What is an Employer of Record and Why Would Your Company Need One?

What is an Employer of Record and Why Would Your Company Need One?

The past few years have proven that the world of work is only getting more flexible. Remote workers, freelancers, contractors, and consultants have all become much more commonplace. In fact, your company may work with one (or all) of those types of flexible workers now. While the concept of flexible work isn’t exactly new, its huge explosion in popularity has meant a larger percentage of the workforce is now flexible AND a much larger portion of companies than ever before are turning to this type of worker for the business. McKinsey and Company estimates that over 40% of the US workforce now participates in flexible, gig or freelance work. And this number shows no signs of slowing down. 

Now that this flexible workforce is here, the new question arising for businesses is how do I manage them? How do I make sure they’re paid compliantly? And how do I reduce all of the admin work for my internal team? With the rise of a new workforce has come the rise of new solutions to help answer those questions. If you’ve had any experience with flexible teams you may have heard of the term EOR (and if you haven’t, you’re not alone). 

What is an Employer of Record? 

EOR stands for Employer of Record. It’s a service that is provided by companies to take on the responsibility of being the legal employers of a group of W2 workers. The EOR works as a third party that becomes legally responsible for employees while they still continue to do important work for your company. Some of these responsibilities include taking on the risk associated with employment laws and regulations (non-compliance, legal issues) and HR tasks (payroll, tax filing, benefits administration). While the EOR handles these responsibilities, the employer is still in charge of where, when, and how the employees will work. Essentially, an EOR allows a business to alleviate the administrative duties associated with having W2 full-time, part-time, or hourly employees, while still having full autonomy over the employee’s day-to-day operations.  

Why Would Your Company Need One?

As you may imagine, outsourcing all of this compliance and HR can come with some major benefits for both large and small businesses. In terms of startups and small businesses, hiring and maintaining an in-house HR team for this workforce can be staggeringly expensive but companies of all sizes stand to save on the costs associated with human resources administration by outsourcing these responsibilities to an EOR.   

In contrast to permanent staffing, taking advantage of freelancers and temporary employees is a cost-effective alternative in terms of increasing or decreasing the size of a business’s workforce. By engaging an EOR, all of the administrative work required to get these employees up and running is alleviated from the business.  

When it comes time to consider who to partner with as your employer of record, make sure you are choosing a company that is technology-focused. While a lot of legacy payroll providers incorporate technology as an afterthought, the world of work is changing rapidly and you’ll need an employer of record who can keep up. Automating the onboarding, classification, and payment processes will make everything more efficient for your internal team and your workers.

AllWork = Your EOR Solution

Here at AllWork, our platform is specifically designed to help businesses adapt to the rapidly changing talent market. Operating as an EOR for all W2, flexible employees, we offer an all-in-one payroll service that guarantees that employees are paid on time. AllWork acts as an employer of record while providing compensation insurance, vacation and sick time, and retirement savings. Our HR services offered ensure that workers are classified properly and onboarded without the administrative burden. Not only are we an EOR, but we’ve combined this with our integrated management technology. Meaning your whole team can now operate more efficiently than ever before. To read more about our services available to you, check out our “Solutions” tab.  

Ready to learn more about AllWork’s EOR services? Reach out today! Email info@allworknow.com or schedule a demo here to get started!