Functions of Employer of Record
An employer of record (EOR) is an entity that assumes the role of the official employer for tax purposes while an employee carries out work for a different company. EORs provide a range of services related to traditional employment responsibilities and obligations.
The employer of record takes charge of various personnel-related functions, which include:
- Managing payroll processing and funding.
- Handling tax deposits and filings.
- Addressing unemployment-related matters.
- Managing workers' compensation requirements.
- Issuing Forms W-2.
- Handling time sheet collection and processing.
- Creating and maintaining employment contracts.
- Onboarding new employees.
- Maintaining certificates of insurance.
- Completing and storing Forms I-9.
- Ensuring compliance with E-Verify procedures.
- Conducting background checks and drug screenings.
- Providing and administering employee benefits.
- Managing employee terminations.
These services are often accessible through a software platform, enabling clients, employees, and recruiting partners to efficiently communicate and manage various aspects of work assignments. Additionally, these platforms offer valuable insights and analytics related to employees on assignment, costs, and more.
Utilizing an employer of record can result in time savings for recruiters and businesses. The elimination of payroll and HR-related tasks can potentially free up a significant amount of time.
An EOR offers a cost-effective solution for outsourcing payroll and HR functions. Businesses pay the EOR a fixed hourly or monthly rate for the employee's services, and the EOR takes care of all associated tasks.
Employer of record services prove especially beneficial when managing payroll processing and navigating employment laws for employees located in multiple states. The EOR keeps abreast of state and local regulations, alleviating the need for businesses to learn and comply with laws in various locations. Responsibilities are divided between the business and the employer of record.
Starting with the business or EOR client, they maintain control over day-to-day business operations and are accountable for workplace safety and compliance. The employer of record assumes responsibility for employment-related matters, including compliance with payroll regulations and tax laws.
