What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a service that takes on the responsibilities of being the legal employer for workers that a company sources but does not directly employ. This service allows organizations to leverage a flexible workforce without taking on the administrative, legal, and compliance burdens associated with employment. The EOR handles payroll processing, benefits administration, tax compliance, and more, freeing up businesses to focus on their core operations.
For companies engaging contingent or temporary workers, particularly across different states or countries, an EOR can be a critical partner in managing legal responsibilities and ensuring that all employment practices comply with local, state, and federal regulations.
How Does an EOR Work?
When a company partners with an EOR, the workers identified by the client company become employees of the EOR. However, these workers perform their duties for the client company as if they were directly employed. The EOR acts as the legal employer, responsible for critical employment functions such as:
- Payroll management: Ensuring that workers are paid accurately and on time.
- Onboarding and offboarding: Managing the paperwork and compliance for bringing new workers on and transitioning them off assignments.
- Tax compliance: Withholding and paying employment taxes in accordance with applicable regulations.
- Benefits administration: Providing benefits such as health insurance, retirement plans, and other perks.
- Compliance: Ensuring adherence to labor laws, including workers’ compensation, overtime regulations, and workplace safety.
By offloading these responsibilities, businesses can focus on sourcing talent and managing their operations, while leaving the complex and time-consuming aspects of employment to the EOR.
1. Compliance with Employment Laws
Staying up to date with constantly changing employment laws across different regions can be challenging. From local wage laws to mandatory trainings such as anti-harassment courses, every state and country has its own regulations. An EOR keeps track of these requirements, ensuring that businesses remain compliant, no matter where their workers are located. This includes:
- Employee classification (1099 vs. W-2)
- Tax withholding
- Compliance with leave laws
- Proper handling of benefits and overtime
Failure to comply with these laws can result in significant financial penalties and reputational damage. Partnering with an EOR ensures that these risks are mitigated.
2. Simplified Payroll and Benefits Management
Managing payroll for a diverse contingent workforce can be complex, especially when workers are spread across multiple regions. An EOR takes over the management of payroll, ensuring that every worker is paid on time, the correct taxes are withheld, and benefits are administered correctly. In addition, they manage other payroll-related tasks such as:
- Sick and vacation time
- Final pay upon offboarding
- Worker’s compensation
- Retirement plans
For international companies, an EOR is essential for managing payroll and benefits when expanding into new regions where the employer may not have an established legal presence.
3. Increased Operational Efficiency
For companies with a lean HR or administrative team, handling all aspects of employment can take away valuable time that could be spent on strategic initiatives. An EOR takes over these duties, enabling internal teams to focus on business growth. For example, Jessica Kane from Eastridge explains how using an EOR can give HR teams back 10 to 20 hours a week, freeing them up to concentrate on higher-level projects rather than managing administrative tasks.
4. Flexibility and Scalability
Whether your company is in a rapid growth phase or needs to downsize temporarily, an EOR provides the flexibility to scale your workforce as needed. EOR services are especially valuable for companies with fluctuating needs, such as:
- Project-based work
- Headcount augmentation
- Seasonal hiring
- International expansion
An EOR allows businesses to hire workers in locations where they don’t have a legal entity, avoiding the complexity and cost of establishing a subsidiary.
5. Reduced Risk
Compliance risk is a significant concern for any business managing a contingent workforce. Misclassifying workers as independent contractors rather than employees, for instance, can lead to severe financial penalties. EORs like Eastridge also offer services to evaluate independent contractor compliance and recommend proper worker classification to avoid these risks.
Industries that Benefit from EOR Services
EOR services are used across a wide range of industries. However, certain sectors benefit more due to the nature of their workforces and the regulatory complexities involved:
- Entertainment and Media: The shift from 1099 contractors to W-2 employees has made compliance more challenging. An EOR ensures that these workers are managed in a compliant manner, from payroll to project tracking.
- Technology: Emerging tech companies, such as those in AI or automotive, often rely on contingent labor. An EOR allows these companies to scale quickly while maintaining compliance.
- Life Sciences: Life science companies often need to scale teams for laboratory or sales functions. EOR services provide a flexible solution for bringing in talent quickly without the administrative burden.
International Expansion: Companies that are expanding globally, especially those on the path to an IPO, find EOR services invaluable for managing compliance, payroll, and employee benefits across different countries.
The EOR Onboarding Process
Once a company selects an EOR partner, the onboarding process begins. This includes reviewing worker documentation, ensuring compliance with all applicable laws, and managing payroll setup. EORs like Eastridge focus on creating a seamless onboarding experience for both the employer and the worker, allowing companies to integrate workers quickly and efficiently.
For workers, the process is simple and usually takes less than 30 minutes, ensuring that all necessary documents are filed electronically. This includes compliance with local regulations, such as anti-harassment training and worker eligibility checks. By streamlining this process, companies can scale their workforces more efficiently while ensuring full compliance.
EORs in Global Expansion
For companies looking to expand their workforce across borders, an EOR provides a cost-effective and compliant solution. By partnering with an EOR, businesses can hire workers in countries where they don’t have an established entity, without needing to go through the costly and time-consuming process of setting up a foreign subsidiary.
