Employer of Record Services: What You Need to Know

3 minute read

By Kaili Baird

Employer of record (EOR) services in the United States provide businesses with a way to hire employees without the administrative and legal burdens of being an employer. EORs assume the legal responsibilities of an employer, such as payroll, taxes, and benefits, allowing businesses to focus on their core operations.

What is an Employer of Record?

An Employer of Record (EOR) is a third-party organization that legally assumes the responsibilities of an employer on behalf of another company, known as the client company. The EOR manages various HR functions, including payroll processing, tax compliance, employee benefits administration, and legal and regulatory matters.1 By engaging an EOR, the client company can streamline its operations, reduce administrative burdens, and gain access to specialized HR expertise.

EOR services have become increasingly popular in recent years, particularly for companies expanding into new markets or seeking to hire remote workers. They offer a flexible and cost-effective solution for businesses looking to simplify their HR processes and mitigate employment-related risks.

The EOR model provides several advantages to both the client company and the employees. For the client company, it reduces the need for in-house HR resources, lowers administrative costs, and ensures compliance with local labor laws and regulations. For employees, it offers access to benefits and support typically associated with larger organizations, such as comprehensive health insurance, retirement plans, and professional development opportunities.

Employer of Record Services: Mitigating Risks

EOR services play a crucial role in mitigating various risks associated with employment, including:

Risks of Employer of Record Services

While EOR services offer numerous benefits, there are also certain risks associated with their use:

Learn More

For individuals and organizations interested in learning more about Employer of Record services, numerous resources are available online. Reputable sources such as the Society for Human Resource Management (SHRM), the National Association of Professional Employer Organizations (NAPEO), and industry publications provide valuable insights, best practices, and case studies related to EOR services. Additionally, legal and consulting firms specializing in employment law and HR can offer expert guidance and support in navigating the complexities of EOR arrangements.

Kaili Baird

Contributor