Admins can learn about the hiring toolkit feature, how to add local or remote employees in Gusto, add them to payroll, estimate a new hire's benefits cost, resend an employee welcome email, and more.
Solution
This article helps admins add new employees in Gusto. Before you start, you’ll need to have Gusto admin permissions.
You can add US-based employees to Gusto from the People page of your admin account. For non-US employees, learn how to hire and pay them with Employer of Record (EOR) powered by Remote.
Expand the sections to learn more about Gusto's hiring toolkit, adding employees, handling remote US workers, and more. Use CMD + F (or CTRL + F) to search for words in the article.
But first, watch this video if you need tips on hiring employees in new states. Your Gusto experience may look different from what is shown in this video.
When you’re adding an employee to Gusto, it’s important to choose the right process for the situation:
If you’re adding employees for the first time during account setup:Reference this article.
If you’re convertinga contractor to an employee(or vice versa):Dismiss them from their previous role, then follow the steps below to rehire them in their new role.
If you need to add multiple employees at once, click Add multiple employees and follow the steps in the Add multiple employees at once section.
Enter the new employee's info:
Full name
Preferred first name (optional): We’ll use this name to refer to this person in communications where their legal first name is not required (like in the offer letter, onboarding emails, and org chart).
Worker type
Country
Personal email: If the new employee does not have an email, this field may be optional if you’re not sending them an offer letter or background check request through Gusto. You must use an email address that’s not associated with another employee at your company.
Hiring options: If your plan offers this, you can send an offer letter or request a background check here. Learn more in the Send an offer letter and/or background check section.
Click Save and continue.
Fill out the employee’s work info:
Work location (address)
Work state
Job title (optional): Select one or scroll to the bottom of the list and click Create a new job title.
Start date: If you have benefits, this date also determines your employee’s effective date for health coverage based on the waiting period you selected during onboarding.
Department: Select one or scroll to the bottom of the list and click Create a new department.
Manager (optional): If this is the first direct report for a new manager, leave this field blank for now. You can later add the direct report to the new manager’s profile.
Click Save and continue.
Add compensation details:
Employee type (e.g., salary, hourly, overtime-eligible): We do not currently support paying employees by piece rate, like per visit, per bundle, or per package.
Compensation amount
Employment status: Determines their benefits eligibility if you offer benefits through Gusto.
We’ll assign each employee a unique identifier, their Gusto employee ID. This 6-character alphanumeric ID (e.g., 5G9934) is securely generated and randomly assigned. This helps with running payroll using CSV files and record-keeping.
By entering the employees’ info directly into Gusto
You cannot send offer letters and background checks in bulk. If you use Gusto Recruiting, hire your candidates from the Hiring page, where you can see Gusto Recruiting details.
Uploading a spreadsheet is one way to add multiple employees at once. Once you upload the spreadsheet, we’ll prompt you to fill out a table with more hiring information.
Step 1: Set up your spreadsheet
If you want to upload your data using a spreadsheet, you can fill out this template or set it up on your own.
If you set up your own, here are the column labels to include in Row 1. Required fields are marked with an asterisk (*).
Legal first name*
Last name*
Middle initial
Preferred first name
Email
Start date (MM/DD/YYYY or YYYY/MM/DD)*
Job title
If you have more data fields to add, you can enter them directly into Gusto after uploading the spreadsheet.
Either drag and drop your CSV file or click Upload to select the file from your computer.
Click Continue.
We’ll automatically match your spreadsheet’s columns to Gusto’s data fields. Review each category.
To change how a field is mapped, click the field under the Gusto column and select the correct field. If you choose Unmatched, that column will not be imported.
On the next page, you can add data to any columns that cannot be matched.
Once your categories match, click Continue.
Review the imported data in the table and fill out the required fields for each employee.
We save your progress as you go, so you can leave this page if needed.
Once you’ve added each new employee to the table, click Create employee profiles.
To send a candidate an offer letter, start the process in Gusto. We’ll email the letter to them right away, and once they sign, you’ll get a notification to add them to payroll.
To create and send an offer letter:
Step 1: Add the employee to Gusto before creating the offer letter
Preferred first name (optional): We’ll use this name to refer to this person in communications where their legal first name is not required (like in the offer letter, onboarding emails, and org chart).
Worker type
Country
Personal email
Hiring options: Select Send an offer letter. After you complete the next few steps, we’ll prompt you to create or edit an offer letter template.
Click Save and continue.
