Six Ways an Employer of Record Service Benefits any Organization


In a post back in January, we explained “What is an EOR and How do you Know if you Need One.” To elaborate on that material, this post will focus on the six primary benefits an Employer of Record or “EOR” solution delivers to any organization.  This list of potential benefits can be used in conjunction with the materials in the January post to arrive at the decision regarding whether or not an EOR makes sense for your company.

1. Avoid Misclassification Audits

Employer of record services protect organizations against misclassification and penalties. With so many new labor types and a dizzying array of laws and regulations sprouting up to address them all, it makes sense to rely on an EOR. Their business is labor law and compliance with worker classification regulations. Let an EOR focus on this so you can focus instead on your core business functions and avoid misclassification audits, penalties, etc.

2. Risk Mitigation

EOR’s relieve risks associated with workers’ comp and other insurance issues. Again, the employer of record core competency is HR benefits administration including all required insurance coverages. Leave it to the pros to manage these often-complex processes, which lowers your risk while raising your productivity in core business areas.

3. Increased Labor Spend Management 

EORs provide increased labor spend management and control. Similar to the “payrolling” agencies that are the predecessors of today’s employer of record solutions, the EOR maintains replicable and standardized processes for the proper administration of contingent labor.  Rely on an EOR to enforce best practices in the acquisition, screening, management, and compensation of contract workers; complete with detailed financial reporting to you the customer.  These standards and practices support transparency in labor spend and result in much more informed control over decision-making related to the non-employee workforce.

4. More Time For Core Business

EORs minimize the time, effort and overtime costs associated with learning and complying with employment laws. How many man-hours are expended in your HR and procurement departments to ensure compliance with all applicable labor laws? Does your organization spend money on continuing education for its HR and procurement personnel? This time and related expense can be easily avoided by engaging a third party to assume responsibility and control over these functions. 

5. Standardize Processes

EORs streamline and standardize on-boarding and off-boarding process. Similar to the efforts involved in compliance, insurance and payrolling, the efforts associated with on- and off-boarding of contract workers can absorb a significant amount of time from an HR department’s day.  With a constant stream of project workers, contingent laborers, statement of work teams and other resources beginning and ending engagements, the time spent satisfying business rules – like those governing drug screenings, criminal background checks, credit reporting, plant access, computer/other hardware assignments and numerous other concerns – can eat into the productivity and profitability of the department. In many cases it makes fiscal sense to outsource these processes to an EOR.

6. Simplify Expense Reimbursement

EORs simplify expense reimbursement for temporary workers. You’re perhaps noticing a pattern here? Like the other activities mentioned in this list, expense reimbursement is yet another activity that is both time consuming and not central to the core function of the organization.  This tedious task is something an employer of record service loves to complete for its customers.

In short, an EOR helps an organization offload the total burden of administering the non-employee workforce in a way that is safe, proven-effective and affordable.  Contact your nextSource representative today for more detailed information on how your organization  may benefit from engaging an Employer of Record service.

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