Employment Type Change After Payroll Run
This article explains the limitation around changing an employee’s employment type after payroll has been processed and provides guidance on how to proceed.
Overview
Once payroll is processed for an employee, Zenoti locks their employment type to ensure compliant tax reporting and accurate historical payroll records. If a business needs to move an employee from W-2 to 1099, or from 1099 to W-2, they must create a new employee profile for future payroll runs.
Employment type restriction
Once payroll has been processed for an employee, their employment type becomes permanent for that profile. This means you cannot switch an employee from W-2 (regular employee) to 1099 (contractor), or from 1099 (contractor) to W-2 (regular employee) after they have been included in a payroll run.
If the employee’s classification must change, you must create a new employee profile in Zenoti with the correct employment type and use that profile for all future payroll processing. The original profile should remain unchanged to preserve accurate historical payroll and tax records.
Impact on employee onboarding status
If a business changes an employee’s employment type before payroll is processed, the employee’s onboarding status is impacted.
When an employee who has completed onboarding is switched from W-2 (regular employee) to 1099 (contractor), or from 1099 (contractor) to W-2 (regular employee), the onboarding status automatically changes from Completed to Not Started.
The employee must complete onboarding again under the updated employment type before they can be included in payroll.
Note
Once payroll has been processed, the employment type cannot be changed for that employee profile.
Create a new employee profile
Use this navigation if the employee’s employment type must change after payroll has been processed.
At the Center level, click Employees.
Click Add Employee.
Enter the employee’s basic details (name, email, phone number).
In the General tab, set Type of Employee to:
W-2 Employee (for standard employees), or
Self Employed / 1099 Contractor (depending on region terminology).
Complete the required personal, employment, and payroll-related fields.
Click Save.
Use this profile for all future payroll runs.
Note
Do not modify the original profile once payroll has been processed. This ensures historical payroll data remains accurate.
Frequently asked questions (FAQs)
Q. Can I correct an employee’s employment type if I made a mistake before running payroll?
A. Yes. If payroll has not been processed for the employee, you can edit the employment type directly in the employee profile.
Q. Will historical payroll amounts move to the new profile?
A. No. Historical payroll processed under the original profile remains unchanged for compliance and reporting accuracy.
Q. Can I merge the old and new employee profiles later?
A. No. Profiles cannot be merged. Keep both profiles:
The old profile holds historical payroll data.
The new profile is used for all future payroll runs.
Key Terms
Term | Description |
W-2 Employee | A standard employee whose taxes are withheld and reported by the business. |
1099 Worker / Contractor | An independent contractor responsible for managing their own tax withholdings. |
Employee Profile | A record inZenotithat stores an employee’s details, settings, permissions, and employment type. |
Payroll Run | The process that calculates andfinalizesemployee earnings, deductions, and taxes for a pay period. |