Fill out the employee’s work info:
Work location (address)
Work state
Job title (optional): Select one or scroll to the bottom of the list and click Create a new job title.
Start date
Department: Select one or scroll to the bottom of the list and click Create a new department.
Manager (optional): If this is the first direct report for a new manager, leave this field blank for now. You can later add the direct report to the new manager’s profile.
Click Save and continue.
Add their compensation details:
Employee type (e.g., salary, hourly, overtime-eligible): We do not currently support paying employees by piece rate, like per visit, per bundle, or per package.
Compensation amount
Employment status: Determines their benefits eligibility, if you offer benefits with Gusto
Manager and Job title: You must complete these fields if the offer letter includes them.
Click Preview to view what the letter will look like with this employee’s details filled out.
You can edit the offer letter directly if you want to customize it for this employee. Place your cursor where you’d like to make a change, then start typing.
Insert Smart Text: Use this if you want to add a field that will automatically populate with the employee’s info. Place your cursor where you want the text to go, then click Insert Smart Text and select a field to add.
Click Save and continue.
If you need to make any changes, click Edit.
Optional: Add a note to go along with the offer letter.
Preferred first name (optional): We’ll use this name to refer to this person in communications where their legal first name is not required (like in the offer letter, onboarding emails, and org chart).
Job title (optional): Select one or scroll to the bottom of the list and click Create a new job title.
Start date
Department: Select one or scroll to the bottom of the list and click Create a new department.
Manager (optional): If this is the first direct report for a new manager, leave this field blank for now. You can later add the direct report to the new manager’s profile.
Click Save and continue.
Add their compensation details:
Employee type (e.g., salary, hourly, overtime-eligible). We do not currently support paying employees by piece rate, like per visit, per bundle, or per package.
Compensation amount
Employment status: Determines their benefits eligibility if you offer benefits with Gusto
Save your work and send the background check request:
Add [name] and exit: This sends the background check request to the candidate’s email and returns you to People, where you can view the check status and onboarding checklist under Onboarding.
Add [name] and set up for payroll: This sends the background check request to the candidate’s email and takes you to the Add to payroll task on their onboarding checklist.
The candidate will get an email right away asking them to review their info and agree to a background check. The check will start once they give permission.
Preferred first name (optional): We’ll use this name to refer to this person in communications where their legal first name is not required (like in the offer letter, onboarding emails, and org chart).
Worker type
Country
Personal email
Hiring options: Select Send an offer letter and Run a background check. After you complete the next few steps, we’ll prompt you to create or edit an offer letter template.
Click Save and continue.
Fill out the employee’s work info:
Work location (address)
Work state
Job title (optional): Select one or scroll to the bottom of the list and click Create a new job title.
Start date
Department: Select one or scroll to the bottom of the list and click Create a new department.
Manager (optional): If this is the first direct report for a new manager, leave this field blank for now. You can later add the direct report to the new manager’s profile.
Click Save and continue.
Add their compensation details:
Employee type (e.g., salary, hourly, overtime-eligible). We do not currently support paying employees by piece rate, like per visit, per bundle, or per package.
Compensation amount
Employment status: Determines their benefits eligibility if you offer benefits with Gusto
Manager and Job title: You must complete the manager and job title fields if the offer letter includes them.
Click Preview to view what the letter will look like with this employee’s details filled out.
You can edit the offer letter directly if you want to customize it for this employee. Place your cursor where you’d like to make a change, then start typing.
Insert Smart Text: Use this if you want to add a field that will automatically populate with the employee’s info. Place your cursor where you want the text to go, then click Insert Smart Text and select a field to add.
Click Save and continue.
Step 3: Run the background check and send the offer letter
Optional: Add a note to go along with the offer letter and background check request.
Click Send offer to [name].
We’ll send the offer letter to the candidate’s email right away. After they sign it, we’ll email them again to approve the background check. The check will start once they agree to it.
Their status will update when they sign the offer letter and begin their background check. Once they give permission for the check and provide their personal information, the status will say “Background check in progress,” and you’ll see an estimated turnaround time. We’ll let you know when it’s done.
You can keep onboarding the candidate while the background check is happening. Go to People and click the ⋮ menu next to their name. Then, open their onboarding checklist.
The work location you enter in Gusto for a new hire depends on several factors: where your employee lives and works, how long they’ll stay in a state, if the states have reciprocity, and other factors.
These rules can feel confusing, but we’re here to help.
In most cases, you need to withhold taxes in the state where your employee physically works, either their resident or non-resident state.
Resident state: This is your employee’s permanent home address.
