Employer of Record (EOR)
An Employer of Record (EOR) is very similar to a Professional Employer Organizations (PEO) in how they both provide work comp and payroll services as a turnkey service. EOR’s enable staffing companies to cost-effectively outsource human resource management services including workers’ comp. In turn, a staffing firm can concentrate on the revenue-producing part of the business. Leaststaffs’ preferred EOR’s (like PEO’s) services all 50 States.
EOR’s became more popular among staffing companies as a workers comp/ payroll back office solution (versus PEO’s) as carriers pulled back from the PEO market after the recession of 2008. Carriers generally feel more comfortable with the EOR legal relationship to the employee. Also, many PEO’s do not work with staffing companies less that 3 years old too.
In an EOR arrangement, the employees are 100% the legal responsibility of an EOR. Conversely, with a PEO, it is a “shared legal relationship” with the employee. This shared legal arrangement with a PEO is also referred to as a “co employment arrangement.” With an EOR, the relationship between them and the staffing firm is generally invisible to the employee and staffing client. The staffing company still controls the daily management of employees and controls all aspects of the employees’ work schedules, pay rates etc.
Responsibilities of an EOR (which are similar to a PEO) :
- Provides a workers’ comp solution often with less expensive rates than some direct carriers and State Funds (depending on your comp loss experience.)
- Administers workers’ comp claims
- Manages employee benefits and payroll
- Manages payroll tax compliance
- Administers unemployment insurance claims
Hundreds of staffing companies use EOR’s and they service all 50 States. Leaststaff only works with a few EOR’s because Leaststaff only uses ones that are very experienced in the staffing industry and have stable comp carrier relationships. Some EOR’s are not experienced in the staffing industry and unless they have at least 50 other staffing should be avoided.