> ## Documentation Index
> Fetch the complete documentation index at: https://docs.bolto.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Converting a Contractor to an Employee

> Move a US contractor onto W-2 payroll — what carries over, what ends, and what your new employee completes next.

When a US contractor's role becomes a full-time position, Bolto converts them to a W-2 employee in one guided flow: their contractor engagement is closed out cleanly, a new employee record is created on the same login, and they're invited to complete employee onboarding.

<Note>
  **Before you start:**

  * Conversion is for **US contractors** of companies enrolled in Bolto Payroll
  * The contractor must be **active** and have **completed their contractor onboarding**
  * You need an **active payroll group** to place them in
  * Available to Owners and Contractor Managers
</Note>

***

## How to convert

From **Payroll → Employees**, open the **Add employee** menu and choose **Convert contractor**.

<Steps>
  <Step title="Select the contractor">
    Search your existing US contractors and pick the person. Their legal name, email, and work locations are pulled from their contractor record automatically.
  </Step>

  <Step title="Work details">
    Job title, **employee start date**, department, payroll group, work location, and whether to **require I-9 verification**.

    Bolto derives the **contract end date** for you: the contractor's current contract ends the day before their employee start date (or on its own earlier end date, if the contract was already ending).
  </Step>

  <Step title="Compensation">
    Exemption status, pay type (Hourly / Annually / Piece), and amount. For hourly non-exempt employees, overtime and double-overtime rates are created automatically.
  </Step>

  <Step title="Review and confirm">
    The review screen spells out the transition — when the contract ends, when employment starts, and what the person will be asked to complete. Confirming is final: **the existing contract is permanently ended and the conversion can't be undone.**
  </Step>
</Steps>

***

## What happens when you confirm

1. **The contractor engagement is closed out** — their contract is given its end date and their contractor record is end-dated. Their payment history is preserved; they'll still receive a 1099-NEC for the contractor portion of the year.
2. **A new employee record is created** on the same Bolto login, carrying over their personal details (name, contact info, address) and work locations.
3. **Pay rates are set up**, including auto-created overtime rates for hourly non-exempt employees.
4. **They're added to the current payroll draft** for their group when their start date falls in the current pay period — otherwise they're included in the next one.
5. **They receive an onboarding email** with a link to complete their employee setup.

<Warning>
  If the payroll group has **Auto-Pay** enabled, adding the converted employee cancels Auto-Pay for that pay period — review and approve that payroll manually.
</Warning>

## What your new employee completes

Employee onboarding is a fresh start — contractor payment details don't carry over to the employee record. They'll be asked for:

* **Personal details and SSN**
* **Tax withholding** — federal W-4 and state forms
* **Bank details** for direct deposit
* **Form I-9, Section 1** — if you required I-9 verification (you'll then complete [Section 2](/hiring/i9-verification))

Until they finish, they appear under **Hires in progress** on the Employees overview, and they'll block payroll approval if unresolved by the deadline — Bolto flags this on the draft.

***

## Good to know

* **One person, two records.** After conversion, the Team Directory shows both the closed contractor record and the new employee record. Their contractor payment history stays intact.
* **W-2 and 1099-NEC in the same year.** Someone converted mid-year receives both forms for that tax year — a 1099-NEC for contractor payments and a W-2 for wages.
* **Timing the switch.** Pick a start date at a clean pay-period boundary when you can — it keeps the final contractor payment and the first paycheck from overlapping the same days.
* **One-way flow.** There's no employee-to-contractor conversion. If a former employee later returns as a contractor, add them through the normal [contractor flow](/contractors/adding-contractors).
* **Payroll groups with Auto-Pay accept salaried compensation only** — to convert someone as hourly, place them in a non-Auto-Pay group.