Classify and compensate employees with the ease of Upwork.
Find out how Upwork Payroll can help your business!
Manage and pay W-2 employees via Upwork
Classify workers in compliance with IRS regulations and other applicable laws. Comply with ACA requirements.
Without increasing overall costs!
Staff augmentation is better through Upwork
Upwork is the premier place to hire, work with and pay freelancers online. With Upwork Payroll, we now support W-2 classified workers as well:
- Engage and payroll talent anywhere in the US
- Free yourself from the inconvenience (and risk) of payroll and benefits administration
- Increased compliance with federal and state classification laws
Businesses that bring their workers to Upwork Payroll save time and money by leveraging Upwork’s staffing partnerships and integrated billing functions. Clients typically achieve a 20% to 40% reduction in costs over traditional staffing agencies. With Upwork Payroll, you retain the advantages of payrolling workers through a third-party vendor, while gaining the benefits of working through Upwork--increased productivity and collaboration.
Staffing agencies traditionally charge 26%+ of your costs to cover fees, payroll and taxes. Compare that to Upwork Payroll, where only 21% is spent on those charges and 79% goes to the employee. Payment processing fees may apply.*
Assume that an employee earns $20 per hour:
|You pay||$27 /hr||$25.32 /hr|
|Taxes and fees||$7 (26%)||$5.32 (21%)|
* Payments on Upwork are subject to an additional 2.75% or $25/month payment processing fee.
Find out how Upwork Payroll
can help your business!
IRS, ACA (Affordable Care Act), Sick Leave & other regulatory compliance
With Upwork's staffing agency as the employer, you:
- Reduce or eliminate the risk of fines, penalties and interest accrual due to misclassification of contract workers and failure to offer affordable, minimum-value health care plans to eligible employees
- Reduce the risk of legal disputes and negative publicity due to mishandling of worker classification and benefits provisioning
- Reduce administrative burden and risk since the Staffing Provider offers, tracks, and pays employees legally-required sick leave
Manage ACA (affordable care act) enrollment and administration
Are you baffled by the federal requirements and responsibilities to provide health care? For workers enrolled in Upwork Payroll, Upwork’s Staffing Provider (which employs the workers) will manage ACA enrollment and administration on your behalf. This includes:
- Providing one or more affordable, minimum-value healthcare plans to eligible employees, in full compliance with ACA
- Monitoring employee eligibility, notifying qualified employees of enrollment options, and collecting the employees’ contribution to monthly premiums
- Contributing the employer’s contribution to monthly premiums (employer’s contribution to be billed at-cost to Upwork Payroll clients)
Existing Upwork client? Get more value for the same cost
We designed Upwork Payroll so that transitioning work to a W-2 employee costs you nothing--and impacts the workers minimally--while providing them with the convenience of payroll tax withholding, W-2 tax reporting, and access to legally required healthcare plans and sick leave.
You will need to determine the worker classification based on the applicable law—which varies based on where you and the worker are and what laws apply to you and the worker. A starting point for U.S. workers is the following chart, which lays out some of the basic differences between employees and independent contractors:
Independent Contractor vs. Employee
*General factors for U.S. workers, which can vary based on engagement details, location, and applicable laws
Contracted for specific project or time period
Decides when and where to work
Determines how to do work, process steps, and what tools are utilized
Does not need or receive skills training
Does not attend frequent meetings or give regular reports
Performs work requiring specialized skills that is not the client’s primary service
Negotiates and sets own rates, including fixed price amounts
Provides own tools and equipment, is responsible for own costs and expenses, and bears risk of loss
Markets services to public on Upwork or otherwise and works with multiple clients
May delegate tasks to others
Works on ongoing basis and may be terminated at will
Has required work schedule and location
Is told how to perform work, in what order, and particular tools to use
May be trained and instructed
May attend frequent meetings and give regular reports
May perform work that is a business’ primary service
Paid hourly wage or salary governed by minimum wage and overtime laws
Reimbursed for all expenses needed for work
May work full-time and exclusively
Must personally perform their work
The IRS guidelines (located here) are also a good resource, as will be federal, state, and local agencies that are responsible for employees, like the U.S. Department of Labor or the New York State Department of Labor.
Please review and discuss your workers’ classification status with them to ensure proper classification and prevent confusion.
The cost of hiring a worker through Upwork Payroll is less than what you would typically pay a staffing agency. 21% of the rate you pay is divided for fees (10% Upwork + 11% payrolling costs), and the employee receives the remaining 79%. This does not include any payment processing fees that may apply. The payrolling costs are comparable to what the employee would pay in self-employment taxes as an independent contractor, so the net after-tax impact to the employee is negligible in most cases.
What additional costs are associated with ACA compliance (the “employer mandate”), and how will those costs be billed?
Additional expenses corresponding to the employer’s contribution to health care premiums will be assessed only for those employees who meet eligibility requirements and elect to enroll in provided health care plan(s). Clients will receive a monthly invoice via the Upwork platform for any employer health plan contributions that are passed on to you, and Upwork fees will not apply to these contributions. Complete information regarding the health plan(s) offered to eligible employees and the employer contribution costs that will be passed on to you will be provided to prospective Upwork Payroll clients prior to finalization of service contracts.
With Upwork payroll, you receive the payroll and IRS/ACA compliance benefits of working with a staffing firm, combined with the productivity and accountability of Upwork’s high-visibility communication tools. Upwork Payroll does not find, recommend, or manage the workers as some staffing firms do. You find and select your own workers and invite them to join the Upwork Payroll program, where you work with them directly.
Every freelancer on Upwork has a profile that, in addition to work history, generally includes identity verification, feedback from past clients, skills test scores and portfolio. Clients can review this information and conduct interviews before inviting the worker to onboard as an employee of Upwork’s partner Staffing Provider. Upwork Payroll does not provide additional vetting. However, a background check may be conducted by the Staffing Provider upon request.
Yes! In addition to finding top talent on our global marketplace, you can also bring your own workers to Upwork. If you are transitioning a large team to the Upwork platform simultaneously, we are happy to help with the logistics. The entire implementation typically takes less than a week.
To use Upwork Payroll for any job, you must sign up and receive verification that employment for each specific worker has started before work begins. Contact us, and we will call you to discuss the program and get you started.