Employer of records (EOR) is a company or organization that is legally responsible for paying employees, including dealing with employee taxes, benefits and insurance. It is the entity that serves as the employer for tax purposes while the employee performs work for a different company.
A recruiter can take on the employment tasks and liabilities.
The option to choose solely depends on key business goals associated with the needs for talent, what you want that day-to-day relationship to look like, and how much liability as an organization you want to absorb. And if you are considering international expansion, the complexities are tenfold.
Most start-ups who cannot afford an HR department, benefits, and other necessary business requirements.
Depending on the kinds of positions needing to be filled, the recruiting process itself can be very lengthy. Sourcing and screening for job candidates, scheduling and conducting Interviews along with making an offer of employment isn’t a process that happens overnight. In addition, these steps can be repeated multiple times just to find the right person for the opportunity. However, an employer of record typically has a wide range of individuals on staff ready to be deployed at a moment’s notice. This can be a great opportunity for companies with a staffing shortage and need qualified help right away.
There are a number of laws that must be followed at a local, state and federal level when hiring employees. In addition, many of these guidelines can be fluid and change without warning. According to The Payroll Edge, partnering with a supplemental staffing agency that is well-versed in payroll and employment law alleviates a company’s human resources department from having to stay updated on any new changes to these critical rules and regulations.
In addition to payroll concerns, companies that hire permanent employees are also responsible for ensuring that these individuals have benefits that are adequately maintained and meet their individual needs. However, when working with an employer of record, Business Week wrote that these organizations, in many instances, have the ability to negotiate much lower rates than a company can secure by themselves. Given the changes to the Affordable Care Act, partnering with an employer of record may be a wise investment.