When a company hires an employee, it assumes responsibility for all of the hiring tasks, costs, and responsibilities associated with having that employee among the employees. But not all companies want to deal with this responsibility. There is another option: using an employer of record.
What is an employer of record?
An Employer of Record (EOR) is an organization that acts as an employer for tax purposes while the employee performs work for a different company. The (EOR) takes on the responsibility of traditional employment tasks and liabilities.
The employer of record undertakes all employee functions, including:
- Payroll processing and financing
- Depositing and filing taxes
- tackling unemployment
- Workers' compensation processing
- Issuance of W-2 forms
- Collect and process schedules
- Create and maintain employment contracts
- The employee on board (new hire)
- Keep your insurance certificate
- Filling out and storing Forms I-9
- Compliance with E-Verify
- Perform background checks and drug checks
- Offering and managing benefits
- Termination of employee service
- Terminating employees
By using a registered employer, recruiters and other businesses can save time. Not having to deal with payroll and HR issues can save you hours.
EOR is a cost-effective way to outsource payroll and human resources functions. The company pays the EOR at a set rate for each hour the employee works, and the EOR takes over all the tasks.
Owner registration services can be especially useful when dealing with payroll processing and employment laws for employees in multiple states. EOR stays up to date on state and local laws, so you don't have to worry about learning and complying with laws in multiple places.
who is in Charge?
A business and a registered employer have different responsibilities.
Let's start with the EOR business or customer, The business in which the employee works retains control over business operations, The business is also responsible for workplace safety and compliance.
The registered employer is responsible for employment issues along with compliance with payroll and tax laws.
Employer of record in contract staffing
When applied to employment agencies that offer contract employment, the registered employer acts as the legal employer of contract employees. The employer responsible for the registry often falls to a third party known as the contractual employment back office. Recruiters can take on back-office responsibilities themselves, but recruiters can also outsource the responsibility to a contractual staffing back office.
If you choose to add contracted employees to your hiring business, you need to select the registered employer for your contractors.
Also, if you decide to run the back office yourself, you need to make sure that you have the time and resources to do so.
Finally, if you don't want to run the back office yourself, your contracted back office provider can take the responsibility from you. The registered employer will handle the recruitment agency (the recruiter) finance the payroll, pay the workers, and handle all payroll and staffing responsibilities.
Global Registered Employer
Other companies that are not hiring can use Employer Registered Employers (EORs). When a company wants to hire an employee from another country but does not have an entity in that country, the company can use the (EOR) rate, The employee still works for the company, but the registered employer deals with payroll and human resource issues in that local country.
This enables the company to expand globally, without having to set up an entity or worrying about local employment laws and taxes. With the emergence of remote working trends, global EOR operations are poised to be a vital part of the global recruitment system for companies that want to hire anyone, anywhere.
Getting an Employer of Record
Whether you are a recruiter providing contract staff or a business leader looking to recruit overseas, you need to make sure that employees are properly categorized, paid accurately, and handled with recruitment issues. further, there can be consequences at the state and federal levels.