A third-party entity, known as an Employer of Record (EOR), is responsible for officially hiring a worker for a different company, to provide services for them. This can be beneficial for companies that are hiring employees on a temporary or contract basis, or for companies that are expanding into new markets/globally and need to comply with local employment laws.
The EOR is responsible for all the legal and administrative responsibilities of being an employer, including:
- Hiring and onboarding employees
- Payroll and taxes
- Benefits administration
- Compliance with local, state, and federal employment laws
- Terminating employees
The company that is using the services of the worker, known as the “client company,” will typically enter into an agreement with the EOR to provide these services. The EOR will then hire the worker, and the worker will be considered an employee of the EOR. The worker will typically be assigned to work at the client company, but the EOR will retain ultimate control over the worker’s employment.
One of the main benefits of using an EOR is that it allows the client company to avoid the legal and administrative responsibilities of being an employer. This can be especially useful for companies that are hiring employees on a temporary or contract basis, or for companies that are expanding into new markets and need to comply with local employment laws.
Another benefit of using an EOR is that it can provide the worker with a higher level of job security. Because the worker is an employee of the EOR, they will typically be entitled to the same rights and benefits as other employees of the EOR. This can include things like health insurance, paid time off, and retirement benefits.
However, it’s important to note that the use of an EOR can also have some drawbacks. One of the main drawbacks is that the worker may not have as much control over their employment as they would if they were an employee of the client company. Additionally, the worker may not be able to negotiate their salary or benefits directly with the client company.
Overall, an Employer of Record is a third-party company that acts as an official employer for a worker. This service can be beneficial for companies that are hiring employees on a temporary or contract basis, or for companies that are expanding into new markets and need to comply with local employment laws. The EOR is responsible for all the legal and administrative responsibilities of being an employer, including hiring and onboarding employees, payroll and taxes, benefits administration, compliance with local, state, and federal employment laws, and terminating employees. However, there are also drawbacks to consider, such as the worker may not have as much control over their employment and may not be able to negotiate their salary or benefits directly with the client company.
To learn more about our EOR services, click here.