If you run a business and hire employees, please read on...
We’ve gotten calls asking if a newly hired employee can be paid outside of payroll until the employer thinks the job will work out.
The answer is no!
Employee status is not based on the amount of hours an employee works. It's based on the employment relationship.
Just because someone is new or only works part time doesn't allow that individual to be paid as a non employee.
There are lots of rules about employment status, but the top ones are:
EXPERIENCE LEVEL AND INDEPENDENCE:
You hire an independent contractor for their skills. No training is required.
An employee is usually provided training and works under your or your manager's supervision.
WORK SCHEDULE:
An independent contractor decides when and where to do work for you.
An employee usually has set hours and works a regular schedule.
A common myth is that a newly hired individual can be paid outside of payroll until that person and the supervisor see how it goes and if it works out. That’s just not true. Employee status is determined on day 1: even if that person only works a few hours in that first shift and then is let go, that person was an employee for that shift and should have been paid through the payroll service, subject to payroll tax withholding.
Hope this helps. If you have questions, feel free to reach out to our team.