As a startup business leader, you already know how important HR functions are to the success of your company. Recruiting and hiring employees to propel your momentum, of course, is essential for your emerging business.
But how are you handling the HR needs of your temporary, contingent, and freelance workers?
There’s a long list of personnel functions to perform, and most HR teams simply don’t have the time and resources to manage them all.
That’s where employer of record (EOR) services come in.
Let’s take a look at what an EOR is and how it can help your small business or startup manage its contingent workforce.
What is an employer of record?
An employer of record is really just a third-party payroll service provider.
“Oh, an EOR is a payroll processing company like Paychex or ADP?” you’re wondering.
Eh, kind of. But not really.
An EOR partner takes it a step further than that because it is technically the one that employs your worker. Here’s how it works, more or less:
- You want to hire a worker right now, but you don’t have the time or resources to do so
- You partner with an EOR
- You say to the EOR, “This is the worker we need. This is what the worker will do for us.”
- The EOR confirms your request and contacts the worker directly
- The EOR conducts all of the worker’s preliminary testing (background check, drug test, etc.)
- The EOR onboards the worker (time and expense reporting, safety, benefits, etc.)
- The EOR sets up a start date for you and the worker to get to work
In this process, the EOR assumes all hiring responsibilities for your worker. So even though the worker performs tasks and functions for your business, the worker is still technically employed by the EOR.
Why should I partner with an EOR?
Partnering within an EOR eliminates the tedious administrative and payrolling burdens that come with managing temporary employees. This way, the EOR is in charge of all the worker’s taxes, benefits, insurance, and statutory or administrative costs.
The EOR handles all personnel functions, including:
- Background screening
- Drug testing
- I-9 forms
- Timesheet management
- Payroll processing, funding, and distribution
- W-2 form issuance
- E-Verify compliance
- Healthcare benefits administration
- Employment taxes registration/filing
- Unemployment administration
- Workers’ compensation claims
- Continued worker care (job satisfaction)
- Conversion of contingent workers to direct employees
- Worker termination
Related: Employer of Record (EOR) Workflow Video
Okay, so who’s really in charge of the worker?
You are! Your company operates as is and will continue to be responsible for all workplace safety and compliance issues. So think of it this way: The EOR doesn’t replace your HR department—it acts only as an extension of it.
As far as liability and employment issues, payroll compliance, and tax laws—the EOR assumes responsibility for all of those. This means your HR team will have more time and energy to focus on other ways to improve the health and happiness of your workplace.
Related: Should You Partner With an Employer of Record?
How will an EOR make my business more efficient?
When you partner with an EOR, your business will be able to:
1- Save time.
Outsourcing burdensome tasks to a proven EOR provider doesn’t just free up time for your internal team—it ensures a more consistent and compliant engagement process for your worker. Paperwork? Done. Tracking down candidates? Taken care of. With an EOR, it’s all good!
2- Lower costs.
Spend less time (and money) in the weeds (on tedious tasks) and more time on valuable tasks that boost your HR teams, enhance your workforce, and improve productivity—all of which contribute to cost savings. In short, working with an EOR will make your employees happy and boost your company’s bottom line at the same time.
3- Reduce co-employment risk.
Want to spare yourself from the costly legal ramifications of misclassifying employees? Partner with an EOR. Want mitigation from sensitive co-employment issues? Partner with an EOR. Want to reduce stress and alleviate concerns among your legal team? Partner with an EOR!
4- Become a more flexible workplace.
Partnering with an EOR gives you a chance to “try before you buy” when it comes to talent. So, if you’re ever interested in bringing on a resource—but you want to see how they’ll fit in first—you can do that with an EOR. More to the point, if you decide you want to bring the worker on full-time, the right EOR will help you make that transition at no additional cost.
In short, you reap all the benefits of a rock-solid workforce with none of the annoying administrative pitfalls. Everyone wins!
Related: Employer of Record Workflow Infographic
Interested in partnering with an EOR?
Contact us today! We can help you find the best startup services for you and your emerging business. And don’t forget to follow us on Facebook, Twitter, LinkedIn, Instagram, and YouTube for more!
This blog was written by Viaduct Recruitment Manager Chad Witherell.