Why Payroll Companies Refuse to Add ITIN Workers (And Why That Puts You at Risk)

"We can't add ITIN workers to payroll."

If you've heard this from your payroll provider, you're not alone.

Here's what they're not telling you: When payroll companies refuse ITIN workers, they're protecting themselves, not you.

Why Payroll Companies Say "No" to ITIN Workers

Most payroll platforms are built for automation and scale. Adding employees with Social Security numbers is straightforward—it fits their system perfectly.

ITIN workers require something different:

Manual setup and verification
Extra attention to tax reporting
Back-office processes that can't be fully automated

For many payroll companies, that extra effort feels like risk. So instead of building proper processes, they just say "no."

What They Don't Tell You

Payroll companies rarely explain the real reason. They won't say:

"Our system isn't designed for this"
"We don't want to manage the extra steps"
"We're worried about making mistakes"

Instead, they frame it as a legal or compliance issue—even when it isn't.

That leaves you believing you're doing something wrong, when you're actually trying to do the right thing.

The Real Risk Falls on You

Here's what most employers don't realize:

If a worker should be on payroll and isn't—the liability is yours, not your payroll company's.

Paying ITIN workers off-payroll or through workarounds exposes you to:

Misclassification claims
Wage and hour violations
Audit problems
Tax and reporting issues
Difficulty defending pay disputes

Even if your payroll company told you they "can't" add the worker, that won't protect you when there's a complaint or investigation.

Two Payroll Systems = Twice the Risk

Some businesses try running two systems: one for SSN workers, another method for ITIN workers.

This feels like a temporary fix. It's actually a long-term compliance problem.

When workers aren't all treated consistently:

Records are incomplete
Time tracking becomes fragmented
Proof becomes harder to produce during audits
Mistakes compound quietly over time

When regulators or attorneys review your records, gaps raise serious questions.

What Compliant Payroll Actually Looks Like

Compliant payroll includes all employees—whether they have Social Security numbers or ITINs—as long as they're legally eligible to work and properly classified.

That means:

W-2 reporting for everyone
Proper tax withholding
Consistent time and pay records
One system of record

The difference isn't legality. It's whether your payroll provider has built the process to support it.

The Bottom Line

When a payroll company refuses to add ITIN workers, it's not because it's impossible.

It's because they've chosen not to build the process.

And that decision quietly puts your business at risk.

At Baron Payroll, we've been processing ITIN workers as W-2 employees—correctly and compliantly—for over 20 years. We built the processes other providers avoid because doing payroll right means doing it for your entire workforce.

Want to see what compliant ITIN payroll costs?