Non-resident state: This is where your employee works for a short time or commutes to work, but it’s not their permanent home.
If your employee works in multiple states, use this guidance to enter the correct work address in Gusto so that unemployment insurance is sent to the correct state.
The main rule is that taxes are owed in the state where the work is performed. When you hire a remote employee in a new state, you usually need to register in that state and the state where your business is located. Make sure you understand the tax rules in both states.
State laws are different. If your employee works in a different state, check that state’s employment tax laws to determine if you need to pay taxes to both the home and work state.
Some states have special rules, like the Convenience of Employer (COE) rule, that can affect taxes. If you’re unsure, always talk to a legal or tax advisor.
How to handle this in Gusto
Make sure your employee’s home address is correct.
Make sure your employee’s work address matches where they’re actually working.
If they work in more than one state, use this guidance to enter the correct work address in Gusto so the correct state gets unemployment insurance.
If they work from home, select that option when adding their work address.
To edit the work address, go to Settings, then Company, and add the new address.
Important: If you add a work location in a new state, register for payroll taxes in that state first. If you don’t, you might not be able to run payroll.
If the state requires income and unemployment tax registration, you’ll need to register for both. Go to this State Tax Registration article to get started.
Taxes are usually owed to the state where the work happens. But if the states have a reciprocal agreement, the employee may only need to pay income taxes to their home state. This can affect how you handle income tax withholding.
How to handle reciprocal agreements in Gusto
To withhold and pay income taxes to your employee’s home state, you must register for a withholding account there.
To do this:
Check if the states have a reciprocal agreement here.
Follow the steps in this article to set up reciprocity.
This article also explains how to register to do business in a new state.
If the home state and work state do not have reciprocity
If the two states do not have reciprocity, we’ll withhold income and unemployment taxes based on the work state. This means we only withhold income tax from the non-resident state.
We currently do not support flexible (variable) “courtesy” withholding. We have safeguards in place to make sure we calculate and withhold the correct taxes based on the employee’s work address during each pay period.
When you hire a remote employee, you need to follow the pay and labor laws in the state where they live and work — even if your business is in another state.
Here are important things to check for every out-of-state employee:
Pay frequency: Check how often you must pay employees in their state.
Some states only allow certain schedules (like weekly or monthly), and the rules may depend on the type of job.
If your regular schedule is not allowed, follow the rules in the employee’s state. Learn how to set pay schedules in Gusto.
e-Verify: If a remote employee lives in a state that requires e-Verify (for some or all employers), you’ll need to complete it.
States with e-Verify enrollment requirements (as of January 1, 2024): Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and West Virginia.
Always check your state’s latest rules.
Final paycheck: States have their own laws for final pay, mainly how and when it’s sent. The rules may change depending on whether the employee quits or is terminated.
Meal and rest breaks: States require certain paid or unpaid breaks. Make sure employees know the rules and get the breaks they’re owed. Learn how to set up meal breaks in Gusto.
Disability insurance: Some states require you to withhold money for state disability insurance. We handle this in California, New Jersey, Rhode Island, and Hawaii. If the employee works in New York, you can have us withhold payments, but you’ll need to send the payments to the agency yourself. Go to the “State Disability Insurance (SDI)” section of this article to learn more.
If the contractor’s mailing address differs from the location where the work was performed, and you need a 1099 for the work state, we can help resolve this. To contact us, sign in to your Gusto account and click the help icon in the top-right corner of the page.
Note: If you’re rehiring a dismissed employee, reference this article instead for instructions.
To make sure all W-2s include the correct year-to-date information, you must report any payrolls processed outside of Gusto (like paper checks, another payroll system, or manually) for both dismissed and current employees.
If you never added a dismissed employee to Gusto, you’ll need to add them now before reporting their payrolls.
To add a previously dismissed employee to Gusto for W-2 reporting:
Enter the dismissed employee’s details. You’ll need to get this information from the dismissed employee:
First name and middle initial
Last name
Social security number (SSN)
Birthdate
Home address
Work address
Start date
Last employed date
Click Save.
The employee will now appear in the Dismissed employees list.
If you receive the error message “SSN already in use,” this means the employee is already in Gusto. Go to the Dismissed tab under People to find their profile.
If your company offers health benefits through Gusto, new hires receive an invitation to enroll during onboarding.
How new hires enroll in benefits through Gusto
If your company offers health insurance through Gusto (including via broker integration), we’ll automatically invite eligible new hires to enroll in benefits during onboarding.
