An employer of record (EOR) is a third-party entity that undertakes the responsibility of all formal employment tasks for a company, functioning almost like an external human resources department.
For instance, consider a U.S. company expanding its operations overseas. This company might engage an EOR to manage the complex international labor laws, ensuring seamless operations abroad. In this capacity, the employer of record shoulders the weight of all the administrative duties connected with staff employment, offering significant relief to the company.
The employer of record ensures compliance with intricate laws, such as the Fair Labor Standards Act (FLSA) in the United States. This act specifies standards for minimum wage, overtime pay, recordkeeping, and youth employment. By complying with these regulations, the employer of record helps companies steer clear of legal pitfalls and maintain a harmonious employer-employee relationship.
In essence, the employer of record serves as an instrumental player in a company's legal and HR apparatus, effectively easing the compliance burden that comes with staff employment.
The essence of an employer of record lies in the management of various employee-related tasks on behalf of the businesses they partner with. These tasks are critical, spanning from the financial to the legal realm, and ensuring they're executed flawlessly is part of the employer of record's essential duties.
An employer of record is tasked with:
The expansive responsibility of an employer of record presents businesses with multiple benefits. Chiefly, it provides businesses more room to focus on their own specialties as they can trust their employer to handle these tasks for them.