Classify workers in line with the IRS, meet ACA requirements, and stay on the right side of key employment laws – without increasing your overall costs.
With Upwork Payroll you can be confident you’re complying with federal and state classification laws – wherever your talent is based.
We’ve engineered smart billing functions to save you precious time and money – up to 40% of the cost of traditional staffing agencies. With Upwork Payroll you keep all the advantages of outsourcing your payroll. And add even more talent and collaboration to the mix.
With Upwork Payroll, 77% of the money goes to the employee and only 23% goes towards fees, payroll, and taxes. Compare that to staffing agencies, which traditionally charge at least 26% of your costs to cover overheads.*
* We’ve based this on an employee earning $20 per hour. Payment processing fees might apply.
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:
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:
*General factors for U.S. workers, which can vary based on engagement details, location, and applicable laws
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. 23% of the rate you pay is divided for fees (10% Upwork + 13% payrolling costs), and the employee receives the remaining 77%. 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.
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 independent professional 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.