EORs handle the complexities of international hiring, from navigating different tax laws to ensuring compliance with local labor regulations. This makes it easier for companies to hire the best talent globally without being bogged down by administrative hurdles.
What Makes Eastridge Different in the EOR Space?
Eastridge Workforce Solutions stands out in the EOR space due to its dedication to client satisfaction, innovative technology, and specialized service model. Here are a few key differentiators that set Eastridge apart:
Dedicated Account Management
One of the most significant advantages Eastridge offers is a dedicated account management model. This ensures that each client has a single point of contact who deeply understands their business, workforce needs, and compliance requirements. The account managers at Eastridge are not juggling multiple roles—they focus exclusively on EOR services, ensuring that every client receives expert, personalized attention.
Clients often mention how much this focused service model improves efficiency. According to Jessica Kane, clients routinely save 10 to 20 hours a week by outsourcing their administrative burdens to Eastridge. These time savings are particularly valuable for companies managing large, complex workforces or those operating in multiple regions.
Comprehensive Compliance Solutions
Eastridge excels in providing compliance solutions that help companies navigate the complexities of both domestic and international employment laws. With expertise in all 50 U.S. states and Canadian provinces, Eastridge ensures that businesses remain compliant with a range of regulations, from tax withholding and wage laws to local mandatory trainings and anti-harassment courses.
Eastridge also offers independent contractor compliance evaluations. This service helps companies avoid costly misclassification penalties by evaluating whether a 1099 contractor should be classified as a W-2 employee, and vice versa. This attention to compliance helps companies avoid significant financial penalties and legal risks.
Scalable, Flexible Solutions
Whether a client needs to hire one part-time worker or scale a workforce of hundreds, Eastridge can support their growth. The company’s technology platform enables seamless scalability, allowing businesses to onboard new workers, track time and expenses, and manage contingent workforce projects with ease.
For example, Eastridge helped a media company transition 300 workers to an EOR solution in just two weeks. The implementation included automated payroll processing, project code management, and a time-tracking platform that allowed the client to free up significant internal resources. The result? The company reallocated internal headcount and improved operational efficiency, all while ensuring compliance and worker satisfaction.
Proprietary Technology Platform
Eastridge’s technology platform is designed for ease of use, enabling clients to manage their contingent workforce with just a few clicks. The platform offers features like automated payroll processing, real-time reporting, and time and expense tracking. This level of transparency ensures that clients have complete visibility into their contingent workforce at all times, allowing them to manage costs and monitor compliance.
The platform also makes extending contracts, onboarding new workers, or offboarding employees simple. With built-in compliance checks and reporting tools, clients can rest assured that their workforce is being managed efficiently and in full compliance with all relevant laws.
Commitment to Worker Experience
Eastridge recognizes that a positive employment experience is just as important for contingent workers as it is for full-time employees. The company places a strong emphasis on worker satisfaction, providing a dedicated team that checks in with workers regularly to ensure they feel supported. Workers can provide feedback through automated surveys at various milestones, allowing Eastridge to address any issues early and improve retention.
This focus on worker experience helps companies reduce turnover, increase productivity, and foster a positive working relationship between the employer and the contingent workforce. As Jessica De La O, an account manager at Eastridge, explains, “We know from feedback that our service model has a direct impact on the client’s ability to retain talent and reengage them later.”
What to Look for in an EOR Provider
Choosing the right EOR provider is crucial for the success of your contingent workforce program. When evaluating potential partners, consider the following:
- Compliance Expertise: Ensure the EOR has a deep understanding of compliance regulations across different states and countries. This is particularly important for businesses operating in multiple locations.
- Technology Integration: Look for an EOR with a robust technology platform that simplifies payroll management, worker onboarding, and reporting. Eastridge, for example, offers a platform that allows clients to manage workers with just a few clicks.
- Dedicated Support: A dedicated account management team is essential for seamless operation. Look for an EOR that offers personalized support for both the client and the workers.
- Scalability: As your business grows, your EOR should be able to scale with you, whether you need to manage a small team or a large workforce.
Employer of Record Service Expertise
The Eastridge Employer of Record Team gives an overview of how EOR works and walks through the benefits of the service for a wide range of industries. The team also shares real-world examples of companies benefiting from EOR and speaks to key components that make for a successful EOR program.
An Employer of Record (EOR) provides a comprehensive solution for businesses looking to manage their contingent workforce without the legal, administrative, and compliance burdens of direct employment. From payroll and benefits administration to worker classification and compliance, an EOR handles it all. This allows companies to focus on their core business objectives while ensuring that their workforce is managed efficiently and in full compliance with local and international laws.
Eastridge Workforce Solutions differentiates itself by offering dedicated support, comprehensive compliance expertise, a flexible service model, and a proprietary technology platform. Whether you’re expanding globally or scaling your workforce domestically, partnering with an EOR like Eastridge can help you streamline operations, reduce risks, and increase efficiency.