If you are familiar with the world of HR, you may have heard the term “employer of record”. But what exactly does it mean? An employer of record, also known as an EOR, is a third-party organization that serves as the employer for tax purposes while the employee continues to perform work at a different company. The employer of record takes on the responsibility of employment benefits, HR management, and oversight of compliance on behalf of another company.
Choosing an employer of record for your business can let you scale quickly while removing the admin burden from your internal team. When you partner with a payroll service provider who is also the employer of record, you’re ensuring that you’re following all regulations, paying your team compliantly, and providing
EORs can be especially helpful for contractors, consultants, freelancers, hourly workers, or part-time employees. This segment of your workforce usually needs extra attention when it comes to issuing payments and has frequently changing compliance rules.
Legal and compliance oversight
One of the most complex pieces involved in the hiring, managing, and paying of freelancers is the ever-changing compliance regulations. Maintaining compliance yourself is a headache and carries the risk of potential fines and legal fees if you aren’t classifying your workers correctly or withholding taxes appropriately. Partnering with an employer of record means they are the ones keeping track of, and inforcing, all state, federal, and even local laws. Knowing the state and federal differences in the minimum wage, sick leave policies, overtime rules, and workers’ compensation are complicated and require a lot of time and attention.
At AllWork, we help companies of all sizes navigate this world of employee classification. We’re here to ensure that businesses are always in compliance with all state, federal, and even individual city laws.
Timely, accurate payments for your whole team
Making sure that your team is paid quickly and accurately doesn’t just make for happy workers, it’s the law. You must make sure you’re issuing payments on time, every time. This can put an extra burden on your in-house team since paying freelancers is much different than paying your full-time employees since there is usually a need for more frequent payments. There are also overtime laws, sick time compensation, and state and local laws to consider.
An EOR can take all of this off your plate, issuing payments on your behalf and taking full responsibility for all employment-related tasks.
A technology-first approach
When it comes time to consider who to partner with as your employer of record, make sure you are choosing a company that is technology-focused. While a lot of legacy payroll providers incorporate technology as an afterthought, the world of work is changing rapidly and you’ll need an employer of record who can keep up. Automating the onboarding, classification, and payment processes will make everything more efficient for your internal team and your workers.