's services?

Horizons Tip

Engaging a contractor indefinitely might resemble a permanent employment arrangement. Generally, contractors are hired for specific tasks or projects with clear timelines. Ensuring there's a defined duration or project scope can help in differentiating between employees and contractors and reduce the risk of misclassification.

How do you decide the contractor's payment?

Horizons Tip

The manner in which a contractor is compensated can be indicative of their working relationship with the organization. Fixed monthly fees can resemble salaried employees, while variable remuneration or milestonebased payments often underline the contractor's independence and project-centric approach. It's vital to align the payment method with the nature of the contractor's engagement to avoid potential classification issues.

How many hours a week is the contractor expected to commit to your company's tasks?

Horizons Tip

Contractors dedicating extensive hours regularly, especially resembling full-time commitments, might be viewed more as employees than independent entities. It's crucial to evaluate the hours dedicated to ensure that the contractor's status aligns with their actual working pattern and doesn't inadvertently lean towards a traditional employee role.

Frequently asked questions

Full-time employees require direction and supervision from their employers around performing their tasks. They work on a long-term basis and are dependent on their employer for direction, scheduling and performance. The employer is responsible for supervising and monitoring their work and performance, as well as reporting, paying payroll and managing taxes on their behalf.

Independent contractors operate as a separate business entity. They usually invoice for their services and work on a project-by-project basis or a short-term contract. They also provide their own equipment and supplies and are responsible for paying their own taxes, including local, state, federal, social security, and health insurance.
Converting a contractor to an employee involves legal considerations like reviewing and updating the employment contract, ensuring compliance with labor laws, and communicating the change transparently to the contractor.

If you don’t convert your contractor to a full-time employee when required by labor laws or contractual obligations, you may face legal consequences, including potential fines or penalties for misclassification. Additionally, your contractor may file a complaint or lawsuit for employment rights and benefits they believe they are entitled to as an employee, such as overtime pay or benefits. It’s essential to adhere to applicable laws and contracts to avoid these potential issues.

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