What Is an Employer of Record (EOR) and How Do You Know If You Need One?

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“EOR” is an Employer of Record, or a third-party organization contracted to assume the legal responsibilities involved in employing workers/laborers on behalf of your company or organization. An EOR is typically used by companies electing to not directly employ workers on assignment or in a different state of foreign country. The EOR commonly manages the HR processes associated with hiring, employee tax reporting, benefits administration, all relevant insurance coverages and, (for international resources) visa applications and sponsorship. The EOR becomes the primary employer of your employees in a legal sense.

What Are the Benefits of Using an EOR?

  • The primary benefit of an EOR is a reduction in the complexities associated with HR and specialized contingent workforce management functions;
  • An EOR helps improve market access to employees in other states and countries;
  • The EOR ensures a business is compliant with all relevant labor laws and regulations, which can be especially challenging during international expansions where regulations surrounding benefits and taxes are more complicated;
  • The EOR can unlock access to new markets and help drive better rates for benefits.

Why Might I Need an EOR for My Organization?

It is fairly simple to determine if your organization can benefit from an EOR arrangement to manage contract staffing. Particularly, if your organization intends to ramp up usage of contract workers but doesn’t have the bandwidth to adequately manage the following HR-related tasks for the influx of new contractors, the use of an EOR can help ensure compliance with all required regulatory, tax, and business-rules-based concerns. These things are critically important to a successful contract worker program:

  • Payroll processing and funding;
  • Tax deposits and filings;
  • Employment contracts and paperwork;
  • Maintaining Certificate of Insurance;
  • I-9 and E-Verify;
  • Unemployment insurance;
  • Workers’ Compensation;
  • Background checks and drug screenings;
  • Benefits administration (health, dental, vision, life, 401k);
  • Employee terminations;
  • Employee issues.

Adding to HR headcount in order to manage a newly expanded contract workforce can add significant costs to an HR department. And, if cost savings and efficiencies are among the reasons why you may be considering adding contract workers to your workforce mix, then it seems counterproductive to add full-time resources to HR. In these cases, the EOR is definitely worth consideration.

How Is nextSource Different?

There are many different EOR companies in the market, so why should you choose nextSource above all others? We at nextSource are constantly innovating and pushing ourselves to be above the competition when it comes to service excellence, quality of candidates, and performance. 

When you choose nextSource as your employer of record, you can be sure to know that we will treat you with a highly customizable experience. Your business is unique, so why shouldn’t you receive a white glove treatment? You will also receive a dedicated client team to support associate experience, consistently exceeding industry onboarding satisfaction metrics by 83%. Our process is 100% electric and online which makes the whole process simple and efficient. There is a single record between onboarding and payroll services, and we pride ourselves on a four-day average between times referred and time working. A simple, efficient, highly tailored employer of record is what your business deserves: Let nextSource deliver it for you.

To read more on this subject, turn to nextSource for expert guidance and visit our employer of record page.

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