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What Is an EOR and What Does It Mean for Contingent Workers?


An employer of record (EOR) serves as the employer to contingent workers for tax purposes and performs all personnel functions under a legal commitment. Many staffing agencies and search and recruitment firms partner with an EOR to offload the administrative processes associated with employing contingent workers and ensure compliance when it comes to onboarding, payroll services, employer benefits, workers’ compensation, and time tracking. Paperwork, tax filings, background checks, termination, worker issues, and even payroll funding can be managed by the EOR as well. 

How Staffing and Recruitment Firms Benefit

The recruitment or staffing firm benefits from such a partnership with time savings, reduced risk, fewer payroll and HR headaches, greater compliance, and proper worker classification. In short, they benefit by eliminating the employment risk.

Because the EOR is already set up as a legal entity in alternate locations, firms can also benefit by gaining access to those markets, quickly and at a fraction of the cost of doing it on their own. People2.0, for example, is the largest EOR with a footprint that spans 40 countries. An EOR relationship may also improve margins, improve cash flow, and translate fixed costs into variable to save money.

If you’re already working with an employer of record (EOR), you likely already know about all these benefits gained by staffing agencies and search and recruitment firms. What you might not be as familiar with are the benefits your contingent workers gain from such a partnership. 

Top 5 Benefits to the Contingent Worker 

How do contingent workers benefit from this partnership? How can you explain the benefits to your contingent workers if they inquire?

You may be able to leverage your partnership with an employer of record to recruit top talent. Such a relationship offers benefits to the contingent workforce, too, which can improve your credibility and help you attract and retain candidates.

1. International Employment Opportunities

Contingent workers across the US and even the globe can gain access to new opportunities because agencies and recruiters that work with an EOR can easily scale both nationally and internationally. When you break down the barriers to national and international recruitment, the job opportunities for the contingent worker also increase.

In some cases, the EOR can also arrange all visas and work permits for the employee, avoiding delays or refusals. For a contingent worker looking to expand their footprint into another state or country, this is a highly attractive arrangement.

2. Payroll Peace of Mind

When an agency outsources their payroll responsibilities to an employer of record, the workers can feel confident they will always be paid correctly and on time. If they’ve ever worked with a small company with limited resources for payroll and a lack of automation, they’ll appreciate this as they’ve probably had payroll issues in the past. Nothing reduces an agency’s credibility and employer brand among its contingent workforce than constant payroll discrepancies. These payroll mistakes can be enough to erode trust and cause the worker to look elsewhere for employment with a firm they have more confidence in. 

The experts at an EOR company understand the intricacies of payroll in all 50 states and in countries across the globe. This gives them the unique ability to ensure payroll is always accurate. Because they’re dedicated to focusing solely on your company’s administrative tasks, you’ll be able to ensure that payroll is always on time as well. No missed deadlines, no missed overtime pay, no missed holiday pay. Your workforce will be pleased.

3. Better Employee Benefits

A large EOR like People2.0 works with hundreds of agencies and deploys thousands of contingent workers each year. This gives them tremendous buying power when it comes to employee benefits. As a result, an EOR gives smaller talent procurement firms access to competitive benefits at a cost they can afford, so their contingent workers can enjoy more comprehensive benefits programs

This can not only help you attract and retain top talent, but it can increase performance, productivity, and job satisfaction among your workers. 

4. Workplace Rights Protected

When you’re expanding into new states or deploying workers in different countries, it’s easier than you might realize to unknowingly contravene sections of that state or country’s employment standards. This can include holiday pay, overtime pay, minimum wage, and break times. While these types of mistakes may be an innocent oversight on your part, it can nonetheless reduce an employee’s trust in your agency. 

Because an employer of record is an expert in employment laws across the country and the globe and is always on top of the latest employment standards, this helps firms ensure compliance. Contingent workers can rest easy knowing their workplace rights will always be protected when the agency they work for has partnered with an EOR. 

5. Their Questions, Answered

When you have limited time and resources in your payroll and HR departments, answering workers’ questions can end up at the bottom of the priority list. Naturally, this situation can be frustrating for the worker. Sometimes, your staff may simply not have the knowledge or expertise to be able to answer the worker’s questions, which can leave them at a loss. This is particularly true when firms expand to other states or countries and aren’t as familiar with the local payroll and employment laws.

As we’ve mentioned above, the EOR is an expert in all things payroll and compliance. This benefits workers because they will always get thorough and accurate answers to their questions. Whether they’re wondering about overtime pay, have questions about their benefits eligibility, or have concerns related to workplace discrimination, the EOR can share their knowledge. 

As you can see, when you work with an EOR, it’s a win-win scenario for both your agency and your contingent workforce. Leverage this partnership to attract and retain top talent. Contact People2.0 if you want to learn more about the benefits of working with an EOR. 

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