Employer of Record vs. Staffing: What’s the Difference?

In the talent and workforce solutions space, buzzwords and acronyms are commonly thrown around by industry professionals. For instance, the phrase “employer of record” (EOR)—otherwise known as payrolling services—is frequently used, but often misunderstood.

What is an Employer of Record (EOR)?

Some may wrongly believe that “payrolling” is synonymous with “staffing.” I’m here to explain the difference between these two terms and explain why partnering with an employer of record can save your organization copious amounts of both time and money.

EOR vs. Staffing: The major difference

An employer of record’s role is to serve as the statutory employer for an employee or set of employees. Even though the worker does not perform work or other services for the EOR provider, the employer of record handles all HR and personnel functions for the individual—including payroll processing, onboarding paperwork, I-9 and verification forms, unemployment insurance, and workers’ compensation insurance, among others. Upon identifying employees that a company is interested in payrolling, they will bring these workers to the EOR’s attention to initiate the payroll services process.

When hiring an agency to perform staffing services, they are responsible for the discovery, recruitment, and placement of employees on assignment with an outside company. The primary focus of staffing is matching temporary, temp-to-hire, or permanent workers with a job on behalf of their clients. Payrolling services can be carried out by staffing agencies and workforce management companies.

Time is money

One of the most significant advantages of partnering with a payrolling services provider is time savings. By working with an EOR provider, your logistics management and administrative duties will be reduced significantly. Rather than spending countless hours completing back-end onboarding paperwork, your payrolling services provider will take these burdens off your hands. Your HR team will be freed up to focus on more pertinent tasks related to your business.

Cutting costs

Time and cost savings almost always work hand-in-hand. By aligning with an EOR partner, your organization can receive both of these benefits in one solution. Saving time on these onerous payrolling and administrative tasks will enable your HR team to better support and bring value to your organization. EOR providers supply these services at a cost-competitive rate, allowing you to benefit from greater transparency and visibility into the many resources that comprise your collective workforce. Plus, most partners allow you to convert resources from their payroll to your staff at no extra charge.

Greater protection

By utilizing employer of record services, the resources that you choose to payroll are not technically considered your own workers. Instead, they are—from a legal perspective—employees of your EOR partner. So why is this significant? Your payrolling services provider takes ownership of all employee classification tasks and protects you from co-employment risks. Rather than fretting over expensive misclassification findings, your organization will have peace of mind knowing that these resources are compliant with federal employment law.

Interested in learning more about the employer of record process? Check out this video on Broadleaf’s EOR workflow here.

Learn more about Broadleaf’s employer of record services here.

This blog was written by Broadleaf Senior Director of Business Development Gregory Gary.