We’ll show each employee their first day of health insurance based on your company’s waiting period for new hires.
Admins cannot enroll or waive benefits on behalf of employees.
New hires during open enrollment
If you hire someone around the same time your company starts open enrollment, we handle their enrollment separately.
We give each new hire a personal enrollment window, even if your company-wide open enrollment has already started or ended.
You can track the new hire’s enrollment status by viewing their employee profile.
New hires do not appear in your company’s list of open enrollment participants.
You can submit your company’s benefits application even if some new hires have not chosen their plans yet.
Estimate a new employee's benefits cost
If we manage your benefits and you have a new employee joining your team, you can estimate their monthly benefits cost in your Gusto admin account.
We'll estimate the employee’s monthly premium cost based on their date of birth. The summary provides a range of monthly premium costs based on the benefits and plans you offer and if the employee has dependents.
If you’d like to see the premiums of each plan, click Download Cost Breakdown (PDF). The PDF includes the employee, spouse, and child costs for each plan that you offer.
Assumptions and methodology: Estimated costs are used for illustrative purposes only—actual costs will vary. The estimated cost assumes that any child dependent is younger than 18 and any spouse is the same age as the employee. For more detailed pricing, contact your insurance carrier.
You’ll now choose how to welcome your new employee:
Email address: Enter their personal email.
Welcome email (optional): Send a message with first-day reminders.
Digital welcome card (optional): We can send a card signed by your team.
If the start date is more than a week away, we’ll send the card one week before.
If the start date is less than a week away, we’ll send the card right away.
To opt out, uncheck the box.
To change who gets invited to sign, click Edit.
Step 4: Review and send documents
We automatically include standard onboarding documents, but you can add or remove them using the checkboxes.
Included documents
Federal Form W-4: Employee Tax Withholding
Direct Deposit Authorization Form
Employee Eligibility Form I-9: Only available if the employee self-onboards. If you entered their details for them, they’ll need to complete Form I-9 outside of Gusto.
Step 5: Complete the final setup and send the invitation
Before you invite your new hire, take a moment to complete a few final setup steps.
Assign time and attendance (if needed)
If your company uses Gusto’s time tracking or time off policies, assign the new hire to the correct policy now.
Choose a new hire reporting option
Let us know whether you’d like us to file the new hire report for this employee.
If you’ve already hired the employee but haven’t filed the report yet, we can help resolve this. To contact us, sign in to your Gusto account and click the help icon in the top-right corner of the page.
Send the invitation
To send the invitation:
Click Save and continue.
Review the employee’s onboarding timeline.
Click Send invitation.
You’ll return to the onboarding checklist, where you can complete any remaining tasks.
If an employee did not get a welcome email, make sure you’ve invited them to Gusto. If you’ve invited them and they still haven’t gotten an email, you can resend it from your Gusto admin account.
Note: If the employee is already active or has started self-onboarding and are having trouble signing in, share these troubleshooting steps.
Gusto will prompt you to run a new hire payroll when an employee’s start date is before a payroll you already processed. Use the guidance below to decide whether to dismiss the prompt or run the payroll.
Why you see this prompt
Gusto flags pay that may be missing if you added the employee after their start date and after you already ran payroll for that period.
Example:
You run payroll on 10/28 for the period 10/15–10/30.
You add a new employee on 10/29, and they work 10/29–10/30.
You will see a new hire payroll prompt for those two days.
If the employee started later than the hire date on record
Use this when the employee did not start on the date in Gusto and was already paid correctly for their first days.
What to do
Dismiss the new hire payroll prompt.
Update the hire date on the employee’s profile to the actual first day of work.
If the employee’s first days were missed
Use this when the employee did start on the hire date in Gusto and their first days were not paid.
Steps to run the new hire payroll:
Open the new hire payroll prompt in Pay.
Select the dates and pay period shown.
Enter hours or earnings for the missed days.
Review taxes and totals.
Submit the payroll.
Taxes and forms (important)
Important: Taxes are paid based on when the employee actually got paid, not based on when they worked. For this scenario, you do not need to amend historical tax returns or W-2s.
FAQs
Q: When will I see the prompt?
A: You will see it when an employee’s start date falls inside a past pay period that you already processed.
Q: What if I'm not sure which case applies?
Check the employee’s actual first day worked and compare it to the hire date in Gusto and the last payroll you ran.
If the start date in Gusto was too early and the employee was already paid correctly, dismiss the prompt and fix the hire date.
If pay is missing for the first days, run the new hire payroll.
in the top-right corner of the page.